--Four major telecommunications operators purchase 4G mobile
high-speed data licenses
--Companies bid a total of BRL2.6 billion for new spectrum
--Licenses with greatest capacity attract highest premiums
By Matthew Cowley
(Updates with comments from major telecommunications operators
and further details throughout)
SAO PAULO--All four major telecommunications companies in Brazil
on Tuesday secured new licenses to offer mobile high-speed Internet
services, paying prices that were largely in line with
expectations.
The Brazilian government wants the winners of the bidding to
launch 4G services in some of Brazil's major cities in time for the
Confederations Cup soccer tournament to be held in mid-2013.
Critics have argued that Brazilian telephone companies are still
rolling out 3G networks, so the sale of 4G licenses are an
additional and unnecessary burden.
On Tuesday, the operators all noted the significance of the
auction.
"It's an important day for telecommunications in Brazil," said
Mario Girasole, regulatory affairs director at TIM Participacoes SA
(TIMP3.BR, TSU), a unit of Italy's Telecom Italia SA (TI, TIA,
TIT.MI). "It's significant that the operators want to invest."
TIM bought 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% over the minimum price set by Anatel.
In a telephone interview, Girasole said there's a balance
between price and capacity, as more spectrum requires more
investment. In TIM's view, the additional cost of the extra
capacity available in the other licenses wasn't attractive, he
said. Moreover, the block which TIM purchased includes some
commitments to rural data services, which ties in with the firm's
existing licenses, he said.
The telecom operators will have to work together to share
infrastructure, so as to be able to reduce the cost of installing
4G technology, Girasole said. "There's no point in duplicating four
4G networks," he said.
The two nationwide licenses with the most capacity on offer were
sold for the highest premiums.
Telefonica Brasil SA (VIV, VIV4.BR), of Spain's Telefonica SA
(TEF, TEF.MC), won one of the licenses with a bid of 1.1 billion
Brazilian reais ($533 million), a premium of 75% over the minimum
price, while Claro, of Mexico's America Movil SA (AMOV, AMX,
AMX.MX), paid BRL845 million, or 34% over the minimum price.
The president of Claro, Carlos Zenteno, said more spectrum
capacity would allow it to provide faster data speeds, according to
the Convergencia Digital website.
"Those that bought just [20 Mhz] will be able to offer [speeds]
of 40 megabytes per second. In our case, with [40 MHz], we will
achieve up to 100 Mbps. That's why we think this block is so
important, the best for our strategy."
Antonio Carlos Valente, president of Telefonica Brasil, said in
a statement that the company had "achieved its goal" with the
purchase.
Oi SA (OIBR, OIBR4.BR) paid BRL331 million, a premium of 5%, 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, in a statement. Oi is investing a total of BRL24
billion through 2015, including BRL6 billion this year, the company
said.
Write to Matthew Cowley at matthew.cowley@dowjones.com