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Latam Wrap-Up: Telecom Italia’s future in Brazil, Argentina; data center boom

by Roberta Prescott
written by Roberta Prescott Share
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When Spain-based Telefónica announced plans to bolster its stake in the Telco holding company, which controls about 22% of Telecom Italia, it started a huge discussion in Brazil and Argentina’s telecom markets about what would happen to TIM in Brazil and Telecom Argentina, which are both controlled by Telecom Italia.

Members of the Brazilian regulatory agency Anatel told RCR Wireless News at a Telcomp Seminário event in São Paulo last week that at the moment, everything remains the same since Telefónica didn’t increase its voting shares. If this scenario changes—and Telefónica has noted it intends to raise its stake—then there could be potential regulatory hurdles.

One telecom lawyer said there wouldn’t be any problem if Telefónica acquired TIM, but the telco would encounter some regulations, such as giving spectrum back (also there would be some technical difficulty determining the number of customers both companies would have together). Brazil currently has 267 million mobile lines. Telefónica’s Vivo leads with 76,588,945 accesses followed by TIM with 72,677,853.

Another issue is getting approval from Cade (Administrative Council for Economic Defense), which might not allow the top ranked carrier to take over the second ranked carrier.

A Macquarie Capital analyst believes that Telefónica intends to have its Vivo subsidiary bid on the majority of TIM’s assets while Oi and Claro buy the required divestitures.

Data center boom—The region received a boost from data center companies that launched new installations last week. Equinix’s Alog has opened a second data center in Rio de Janeiro. Known as RJ2, the new site will enable Equinix to meet strong customer demand for data center services in the rapidly growing region. Equinix noted that 2014 and 2016 represent significant milestones for Brazil. RJ2 currently has capacity for 320 cabinets. With an additional U.S.$36 million invested in the next two phases of construction, it will grow to 1,170 cabinets.

Portugal Telecom (PT) launched a data center in the Portuguese town of Covilhã following a €90 million investment in the project that will create 1,400 jobs. The launch impacts Brazilian carrier Oi, in which PT owns a stake. PT focuses on providing cloud computing services and is using Oi’s SmartCloud offering to enhance its presence in the country.

IBM announced a planned investment of U.S.$17 million for a new data center in Bogota, Colombia to expand cloud computing and big data services. IBM had already invested $8 million in a Colombian data center in 2011.

Movistar Chile—The Chilean unit of Telefónica is investing U.S.$1.25 million this year to strengthen fixed and mobile networks aiming to double its capacity. To date, the company has implemented 65% of the total planned investment for this year. The carrier forecasts investing a similar amount next year. Movistar is investing in a national LTE launch, TV streaming services called Movistar Play, Internet via satellite and network expansion.

More news from Latin America:

Be sure not to miss what’s happening in Latin America’s wireless markets. Check out RCR Wireless News wrap ups.

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Editor, [email protected] Roberta Prescott is responsible for Latin America reporting news and analysis, interviewing key stakeholders. Roberta has worked as an IT and telecommunication journalist since March 2005, when she started as a reporter with InformationWeek Brasil magazine and its website IT Web. In July 2006, Prescott was promoted to be the editor-in-chief, and, beyond the magazine and website, was in charge for all ICT products, such as IT events and CIO awards. In mid-2010, she was promoted to the position of executive editor, with responsibility for all the editorial products and content of IT Mídia. Prescott has worked as a journalist since 1998 and has three journalism prizes. In 2009, she won, along with InformationWeek Brasil team, the press prize 11th Prêmio Imprensa Embratel. In 2008, she won the 7th Unisys Journalism Prize and in 2006 was the editor-in-chief when InformationWeek Brasil won the 20th media award Prêmio Veículos de Comunicação. She graduated in Journalism by the Pontifícia Universidade Católica de Campinas, has done specialization in journalism at the Universidad de Navarra (Spain, 2003) and Master in Journalism at IICS – Universidad de Navarra (Brazil, 2010) and MBA – Executive Education at the Getulio Vargas Foundation.

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