TNE » Topics » Our business is highly regulated. Changes in laws and regulations may adversely impact our business.

This excerpt taken from the TNE 20-F filed Jun 15, 2007.
Our business is highly regulated. Changes in laws and regulations may adversely impact our business.
Our industry is highly regulated by Anatel. Anatel regulates rates, quality of service and universalization goals, as well as competition between carriers. Changes in laws and regulations, grants of new concessions or licenses or the imposition of additional costs of universalization, among other factors, may adversely affect our operations and financial results.
After the current government took office on January 1, 2003, some of its members advocated the need to revise the regulatory model followed by the regulatory agencies in Brazil, including Anatel, in order to make them more responsive to their respective ministries. The loss of Anatel’s independence could pose a material risk to our business, given the potential for undue political influence that this new regulatory model could exercise over Anatel.
Also, a number of bills affecting telecommunications policy have been submitted to the Brazilian Congress with an aim to make telecommunications services more accessible to Brazil’s low-income population. These bills have proposed to: (1) eliminate the monthly subscription fee (assinatura mensal) that compensates telecommunications companies for extending and maintaining fixed-line telecommunications services for their customers; and (2) impose inexpensive fixed-line telephone plans (telefone social) that telecommunications companies would be required to provide to certain eligible low-income residential users. The enactment of these and similar proposed legislation may increase our operating costs and/or reduce the amount of fees we charge our consumers, which could adversely affect our profitability.
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