Telecom giants shell out $1.27 bln in first day of Brazil's 5G auction (updated)

Telefonica Brasil, SA

04/11/2021 12:55

(Updates with latest results)
    By Gabriel Araujo and Alberto Alerigi
    SAO PAULO, Nov 4 (Reuters) - Local units of America Movil,
Telefonica, Telecom Italia and a number of local firms spent
well over a billion dollars on Thursday in order to scoop up
valuable spectrum dedicated to fifth-generation (5G) wireless
technology in Brazil.
    The auction, the largest ever in Latin America's top
economy, will require some 40 billion reais ($7.14 billion) of
investments by the winners, the government has predicted.
    On the first day of the auction alone, seven companies spent
a total of 7.09 billion reais ($1.27 billion) for spectrum
rights throughout Brazil.
    Claro, owned by Mexican billionaire Carlos Slim's America
Movil SAB de CV  AMXL.MX , was the biggest spender, paying 1.63
billion reais for several batches, including the B1 batch of 3.5
GHz spectrum, for which it paid 338 million reais, and the 2.3
GHz E3 batch, which it won with a bid of 750 million reais.
    Spain's Telefonica SA  TEF.MC , which runs Brazil's largest
wireless carrier under the Vivo brand  VIVT3.SA , spent roughly
967 million reais, winning the B2 batch of 3.5 GHz spectrum with
a 420 million reais bid, among several other batches.
    TIM SA  TIMP3.SA   TIMS3.SA , a unit of Telecom Italia SpA
 TLIT.MI , scooped up the B3 batch of 3.5 GHz for 351 million
reais, along with several other batches, which brought its total
payout so far to roughly 976 million reais.
    Winity II, owned by Brazilian asset manager Patria
Investimentos, won a batch in the 700 MHz bandwidth with a 1.4
billion reais bid.
    Brazilian internet service provider Brisanet Participacoes
SA  BRIT3.SA , which went public in July, won the C4 batch in
the 3.5 GHz regional coverage band with a bid of 1.25 billion
reais, making it the second biggest spender on Thursday.
    The long-awaited auction was delayed by differences over the
involvement of China's Huawei Technologies Co Ltd as a supplier
of 5G telecom equipment, which the United States had pressed
Brazil's far-right government to ban on security grounds.
    After a compromise aimed at shielding government
communications, Brazil moved ahead with the tender of four
broadcast bands: 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz. 
    Industry groups have long anticipated the chance for Brazil
to catch up on 5G technology, allowing greater efficiency and
automation in fields from healthcare to agribusiness. However,
slow local licensing for new antennas across the country may
drag on the rollout of the new wireless coverage.
    The telecom infrastructure sector expects Brazil's 5G
network to generate new business opportunities worth over $1
trillion over 15 years and create 1.5 million jobs in four
years, said Vivien Suruagy, head of a federation of 137,000
companies.    
    Brazil's main wireless firms already use Huawei for more
than half of their networks and argued that banning Huawei would
add billions of dollars in additional costs that would be passed
on to consumers.
    Instead, President Jair Bolsonaro's government decided to
build a separate network for itself and all federal agencies,
from which Huawei will effectively be excluded. The government
stipulated that bidders must comply with the governance rules of
publicly listed companies, which Huawei does not.
    Brazilian telecom regulator Anatel expects to resume the
auction on Friday, when it should offer the 26 GHz bands.
    ($1 = 5.58 reais)

 (Reporting by Alberto Alerigi and Gabriel Araujo
Writing by Anthony Boadle and Gram Slattery Editing by Chizu
Nomiyama, Mark Potter and Richard Pullin)
 ((anthony.boadle@tr.com +55 61 98204-1110;  https://twitter.com/anthonyboadle
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