Provisional measure allows companies to decide rules directly with workers; proposal will now be sent to Senate
03/08/2022
The Chamber of Deputies passed Wednesday a provisional measure that allows companies to decide the rules of remote work directly with the worker, without the need for collective bargaining, and changes rules on the payment of food vouchers for employees. The proposal will be sent to the Senate.
The provisional measure was criticized by opposition parties. Deputy Afonso Florence (Workers’ Party, PT, of Bahia) says the measure brings important points, but the possibility of individual negotiation to establish a working-from-home regime opens the door to the “deepening of the logic of labor exploitation.” “It is a fact that hybrid and remote work is here to stay and is one consequence of the pandemic, but workers’ rights cannot be undermined,” he said.
The rapporteur of the provisional measure, Deputy Paulo Pereira da Silva (Solidarity of São Paulo), one of the leaders of the union organization Força Sindical, said he agreed that the negotiation should be collective and bring rules for hybrid work, not remote work. Yet, he cut a deal with the government to keep the rules proposed by the Executive branch. “There is some nonsense [rules] here. We are passing a law that, in a few days, we will have to correct because I think we are making a mistake,” he said.
On the other hand, the deputy government leader Ubiratan Sanderson (Liberal Party, PL, of Rio Grande do Sul) advocate the rule because, in his view, it prioritizes the individual opinion of workers over the position of unions that “many times do not represent the specific will of each worker.” “There is not the slightest possibility of damage to the worker. And if there is, this can be reversed in court. In fact, we are giving more attention individually, which is what people want, than talking to the union. And the opposition doesn’t want this, because they always want to put the union to speak on behalf of people who, many times, don’t even know what is being discussed.”
The lower house also rejected, by a 325-63 vote, the payment of food vouchers in cash. The New Party (Novo), the author of the amendment, argued that this would give autonomy to employees to decide where and how to spend the money. “Some parties have workers voting against workers,” said the party’s leader in the Chamber, Deputy Tiago Mitraud (Minas Gerais).
The proposal was rejected by the governing coalition and caused divergence in the opposition. According to the Brazilian Socialist Party’s (PSB) leader, Deputy Bira do Pindaré (MA), workers prefer to receive in cash rather than in a card. “The problem with receiving in cash is that all the labor charges can be levied on top of it. We need to make an adjustment so that this doesn’t happen,” he said.
Mubadala wants to increase stake in Burger King chain in Brazil to 50.1% — Foto: Divulgação
The Arab investment fund Mubadala Capital has made a proposal to buy the control of Burger King in Brazil, a company currently called Zamp, in a deal that could reach R$938.6 million. Through a voluntary public offering of shares, Mubadala wants to increase its stake in the chain to 50.1% from 4.95% by paying R$7.55 per share. The amount represents a premium of 21.6% over the closing price last Friday, and 31% over the average share price of the last 30 days.
As Valor previously reported, the fund had already been analyzing an offer for the company within the strategy of moving forward on assets with growth potential, but which have lost value on the stock exchange since the pandemic crisis. In 12 months, the stock had declined 49% until last Friday. In the offering, the proposal is for payment in cash on the settlement date, according to a letter from a Mubadala subsidiary sent to the chain, which offers details on the conditions.
On Monday, after the disclosure of the interest to the market, the stock closed the day up 18.81% at R$7.39, a price close to the level offered by investors. The chain’s board of directors – composed mostly of independent members – is expected to release within 15 days a preliminary opinion on the offer, but the initial signals from shareholders are negative.
*By Adriana Mattos, Luiza Ferraz, Maria Luíza Filgueiras — São Paulo
Faster advance in releasing network expected to allow launch as early as Tuesday
08/02/2022
5G antenna in Rondonópolis, Mato Grosso — Foto: Divulgação
The faster advance in the release of the fifth-generation mobile phone (5G) network in the city of São Paulo is expected to allow the launch of the most sophisticated version of the new technology – known as standalone 5G – as early as next Thursday. The information was taken to the command of telecoms regulator Anatel last Saturday by EAF, formed after the auction of the new technology.
The Entidade Administradora da Faixa (EAF) is made up of representatives from the telcos, broadcasters, and satellite operators. Initially, the definition of the 5G start date in São Paulo was to be discussed on August 10. However, now the decision is expected to be confirmed on Tuesday, in an extraordinary meeting of the 3.5 GHz band monitoring group, known as Gaispi. The collegiate is led by Anatel.
