Telefónica to bid against Claro, TIM and 12 other competitors in Brazil in final 5G auction

RIO DE JANEIRO, BRAZIL – The Brazilian government will auction national and regional lots in four frequencies: 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz, expecting to raise R$49.7 billion (US$8.78 billion).

Telefónica, which has Vivo as its mobile company in Brazil, will bid against its two main competitors, Claro and Telecom Italia (TIM), as well as local operators and investment funds.

Completing the list of bidders are Algar Telecom, Brasil Digital Telecomunicações, Brisanet, Cloud2u, Consorcio 5G, Fly Link, Mega net, Neko, Nk 108, Sercomtel, VDF and Winity II Telecom.

Telefónica Brasil CEO Christian Gebara, stressed last week at the company’s analysts conference that this is a “big auction” with many different lots and configurations, so it is difficult to know who will bid for what.

However, the executive stressed that Telefónica is in a “solid position” due to the high investment required and the company’s market standing, which will create synergies that will facilitate the Spanish operator’s deployments.

A NEW COMPETITOR?

With the avalanche of participants, one of the points raised is the entry of a new local competitor in the mobile segment. Traditionally, the Brazilian market had 4 major operators, Oi, Claro, Telefónica (Vivo) and TIM, until Oi declared bankruptcy and the 3 competitors won the auction of its assets.

The Economic Defense Administration Council (CADE), the Brazilian competition authority, has extended its investigation on the Oi takeover for another 3 months.

In this respect, Brazil’s Superintendent of Competition and president of the commission that organized the auction, Abraão Balbino e Silva, assured last week that after the auction there would be a “great possibility” of a new operator in Brazil.

For Balbino e Silva, increased competition means greater consumer choice. “We all win,” he said in a statement published by the auction organizers after the bidders were announced.

TELEFÓNICA BRASIL

At the close of September, Telefónica Brasil posted its best mobile customer record since the second quarter of 2015 with 82.3 million. The company grossed R$3.602 billion through September, 3.56% more than last year.

In addition, with R$6.346 billion invested in Brazil in the first 9 months this year, the operator has taken several steps in the run-up to 5G.

First, it closed a RAN (radio access network) sharing agreement with TIM, which will allow them to shut down their 2G networks and expand 4G coverage to 716 cities (460 for each operator). The pilot tests have been completed, the systems are progressing as planned, and the company expects to have the technical solution completed by the end of the year.

Secondly, Telefónica has prepared an initial launch of 5G DSS (sharing spectrum with 4) in 8 large cities in Brazil, and provides 4.5G coverage in 2,383 cities, 718 more than the previous year. The company has increased its fiber network by 90% reaching locations in the 50 largest cities in the country and is contemplating potential savings through network sharing agreements with other operators.

In the fixed segment, the company has raised its deployment targets to 29 million homes with fiber by 2024. To this end, Gebara said he was open to new alliances to expand this technology, in addition to existing partnerships in Brazil with American Tower and Caisse de dépôt et placement du Québec (CDPQ).

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