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Comparison of Privatization Processes of Telecom Services in India and Brazil

Researchers  :- Prof Rekha Jain

Affiliation of Researchers :- IIMA

WP No. :- WP2011-10-03

Year of Publication :- 2011

Abstract :-   

Although Brazil and India differ widely in their economic indicators, there are some interesting dimensions on which these could be compared. In 2010, while Brazil had the seventh largest GDP at $2.05 trillion on a nominal basis, India ranked tenth at a GDP of nearly $1.5 trillion. On a PPP basis, India ranked fourth with a GDP of $4.1 trillion while Brazil ranked eighth with a GDP of $ 2.17 trillion. However, given the vast population differences, India’s GDP per capita at 2010 prices was $1382 and for Brazil it was $12423. Of late, the economies of these two countries have been growing at significant pace, despite the global recession, although India has shown consistently higher growth rates.

Besides being a part of BRIC, what India and Brazil have in common is a large service sector that contributes significantly to the GDP. For 2010, the service sector in Brazil contributed nearly 66% to the GDP, while in India the sector contributed nearly 59% to the GDP, a quarter of total employment, and one-third of country’s total exports, besides accounting for a higher share in foreign direct investment (FDI). Telecommunication services are a significant part of it in both countries. Exhibit 1 provides the relevant data for both countries for the last three years.

The objective of this paper is to compare the regulatory processes of privatization of telecom services in these countries and the consequences of these on the telecom firms broadly and on the sector as a whole.