Fernando Xavier, CEO of Telefonica Brazil, says he?s working on the possibility of suing Embratel for damages. It may claim some 2.5 billion reals in losses relating to investment in early fulfillment of regulatory targets, or lost revenue of between 1 million and 2 million reals per day. Embratel?s injunction remained in force for about two months, so theoretically Telefonica could claim lost revenue amounting to between 60 million and 120 million reals. (The exchange rate is currently in the range of 2.85 reals per US dollar.) Asked about projected market share in long distance, Fernando Xavier declined to give a number but said the telco?s current shares of intra-regional long-distance and international traffic are around 80% and 20% respectively. At no time has the CEO put a specific number on the amount of damages Telefonica may claim, however.
In Fernando Xavier?s opinion, Embratel?s argument that long-distance licenses should be auctioned to allcomers is unfounded on two counts. First, even if the courts upheld this interpretation of the law, Embratel itself would be debarred from bidding because it?s the incumbent, so it can?t reasonably allege unfair treatment now. Second, if long-distances licenses are auctioned to allcomers they can hardly be construed to be ?scarce assets?. At bottom, he says, Embratel simply wants to postpone the onset of true competition because the duopoly with Intelig is evidently preferable.