Bloomberg News

Brazil Readies 3 Wireless Auctions Next Year as Demand Rises

December 09, 2011

(Adds Global Village Telecom comment in 11th paragraph.)

Dec. 8 (Bloomberg) -- Brazil is preparing three auctions of wireless airwaves for mobile-phone service in 2012 and is beginning work on a fourth sale to meet the growing demand for data downloads, the nation’s top phone regulator said.

Telefonica Brasil SA, a unit of Madrid-based Telefonica SA, and billionaire Carlos Slim’s America Movil SAB may participate in the contest for airwaves in the 2.5 gigahertz band used for so-called fourth-generation services, Joao Batista de Rezende said. That sale, along with an auction in the 450 megahertz band for rural coverage, will be in April, said the president of the National Telecommunications Agency, or Anatel.

“The Brazilian market will guarantee return on investment,” Rezende said in a Dec. 2 interview in Brasilia. “From the conversations I’m having, nobody is going to miss out on this kind of spectrum, because that would mean missing out on the fourth generation,” or 4G, which enables faster wireless Internet connections.

Telecom Italia SpA’s local unit Tim Participacoes SA, Tele Norte Leste Participacoes SA, NII Holdings Inc. and Vivendi SA’s Global Village Telecom Holding SA are likely to bid for 4G airwaves as well, Rezende said.

Anatel is also preparing an auction in the second half of 2012 for the 3.5 gigahertz band, which can be used for several applications including voice, data and video, Rezende said.

“It strengthens the data-transmission infrastructure of the big companies,” Rezende said. “Mobile service is going to need more frequencies in the future.”

232 Million Subscribers

Brazil had 232 million wireless subscribers at the end of October, up 19 percent from a year earlier, according to government statistics. That was the fastest rate of growth since July 2009.

The country had 195 million people as of 2010, according to the World Bank. Some phone users buy subscriptions from multiple carriers to make cheaper calls, and some buy data subscriptions, such as laptop cards, in addition to their phone services.

Subscriptions to high-speed Internet over fixed or mobile lines rose 22 percent to 16 million at the end of the third quarter from a year earlier, according to Anatel.

By the end of 2012, Brazil will have offered 764 megahertz of airwaves to mobile-phone companies. The country will need to reach 980 megahertz by 2015 to keep up with demand, according to estimates from the International Telecommunications Union, a United Nations agency.

Mobile Phones ‘Someday’

“It’s natural to think that someday we will enter the mobile-phone market, but it’s not in our short-term plans,” said GVT, the Vivendi unit, in an e-mail today. The company offers fixed-line phone, Internet and TV service.

The press offices of Telefonica, America Movil, Tim, Tele Norte Leste and NII didn’t respond to phone and e-mail messages today.

To reach the goal set by the ITU, the government plans to begin preliminary discussions in the second half of 2012 for the auction of airwaves in the 700 megahertz band, the last swath of spectrum for mobile phones, Rezende said. Television broadcasters, who now use that frequency, are expected to abandon it by 2016 as part of a switch from analog to digital signals.

Since the 700 megahertz spectrum involves the TV industry, the decision on how to manage it will involve other government agencies, Rezende said.

“Broadcasting is a topic for the government, not just Anatel,” he said.

Phone Fees

Rezende, who assumed the presidency of Anatel Nov. 7, said he aims to reduce the fees carriers can charge to connect calls to mobile phones in the next few years. From 2012 to 2014, companies will reduce their charges to consumers for those fees by about 15 billion reais ($8.34 billion). It makes sense to reduce the fees even more beginning in 2014 to make them cheaper compared with other countries, he said.

The rate reduction plan, announced in October, calls for carriers to reduce the price of a call from a fixed-line phone to a mobile from 42.7 centavos (24 cents) a minute to 31.2 centavos in 2014. In Mexico, Latin America’s second-biggest country after Brazil, carriers can only charge the equivalent of 3 U.S. cents a minute this year.

The reduction of those fees can’t be more drastic because the government seeks the participation of the mobile carriers in the 2012 auctions, and the fees are an important part of their sales, Rezende said.

“The reduction is being done gradually to guarantee stability and investment so that companies can plan for the 2.5 auction,” Rezende said. “With an abrupt cut in mobile termination rates, the company isn’t going to participate in the auction. We’re trying to account for that.”

Regulatory Plan

Rezende also aims to hold talks with the Communications Ministry to adapt the regulatory plan for the telecommunications industry to cover new technologies, Rezende said. It’s important to include network infrastructure inspections and the combination of services such as voice, video and data over a single network, he said.

In March, Anatel expects to authorize the first cable- television licenses after lawmakers approved rules this year allowing foreigners to enter the market, Rezende said. The agency has received about 600 requests for licenses, he said.

Anatel may approve the changes in the law, which has already been signed by President Dilma Rousseff, in a meeting today, he said.

The agency is betting on growth in cable-TV to help meet the demand for high-speed Internet service, he said. That growth will bring lower prices for consumers next year, he said.

--Editors: Cecile Daurat, Niamh Ring

To contact the reporters on this story: Carla Simoes in Brasilia Newsroom at csimoes1@bloomberg.net; Crayton Harrison in Mexico City at tharrison5@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


Video Game Avenger
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus