Bloomberg News

Brazil Wireless Market to Grow With Virtual Networks in 2012

September 28, 2011

(Updates with Infraero comment in seventh paragraph.)

Sept. 28 (Bloomberg) -- Virtual wireless carriers will boost Brazil’s mobile-phone market when they start operations next year, with companies such as Petroleo Brasileiro SA showing interest in the segment, said the country’s telecommunications regulator.

The operators may account for as much as 5 percent of the market next year, said Emilia Maria Ribeiro, a commissioner for Brazil’s telecommunications regulator, Anatel. The companies, known as MVNOs for mobile virtual network operators, buy wireless network capacity or lease network equipment from carriers and resell the airtime to users.

Petrobras, Brazil’s state-controlled oil company, has sought information on MVNO licenses, Ribeiro said without giving details. Others requesting information include the country’s airport operator, Infraero, and the postal carrier, Correios. Anatel is already evaluating 50 company requests for MVNO approvals, she said.

“MVNOs are a great business and, since we’re an emerging country, we could see extreme growth in the next few years,” the commissioner said in a Sept. 23 interview in Brasilia. “Telecom companies that already own airwaves need to nurture their use.”

The MVNO system allows companies such as banks and retailers to buy airwaves from carriers and sell mobile phones with their own brand, said Ribeiro.

Carriers Can Sell

Among the carriers that can sell airwaves to MVNOs are Rio de Janeiro-based Tim Participacoes SA and Tele Norte Leste Participacoes SA, as well as Sao Paulo-based Vivo Participacoes SA, America Movil SAB’s Claro SA, Sercomtel Telecomunicacoes SA, NII Holdings Inc. and Cia. de Telecomunicacoes do Brasil Central.

Anatel forecasts mobile-phone connections in Brazil will reach 270 million by 2012, including 13.5 million carried through MVNOs, or 5 percent of the total market, said Ribeiro. This year, the regulator foresees 240 million mobile connections, 18 percent more than in 2010.

Petrobras’s press office said the company won’t comment about its interest in MVNOs. Infraero is monitoring the subject and doesn’t have a project in development at the moment, said an official at the airport operator who can’t be named under the agency’s policy.

Brazil’s First MVNO

Anatel approved virtual network operations in November 2010. The only deal closed so far was between Tim and Porto Seguro SA, a Sao Paulo-based insurance company, which resulted in Porto Seguro Telecomunicacoes, a joint service venture with Datora Telecom. That company will be Brazil’s first MVNO, said Tim in its quarterly report to analysts. The company will begin operations in January, said Ribeiro.

MVNOs will help boost traditional carriers’ client base by offering services to different market niches, said the commissioner. A wine company or a supermarket chain, for example, could tie a minute-based deal package to the client’s spending profile, Ribeiro said.

Anatel has two kinds of permits for MVNOs. One authorizes the company to use regular carriers’ frequency bands and transmission systems to sell mobile phone service. The other option allows companies to act as resellers, able to offer different kinds of service.

“Carriers will boost their client base and will be able to have different pricing for different kinds of services,” said Ribeiro. “Each company will have its own business model.”

--With assistance from Jose Sergio Osse in Sao Paulo and Crayton Harrison in Mexico City. Editors: Donna Alvarado, Jose Sergio Osse

To contact the reporter on this story: Carla Simoes in Brasilia Newsroom at csimoes1@bloomberg.net

To contact the editor responsible for this story: Francisco Marcelino at mdeoliveira@bloomberg.net


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