“EAF accelerated work in São Paulo. On Friday, I was informed that the filter installations were practically ready,” said Anatel’s director Moisés Vieira, referring to the installation of equipment to inhibit interference in the 5G service, which will operate in the 3.5 gigahertz band, in satellite and free-to-air TV services that operate in the same frequency range. He chairs the Gaispi.
“On Saturday, they did tests until dawn. On Sunday, I met with my team and the coordinators and verified that it would be possible to start. There would be no point in holding up São Paulo, the largest city in Latin America, until August 10, when the ordinary meeting [of Gaispi] will take place. I decided, then, that it would be justified to schedule an extraordinary meeting for Wednesday at 9 AM, to release the signal on Thursday,” Mr. Moreira said. According to him, the decision surprised even the telcos.
The minimum requirement for São Paulo is the installation of 462 antennas by the three operators (TIM, Claro and Vivo) by the end of September. But last weekend, 892 stations were already ready to be connected.
The number has been increasing ever since. On Monday afternoon, a total of 1,200 antennas were expected to be put into operation in the São Paulo capital. By the end of the day, the number of requests had risen to 1,800. The detail: this amount already takes into account the goal of installing new antennas by July 2023, which 924 antennas (a ratio of one 5G station for every group of 50,000 inhabitants in the city).
“The new licensing requests are still being processed. The number of stations may reach 25% of the current base,” Mr. Moreira said.
Currently, the city of São Paulo has 4,592 active antennas of previous generations (2G, 3G and 4G). Mr. Moreira pointed out that the 3.5 GHz network has a smaller range and, for this reason, the coverage of the new service will not reach the proportion of 25% over the current technologies.
In the other capitals, standalone 5G signal is spread over a portion equivalent to only 15% of the existing structure. It is concentrated where there is a higher concentration of people. The new network was launched on July 6 in Brasília and has been operating in João Pessoa, Belo Horizonte, and Porto Alegre since Friday.
In addition to a faster internet connection, the implementation of the new technology is expected to increase productivity in the industrial and service sectors. 5G is expected to enhance the use of augmented reality, artificial intelligence, and the intensified use of the Internet of Things.
However, as published by Valor, Anatel’s management team has warned that less than 5% of cell phones are prepared for standalone 5G. The cost of the device is another obstacle: basic models cost around R$2,000 and the most sophisticated ones exceed R$5,000.
There is a lack of consensus among telcos about the need to change the chip to enjoy the full potential of 5G SA. None of them is yet replacing the so-called SIM card.
For Marcos Ferrari, head of Conexis Brasil Digital, which represents the large operators, the industry is prepared to “release 5G in any capital city the day after the release by Gaisp.” According to him, “the faster the schedule advances, the better.”
Alberto Boaventura, senior manager of Telecommunications, Media, and Technology Industry at Deloitte, says that the arrival of 5G in São Paulo is a way for telcos to guarantee a return on the investments already made in the new generation of mobile networks.
The installation of a new 5G signal propagation point can cost between R$600 and R$1 million, including antennas, a signal transmission center, and a transmission tower.
“São Paulo has the best ratio of high-value subscribers compared to other states, and providing better quality mobile services is a way to keep these subscribers,” says Mr. Boaventura. “In an important market, the operators’ coverage goes beyond Anatel’s obligation of one antenna for every 100,000 inhabitants,” he adds.
Mr. Boaventura notes, however, that the 5G leap does not stop at the consumer market. “The technology brings in tow a set of low-latency applications that is quite important for industries.”
Mr. Ferrari says the 5G debut schedule in other capitals depends on the reality of each one.
The cleaning of the 3.5 GHz band, also used to transmit the analogical open satellite TV signal, captured by old satellite dishes, is necessary for 5G transmission, says Euclides Lourenço Chuma, senior member of the Institute of Electrical and Electronics Engineers (IEEE) and researcher at the State University of Campinas (Unicamp). He recalls that Gaisp will meet on August 10 to verify the reports of signal interference.
“The high density of accesses in commercial points in the capital of São Paulo can generate interference from technologies such as microwave internet access,” says Mr. Chuma. According to him, the 5G debut in the 3.5 GHz frequency “is an action to start the system, without having to wait for the state of the art.”
*By Rafael Bitencourt, Daniela Braun — Brasília, São Paulo
Less than 5% of cell phones in operation in Brazil are ready to receive the standalone 5G signal, which was launched Friday in Porto Alegre, João Pessoa and Belo Horizonte. The warning has been repeated by Moisés Moreira, the director of the Brazilian Telecommunications Regulatory Agency (Anatel), in an attempt to lower expectations at this first moment.
