Embratel still has a major problem with customer delinquencies, analysts say, and has a long way to go before the rate is reduced to internationally accepted levels ? say around 3%. However, the company has been working hard to get delinquencies down, they note. Besides disconnecting delinquent customers, it?s implementing an enhanced collection system developed by Tyco that is due to go live in three months? time. Customers are identified in real time via online updates. In addition, the new solution is less reliant on information from other carriers and even from Embratel?s own call center. It should streamline debt collection and facilitate control of delinquencies. The main problem, analysts stress, is the effect of the Brazilian Real?s depreciation on its debts. This looks like being considerable even in the third-quarter balance sheet. True, Embratel is now hedging 75% of its short-term debt for exchange-rate risk, up from 46% previously. But total debt is only 41% hedged. Another concern for analysts is that strong revenue of 193 million reals in the second quarter won?t recur in the third because it reflected a lawsuit Embratel won against the Federal Government, obtaining a tax refund for the period 1989-92.