Bloomberg News

Brazil Raises $1.4 Billion in 4G Wireless Auction

June 13, 2012

Brazil’s government raised 2.93 billion reais ($1.4 billion) from an auction of wireless airwaves as the nation’s top four mobile-phone carriers bought up assets to offer faster Internet speeds to consumers.

Brazil’s telecommunications regulator, known as Anatel, expected to raise 3.85 billion reais if it had sold all 269 frequencies. The average premium paid for the 54 frequencies sold in the auction was 31 percent, Joao Rezende, president of Anatel, told reporters in Brasilia today.

The auction, which started yesterday and ended 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, according to Anatel. More cities must be ready by the end of the next year as Brazil prepares to host the soccer World Cup in 2014.

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 services to expand revenue.

America Movil (AMXL) SAB, based in Mexico City, bought 19 regional 4G frequencies for 144.3 million reais today. Tim Participacoes SA (TIMP3), a unit of Milan-based Telecom Italia (TIT), paid 42.2 million reais for six regional 4G frequencies today and yesterday, while Rio de Janeiro-based Oi SA (OIBR4) paid 68.9 million reais for 11 regional frequencies.

National Spectrum

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 pledged 844.5 million reais for a similar block of spectrum.

Tim Participacoes yesterday also pledged to pay 340 million reais for a 10-megahertz block of national spectrum and Oi said it will pay 330.9 million reais to get a 10-megahertz national swath.

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 2 airwaves in the same area. Sky Brasil Servicos Ltda., a unit of El Segundo, California-based DirecTV (DTV:US), also acquired 12 regional spectrum, in states including Sao Paulo and Rio de Janeiro, for 90.6 million reais.

Fixed-Wireless

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.

Anatel President Joao Rezende said yesterday that it 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.

“The result of the auction gave evidence that the market is attractive and growing,” Rezende said today.

The agency will consider selling the frequencies that are left when it auctions wireless airwaves of 3.5 gigahertz, which may take place this year or next, Rezende said.

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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