Telecom Lead Brazil: TIM, Telefonica Brasil, Claro and Oi
have won 4G LTE licenses in Brazil.
Through the mobile broadband wireless auction, ahead of
the World Cup Soccer in 2014, the government raised 2.56 billion reais ($1.24
billion) from Brazil’s biggest carriers.
Anatel president Joao Rezende said the results exceeded
expectations, with carriers such as Telefonica Brasil, the Brazilian unit of
Spain’s Telefonica paying as much as two thirds more than the minimum bids in
The Brazilian government wants the 4G winners to launch
4G services in some of Brazil’s cities in time for the Confederations Cup
soccer tournament in mid-2013.
“It’s an important day for telecommunications in
Brazil. It’s significant that the operators want to invest,” said Mario
Girasole, regulatory affairs director at TIM, a part of Telecom Italia.
TIM purchased one of the four nationwide licenses on
offer, but opted for one of two licenses with less capacity. It paid BRL340
million for 20 megahertz in the 2.5 gigahertz range, a premium of 8 percent
over the minimum price set by Anatel.
The telecom operators may work together to share
infrastructure, so as to be able to reduce the cost of installing 4G
Telefonica Brasil won one of the licenses with a bid of
1.1 billion Brazilian reais ($533 million), a premium of 75 percent over the
minimum price, while Claro, of Mexico’s America Movil SA paid BRL845 million,
or 34 percent over the minimum price.
Carlos Zenteno, president of Claro, said more spectrum
capacity would allow it to provide faster data speeds.
Antonio Carlos Valente, president of Telefonica Brasil,
said the company had achieved its goal with the purchase.
Oi paid BRL331 million, a premium of 5 percent, for 20
Mhz of capacity.
“This frequency is ideal for the transmission of a
large volume of data in the large urban centers,” said Francisco Valim,
president of Oi.
Oi is investing a total of BRL24 billion through 2015,
including BRL6 billion this year.
ROLL OUT OBLIGATIONS
The licenses came with obligations of minimum investments
to provide 4G coverage in host cities for the Confederations Cup next year, a
dress rehearsal for the World Cup in 2014.
Winners of the auction were also required to assume
responsibility for providing less-profitable rural broadband service, a policy
priority for President Dilma Rousseff.
The licenses stipulated at least 60 percent Brazilian
content in hardware for the new frequencies, a requirement challenged by the
United States and the European Union at the World Trade Organization, according
to agency reports.
The accumulated obligations associated with the new 4G
spectrum led some in the industry to question whether additional costs would
ultimately end up in the bill paid by users of the new technology. But bidding
at the auction suggested the full range of carriers would be competing for