Regulatory changes in Brazil may allow converged operators to scrap their support for loss-making assets and invest the savings in expanding their 4G offerings.
Currently, operators are unable to simply abandon underperforming infrastructure in many of Brazil’s service areas, with Oi and Telefonica’s Vivo in particular having significant underused fixed liabilities. The operators are unable to divest abandoned real estate, and are also obliged to maintain little-used public telephones.
Now, regulator Anatel is considering an overhaul of the regulations enforcing this situation. This would allow operators to reduce their expenditure significantly, providing them extra cash to invest in more profitable 4G infrastructure.
The regulatory obligations have been a major factor preventing troubled operator Oi from investing overseas, which has contributed to its ailing fortunes. Prior to reaching a debt restructuring deal with its creditors at the end of last year, Oi had been the subject of interest from both China Telecom and China Mobile.
The market may soon have a new entrant in the mobile space with the news that AT&T is considering acquiring spectrum in Brazil to launch a mobile service alongside its Sky Brazil TV offering.