In Mr. Moreira’s view, phone companies must make it clear to their clients if the devices in use are prepared for standalone 5G, the most sophisticated version of the new technology, and if it will be necessary to change the chip. “Don’t expect 5G technology to arrive in a big way right now. On the contrary, it demands a certain amount of time,” he told Valor.
Brasília has had standalone 5G since July 6. The signal is offered over the 3.5 gigahertz (GHz) band. Anatel has received reports of frustrated users who have had an experience not very different from that of 4G, in addition to encountering many “shadow” areas (without 5G signal).
“Operators are not changing the chip yet, nor are they marketing exclusive plans for 5G. So far, they only have the obligation to effectively turn on the signal by the end of September. So Anatel still can’t fine them for not meeting quality standards,” he said.
Days after the 5G debut in Brasília, Vinicius Caram, one of Anatel’s technicians involved in the implementation, told Valor that users would now only have a “tasting.” He said that the moment is for “fine tuning” or network “optimization.”
Mr. Moisés reinforced that, among the capital cities that are yet to receive standalone 5G, São Paulo, Rio de Janeiro, Curitiba, Goiânia and Salvador are the ones with “more advanced” work to prevent interference. However, he stated that there is still no defined date.
Regarding the monitoring of the quality, Gustavo Borges, Anatel’s head of control of regulatory obligations, told Valor that, besides checking the number of antennas, the “coverage map” of telecom companies will be evaluated.
“The number of antennas is an objective commitment in the call for bids. By observing the map, we will know if in fact there is signal where availability is declared,” said Mr. Borges. He said that after September 29, the agency will start measuring technical parameters to verify network performance: speed, latency, jitter and packet loss. This involves comparison with international standards.
Mr. Borges said that, even without the commercial launch of 5G plans, Anatel already monitors consumer complaints. The collection of indicators will result in the production of the quality seal A, B, C, D or E for each provider, in each municipality, to be unveiled in 2023.
Most 5G handsets available on the market already offer access to networks that simulate 5G by dynamic spectrum sharing (DSS). With the arrival of 5G networks in new capital cities, users will be able to automatically use the 5G NSA networks, without changing chips or plans, operators and manufacturers told Valor. This option uses the 3.5 GHz network with the pre-existing network structure already used by phone carriers, without the performance of the very low latency offered by 5G SA.
The pure 5G networks require the use of a specific chip and plan, according to information from América Móvil’s Claro, and compatible phones. Currently, this is the case for six Motorola and three Samsung models. The iPhones 12 and 13, launched in November 2020 and 2021, respectively, by Apple, are not prepared for standalone 5G networks in the country.
For the consumer, the difference in latency, or response time, between a device with 5G NSA and with 5G SA is not significant, says Thiago Masuchette, head of product at Motorola.
“You will have a latency difference of 10 milliseconds, on a 5G DSS or NSA, to 1 millisecond on 5G SA,” he explains. Tests done by the manufacturer indicate that the speed does not change between a standalone 5G and a 5G NSA, but the indicator will vary depending on the network quality of the carrier.
In practice, “the frequency and bandwidth that each carrier won in the bidding will interfere with the maximum speed that the consumer can have in the plan,” says Mr. Masuchette.
Today, 60% of Motorola’s portfolio is compatible with 5G networks, according to the executive. Among the six devices that are also compatible with SA networks, currently, the average price ranges from R$2,000 for the Moto G62 model, to R$5,000 for the Edge 30 model, top of the line of the brand.
*By Rafael Bitencourt, Daniela Braun — Brasília, São Paulo
Central Bank’s headquarters in Brasília — Foto: Jorge William/Agência O Globo
The current monetary tightening cycle, now entering its 18th month, may be nearing its end. After a 1,125-basis-points hike in the key interest rate Selic and Central Bank’s messages that the magnitude of the tightening matters, most of market participants believes that the Monetary Policy Committee (Copom) will deliver one final 50-basis-points hike this week, to 13.75% a year. This view, however, is far from being consensual and, with the strong deterioration in medium-term inflation expectations, a relevant portion of the agents expects the rate to reach at least 14% this year.
A survey carried out by Valor between July 27 and 29 shows that medium-term inflation expectations continued to rise. The average point of the 110 estimates collected for the IPCA (Brazil’s official inflation index) in 2023 was 5.4%, well above the top of next year’s inflation target range (4.75%). In addition, agents are already concerned about the de-anchoring of expectations at longer horizons. The median of 86 projections points to an IPCA of 3.5% at the end of 2024, compared with the center of the target of 3%.
