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Brazil's Government Accepts Telecom Rule Change Request - Reports

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SAO PAULO (Dow Jones) The Brazilian government accepted an official request by local telecommunications firms to end restrictions on fixed line operators offering services in more than one region of Brazil, thus opening the way for a merger between Tele Norte Leste Participacoes, or Oi, and Brasil Telecom Participacoes, according to newspaper reports Thursday.

The recommendations will be sent to the National Telecommunications Agency, or Anatel, who are in charge of revising the telecommunications rules. The changes will then be put to public consultation and then it will go to President Luiz Inacio Lula da Silva for final approval, said reports in local newspapers O Estado de S. Paulo and O Globo.

The rule changes are a prerequisite of a merger betweeb the two major Brazilian-owned telecom operators.

For some time, the controllers of Oi and Brasil Telecomh ave been courting the idea of a deal to create a local telecom operator large enough to compete on a regional basis with Telefonica and America Movil.

However, the government has chosen not to include proposed restrictions on telecoms operating in pay TV, leaving this subject to be reviewed by Congress, said the reports.

-By Alastair Stewart; Dow Jones Newswires; 5511 3145-1479; alastair.stewart@dowjones.com

(END) Dow Jones Newswires

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