Bloomberg News

Brazil Raises $1.3 Billion in 4G Wireless Auction

June 12, 2012

Brazil raised 2.72 billion reais ($1.3 billion) in an auction of wireless airwaves as the nation’s top four mobile-phone carriers snapped up assets to offer faster Internet speeds to consumers.

The government auction, which started yesterday and continues today, includes airwaves in the 2.5-gigahertz frequency range. The winners of the spectrum will have to construct fourth-generation networks in host cities of soccer’s Confederations Cup by April 2013, according to phone regulator Anatel. More cities must be ready by the end of the next year to prepare for World Cup games.

With the airwaves, the winning companies can add services such as high-definition video to lure customers. Brazil already has 253 million mobile-phone subscriptions, more than its population, forcing carriers to move beyond voice service to expand revenue.

Telefonica Brasil SA, a unit of Madrid-based Telefonica SA (TEF), was the biggest spender in the auction yesterday, bidding 1.05 billion reais, a 67 percent premium to the minimum price, for 20 megahertz of national spectrum. America Movil (AMXL), based in Mexico City, pledged 844.5 million reais for a similar block of spectrum.

Tim Participacoes SA (TIMP3), a unit of Milan-based Telecom Italia SpA (TIT), will pay 375 million reais for a 10-megahertz block of national spectrum and for regional licenses. Rio de Janeiro- based Oi SA (OIBR4) will pay 345 million reais, also acquiring a 10- megahertz national swath and regional licenses.

New Competition

All four carriers assumed obligations for increasing coverage in rural areas as part of their 4G airwave acquisitions.

The companies will face new competition in some markets. Billionaire investor George Soros’s Sunrise Telecomunicacoes Ltda., which offers pay-TV service in parts of Sao Paulo state, spent 19.1 million reais for airwaves in the same area. Sky Brasil Servicos Ltda., a unit of El Segundo, California-based DirecTV (DTV:US), also acquired regional spectrum, in states including Sao Paulo and Rio de Janeiro, for 90.6 million reais.

The airwaves acquired by Sunrise and Sky were for fixed- wireless spectrum, meaning they will offer services such as Internet access for a specific location rather than for mobile use over a wide area.

The government will miss its forecast for 3.85 billion reais in proceeds from the auction because of lower-than- expected demand for spectrum to be used for fixed-wireless Internet access, Anatel President Joao Rezende said yesterday in Brasilia.

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: Nick Turner at nturner7@bloomberg.net


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