Brazil is the ideal country to acquire a new telecommunications company. Due to military rule, the country has witnessed hyperinflation and its economy is not very liberal. Brazil has undergone major reforms which have ensured that the economy remains somewhat liberal. The country needs to adopt structural reforms so as to ensure a growth in its GDP.
There is a great need to curb inflation and keep the interest rates low. The country has had high public debt and there is no political will to enact conservative spending policies. The revenue system for the country has not been up-to-date and it has a heavy tax burden, although its taxable base still remains narrow.
Individual companies have devoted a lot of resources and manpower in trying to manage their tax affairs. The tax system is still complex, unwieldy, and porous. All these factors necessitate the acquisition of another telecommunications company (USA International Business Publications 50).
Brazil is ideal as a telecommunications hub given that it has a high population, and the market is both large and growing. The country’s economy is diversified and it is witnessing political stability though political effectiveness is not yet up to date.
This coupled with a tax system that is ineffective and a deficient labor market and infrastructure implies that the country is in dire need of another telecommunications company. With the country’s economy moving towards stability, it will be the best spot for such a company.
There is a hope for the country’s sovereign risk to stabilize. The local capital market is deep and this is a solution to the liquidity and solvency problems. There is therefore a stable outlook towards the same. Fiscal consolidation will automatically increase the primary surplus. With the increase in the differential rates, the currency is bound to stabilize.
The country’s banking sector has also been found to be stable. This is due to the fact that it was able to withstand the world economic recession that hit every sector of the economy across the globe. The banks in Brazil have a credit risk management system that is well developed and supportive.
The banking system is characterized by strong regulatory and supervisory strategies. With such stability, the telecommunications company is bound to blossom as most of today’s telecommunications companies carry out their activities hand in hand with the banking sector. A good example of this is the electronic money transfer system that has most of its activities linked to the bank.
The economic structure is also very vital in the success of any telecommunication company. With an export base that is diversified and a financial system that is well-regulate, the country will be at the pick in terms of economic growth.
The telecommunications company will be of great importance particularly when it comes to improving the countries revenue collection system. The country’s political leaders must therefore make and implement laws that will provide a fertile ground for the development of the telecommunications company (Polishuk 200-205).
The telecommunications company will revolutionize the country’s economy through the adoption of the e-business that is stable and with very limited risks. There is limited risk for fraud and theft. With the introduction of a paperless economy, there is efficiency and speed in business transactions. The country forms a large section of the market for information technology in Latin America.
The industry produces computers and other telecommunications equipment that are worth billions of dollars. The government policies seem to be in support of the telecommunication advancements. Internet penetration has greatly increased within the last five years. This is vital for the growth of Brazil’s economy.
Services like e-banking, e-learning and other online activities significant to the growth of the economy will be availed to the people and hence boost the economic growth. There is however a need to upgrade these services to reach the international standards. This there necessitates the establishment of another telecommunications company.
The sales accrued from e-commerce have doubled in the last two years and the sales of personal computers and other communication gadgets have been increasing with time. Telecommunication companies are sustainable and frequently pay dividends aimed at boosting cash flow as well as maintaining a share price that is strong.
The companies are not hit as hard as other sectors of the economy in the event of an economic recession. The country is strategically placed and it is closer to the world great economies like the United States and Mexico. There has been a significant trading between New York and Brazil. The telecommunications company is therefore able to tap in the neighboring markets and maximize the profits.
The telecommunications companies are known for high yielding stocks and they are fast growing companies with a greater competitive advantage. The advancement in the telecommunications technology will help the country to shift from over depending on the export earnings and become in information economy.
The telecommunications company will ensure that the country’s wealth resources are equally distributed to all sections of the country (Polishuk 67-80).
Works Cited
Polishuk, Paul. “Brazil.” Brazil Monthly Newsletter 10 November 2010: 67-80.
Polishuk, Paul. Brazil Telcom. Salvador: Information Gatekeepers, 2009.
USA International Business Publications. Brazil Telecommunication Industry Business Opportunity Handbook. Washington : Intl Business Pubns USA, 2005. Print.