In this environment, which includes an already advanced stage of the tightening cycle and still very negative conditions for current and prospective inflation, there is a clear division among market participants regarding the next steps of monetary policy. It is worth pointing out that in this week’s decision, the relevant horizon for the Copom’s actions is expected to include the calendar year 2023 and, to a lesser extent, 2024.
Thus, even though the expectation of a 50 bp increase in the Selic this week is virtually consensual, the perspective for the rate at the end of the year still causes a significant division among market economists. Valor’s survey shows that 65 analysts expect the key interest rate to reach 13.75% this week and to remain at this level; 32 see the Selic at 14% in December; and 17 project a rate of 14.25% at the end of the year.
“Although there is indeed some possibility that the Copom will choose to interrupt its monetary tightening cycle, especially given the significant extension and intensity [of hikes], we do not believe this will happen in August,” says José Maurício Pimentel, the chief economist at BB Asset. The prospective inflationary picture and the risks around expectations are not yet “safe enough” for the Central Bank to end or even pause the cycle, he says.
“The level of current inflation and its core and diffusion indexes have not yet eased substantially. The recent drop in commodity prices in the international market may help but they could rise again in view of potential new supply problems,” Mr. Pimentel says. BB Asset expects the cycle to end only in September, with the Selic at 14.25%.
By simulating Central Bank’s inflation models, Anna Reis, chief economist and partner at Gap Asset, estimates that the monetary authority’s new projection for inflation at the end of 2023 is expected to rise to nearly 4.3%, compared with 4% in June’s decision, thanks especially to the adjustment of some taxes foreseen for 2023. As a result, the Central Bank’s inflation estimate would move even further away from “around the target” – a strategy the Copom revealed in its last decision that it has been pursuing. In Mr. Reis’s view, this would justify a new adjustment in interest rates in September.
“Reproducing the mechanics it [the Central Bank] has been using, we still think that the conclusion will be that some additional tightening will be necessary. Given the already very high level of the Selic rate, it may signal a new, smaller increase or even leave the door completely open, in the sense of not increasing it further,” he says. Besides the 50 bp increase this week, the economist works with a final 25 bp increase in September, when he sees the Copom ending the tightening cycle.
Although he expects a residual adjustment in September, Mr. Reis believes that the level of interest rates in the Brazilian economy is already quite contractionary, with a real ex-ante rate around 8.3%, a level similar to that of the 2015 monetary tightening cycle.
In addition, the economist believes that the 2023 inflation projections are contaminated by the shocks affecting current inflation. “It’s three consecutive years of expressive shocks that have taken Brazilian and global inflation to high levels, and economists tend to extrapolate the scenario forward. We believe that the risk of inflation in 2023 is greater to be down than up,” he says. Gap projects the IPCA at 5% in 2023 and at 3% in 2024.
Gustavo Arruda, the head of research for Latin America at BNP Paribas, says that the role of the Central Bank, at this moment, is to contain the problem. “The de-anchoring of expectations has happened and we are seeing higher numbers, above 5%. The de-anchoring of expectations is increasing, not decreasing. If I don’t know what is going to happen with the inflationary scenario, one has to work with the balance of risks. And, within this environment, I would rather have the risk of doing more than less, even though it is more costly in terms of activity,” Mr. Arruda says.
BNP Paribas was one of the first banks to point to a scenario of a Selic rate around 14% – and it is still the bank’s baseline scenario. “I can’t see the Central Bank stopping at this point. We know that inflation in the short term will fall for reasons unrelated to monetary policy, but next year’s expectations are rising, as are those for 2024,” he says.
“And, as for the news, we know that there will be more public spending, which is likely to boost demand at the margin. The Central Bank expected that monetary policy would start to decelerate growth starting in the third quarter, but a considerable part will be counterbalanced by fiscal policy,” Mr. Arruda says. In his view, if the Central Bank ends the cycle at this point, it risks facing even higher expectations ahead.
Anxiety surrounding the Copom’s communication regarding the next steps in monetary policy has increased since the committee is used to indicating what it foresees for its next decision. With the cycle nearing its end, the market must therefore remain very attentive to the signals from the policymakers to calibrate bets regarding the end of the cycle.
Economists at Itaú Unibanco expect the Copom to signal that the most probable scenario is the end of the cycle, but leaving the door open for a possible final hike in key interest rates in September should the inflationary scenario deteriorate further. “Additionally, we believe that the monetary authority is likely to determine that an eventual additional adjustment would be implemented at a slower pace (25 basis points),” say the economists at Itaú, which projects the Selic at 13.75% per year at the end of the cycle.
