Brazil’s auction of LTE spectrum produced no surprises as the country’s largest operators secured spectrum assets in the 2.5 GHz band designed for the rollout of mobile broadband services. Brazil’s regulatory body Anatel noted that carriers bid a total of $1.314 billion (R$2.72 billion) for licenses, which was on average a 34.4% premium over set minimum prices.
Anatel did note that the 450 MHz licenses up for bid, which were designed to improve rural coverage, did not garner bids on its own. The government regulator moved to included those licenses with the 2.5 GHz licenses that did receive attention.
Telefónica’s Vivo and América Móvil’s Claro each secured 40 megahertz of spectrum, while Telecom Italia’s TIM and Oi, which is part-owned by Portugal Telecom, each snared 20 megahertz of spectrum. “The auction has split the operators in two different groups, with Claro and Vivo clearly willing to pay the price to get the best spectrum, with TIM and Oi getting the lower capacity bands. This might hint at how aggressively each operator will invest in 4G, with the Mexican and Spanish groups taking the lead and gaining more flexibility with 20MHz bands. For pay-TV operators, the auction opened up the possibility of increasing their portfolio by adding broadband, but, without national coverage, they will only have a limited impact on the market,” noted Ari Lopes, principal analyst at Informa Telecoms & Media.
Vivo paid $507 million (R$1.05 billion), a 66.6% premium, to secure its 40 megahertz of spectrum in Band X, and will have to deploy telecom services in rural areas of Minas Gerais state, and throughout the countryside of São Paulo state and the Northeast region, with the exception of Bahia and Maranhão.
Claro paid $408.4 million (R$844.519 million), a 34% premium, for 40 megahertz of spectrum in Band W as well as spectrum in the 450 MHz band. Claro will be responsible for deploying telecom services across rural areas of the states of Amazonas, Acre, Amapá, Bahia, Maranhão, Pará, Rondônia, Roraima, Tocantins and metropolitan areas of São Paulo.
Oi picked up a pair of licenses in the 2.5 GHz band for $159.84 million (R$330.85 million), a 5% premium over the minimum price. It was the lowest premium paid among carriers for licenses with national coverage. In addition to the 2.5 GHz band, Oi picked up licenses in the 450 MHz band and must cover at least 17% of the country.
TIM paid $164.3 million (R$340 million), a premium of 7.9%, for the national sub-Band V1 and 450 MHz licenses focused on rural areas of the states of Espírito Santo, Paraná, Rio de Janeiro and Santa Catarina. TIM also picked up portions of Bands P for $16.4 million (R$34 million), looking to secure additional spectrum in areas of high demand in the cities of Rio de Janeiro, Belo Horizonte, Manaus and Belem.
The auction also included 35 megahertz of spectrum designed for fixed broadband offerings using LTE technology, with Sky securing 12 slots for $44 million (R$91 million) and Sunrise securing two slots. Sky, which has already deployed LTE services in 101 markets, gained access to spectrum covering 300 markets.
Ativa Corretora analyzed Vivo’s purchase as “marginally negative” since it has paid a high premium of 67% over the minimum value of the acquired range, but without the obligations deployment in rural areas the North. As for Oi and TIM, Ativa noted the result were positive with reduced premiums. “In our opinion, it surprised the market estimates.”
The bidding is set to continue today with bidding for Band P.
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