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The Telebrás System (Telebrás, Telesp, Embratel)

Nine hundred telephone companies became one, then twelve, then a handful owned elsewhere.

Before 1972 there were more than nine hundred telecommunications companies operating in Brazil. Law 5.792 of 11 July 1972 authorised a single state holding company, and Telecomunicações Brasileiras S.A. was installed on 9 November that year, during the military government. Within a few years it had absorbed nearly all of them: twenty-seven state operators plus Embratel, the long-distance carrier, together known as the Sistema Telebrás.

**The problem it was built to solve was real.** Nine hundred operators meant nine hundred technical standards, numbering plans and interconnection arrangements, in a country of continental scale where a call between two states might cross several incompatible networks. Centralising it produced a national network with satellites, submarine cables and a dense terrestrial mesh, and telephony reached essentially the whole territory.

**One figure captures both the achievement and the argument.** Installing a telephone line cost about five thousand US dollars in the 1970s. By 1998 it cost about twenty. The heavy infrastructure had been built, and the technology had changed underneath it - which is precisely why private capital, uninterested for decades, became interested.

**In 1976 Telebrás created CPqD**, its research and development centre, which worked on switching systems, networks and digital telephony with an explicit brief to develop domestic technology. It is one of the few institutions here that outlived the system that created it: CPqD has operated independently since 1998 and still exists.

The system was privatised on 29 July 1998, at the Rio de Janeiro stock exchange, following the 1995 constitutional amendment and the General Telecommunications Law. Twenty per cent of the shares - the controlling blocks - were sold, splitting the system into twelve holdings: three fixed-line, one long-distance, and eight mobile. **It raised R$22.058B, a premium of 63.7% over the minimum price, and remains the largest privatisation in the country's history.** In its final year the system had reported around R$2B of net profit.

**What happened to Embratel afterwards is the part worth following.** The long-distance carrier was bought by MCI WorldCom of the United States. WorldCom filed for bankruptcy in 2002 in what was then the largest corporate failure in American history. In 2004 a New York court approved Embratel's sale to Telmex of Mexico, and in 2015 it was absorbed into Claro, part of América Móvil. **A Brazilian state carrier passed to an American company, through a bankruptcy court, to a Mexican group, in seventeen years.**

The fixed-line holdings became Telemar, Brasil Telecom and Telefônica - Telesp, the São Paulo operator, being the piece that became Telefônica's Brazilian business - and the successors eventually consolidated into Oi and Vivo. **Nine hundred companies became one, then twelve, then a handful, most of them controlled from outside the country.** Whether that arc is a success or a loss is still argued about in Brazil, and this entry does not settle it: the figures above are verifiable, and the judgement is not a technical question.

Telebrás itself was reactivated in 2010, as a mixed-economy company with a narrower brief - connectivity for federal public administration and the national broadband plan, including schools and health and security facilities. **The name survived the system it named.**

Telecomunicações Brasileiras S.A. ↗
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