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Brazil’s 4G auction underwhelms as Oi abstains

Brazil’s auctions for 700MHz 4G spectrum failed to generate the expected amount of revenue after one of the country’s nationwide operators abstained from bidding.

Integrated operator Oi - the Brazilian number four - did not participate in the auctions, possibly due to its considerable debts. The combined bids amounted to BRL5.85 billion ($2.39 billion), well below the target of BRL8 billion.

The three remaining major operators – America Movil, Telefonica Brasil and Telecom Italia’s TIM Participacoes – all won licences despite their bids only slightly exceeding the minimum price stipulated by regulator Anatel.

However, by obtaining licences the winning bidders have also accepted responsibility for sorting out interference in the 700MHz band. The winners will also be required to compensate the TV broadcasters that currently use the airwaves.

Since one 4G licence remains unsold, Anatel will contribute to the financial commitment assumed by the winning bidders by refunding some of the licensing fees. According to Anatel head Joao Rezende, this would amount to a sum of around BRL850 million – meaning that in practice the auctions had only raised BRL5 billion.

Oi’s abstinence from the auction could be linked to reports that it is planning a bid for Telecom Italia’s 67% stake in TIM Participacoes, in partnership with America Movil and Telefonica. However, while the three operators were believed to be planning a BRL30 billion bid for the stake, they were reportedly keen to reach an agreement before the auction.

 

 

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