The chief economist for Brazil at HSBC, Ana Madeira, believes that the Copom is likely to try and give “as little information as possible” and present few changes in relation to the announcement of June’s decision, by maintaining a tone more dependent on the evolution of indicators. “I also expect the Central Bank to leave itself some room to reduce the pace in the next meeting,” she says.
According to the economist, the recent deterioration in inflation expectations is expected to force the Copom to deliver another residual 25 bp hike in September. She believes that only next month will the slowdown in economic activity start to show clearer signs and open space for the monetary authority to put an end to the tightening cycle.
Ms. Madeira also estimates that the continued normalization of supply shocks next year and a synchronized slowdown in the global economy are likely to cause faster disinflation in the economy – HSBC has a projection of 4% for the IPCA in 2023. “In April, the IPCA is expected to already be around 6%. This will mean that we will start to see inflation slowing down, and this will leave room for the Central Bank to start the cycle of interest rate cuts,” says the economist, who estimates the Selic at 9.75% per year in 2023.
On Friday, the yield curve was pricing a Selic around 14% per year by the end of the year and between 12.25% and 12.5% in 2023. The Copom options market, on the B3, pointed to an 88% probability of a 50 bp hike in the Selic this week against an 11% chance of a 25 bp hike. In relation to the Copom’s September meeting, the market pointed to a 35% chance of stability, a 40% chance of a 25 bp hike and a 21% chance of a 50 bp increase.
Garde Asset’s baseline scenario includes 50 bp hikes in August and September, to 14.25%. “We believe that the Central Bank will take into account the additional de-anchoring of expectations. It is concerned about that and will have to react to that,” says Garde’s chief economist Daniel Weeks.
“The focus is going to be on how the Copom will signal the next steps. And, given the deterioration of the prospective inflation scenario between meetings and the fiscal deterioration, both due to the higher risk and the increase in disposable income, it is very difficult for the Copom to close the door and say that it will stop raising interest rates,” he says. In Mr. Weeks’s view, the Central Bank will leave the door open to raise the Selic rate by the same magnitude – 50 bp – or at a slower pace in September.
R$460m investment comes on top of previous R$1bn injection
08/01/2022
Surya Mendonça — Foto: Silvia Zamboni/Valor
Órigo Energia received an investment of R$460 million from the U.S. fund manager Augment Infrastructure with the objective of boosting distributed generation. The amount comes on top of another R$1 billion injection to reach an installed capacity of more than 250 megawatt peak by the end of 2022.
Augment became a major shareholder in the company, along with TPG ART, MOV Investimentos and Mitsui. The company does not reveal the share of the new partner but says that the U.S. fund will not take control of the company.
With this injection and debt raising, the company reaches R$2 billion of investments until the end of 2023 with 500 MWp. By 2024, with new funding planned, the goal is to reach R$4 billion invested and 1 GWp of installed capacity.
Órigo CEO Surya Mendonça knows that it won’t be easy, since the current backdrop of high interest rates makes it difficult to raise funds and the solar industry faces deep problems in its production chains, which have made the capital expenditure of the projects increasingly variable.
“This capital injection gives Órigo more autonomy to accelerate the construction of solar farms, continue investing in technology, and expand the service to new geographies,” says Mr. Mendonça.
He explains that the entry into force of Law 14,300/22, which establishes the legal framework for power self-generation, microgeneration, and distributed minigeneration, brought more security for new investors to invest in Brazil.
“This is a consequence of the attractiveness and predictability that the renewable sector has with the new distributed generation laws that were approved last year. So we see that in Brazil it is possible to attract foreign capital with good projects, a team, and growth plans,” he says.
The executive says that the company serves more than 50,000 customers with a current installed capacity of operational 150 MWp distributed in 40 small solar farms in Minas Gerais, Pernambuco, and São Paulo. The company wants to reach 500,000 customers in the Southeast, Central-West, and Northeast regions.
The strategy is well known and has been working well among companies focused on distributed generation, which means building small plants of up to 5 MWp, disposing of the energy on the grid, and selling quotas of the solar generation to customers. The idea is to direct 90% of the value to increase capacity. The remainder is spent on attracting customers.
In fact, this business model is what attracted the Investment Fund for Developing Countries (IFU), a Danish fund for developing countries that invests in Órigo through Augment. “IFU has made several investments in renewable energy in Brazil, and the investment in Órigo Energia represents our commitment to support the green transition in the country. Órigo has an innovative business model for the development of distributed solar generation sector in Brazil,” says IFU’s CEO Torben Huss.
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