Brazil govt to rake in almost US$1bn from spectrum auction

The Brazilian government will end up with almost 5bn reais (US$920mn) of the total to be paid by the winners of the 5G auction, telecom regulator Anatel said in a press conference.

The figure comprises 2.38bn reais for the minimum price established for the frequency bands plus 2.59bn reais of the premium of the winning bids that will not be converted into additional investment commitments.

The auction held last week raised 47.2bn reais in total, and according to the government was the largest for spectrum in Latin America and the second biggest for assets in Brazil's history.

Excluding the amount that goes to the government, operators will have to invest 42.4bn reais over their concession periods.

In addition to the obligations stipulated in the tender terms, the winners will have the following investment commitments, according to Anatel. The new investments were established precisely because there were premiums offered in the auction.

• 700MHz band (won by Winity, Fundo Pátria) – connect with at least 4G technology another 1,164 stretches of highways, comprising 4,367km for a total of 35,784km.

• National 3.5GHZ band (Claro, Telefônica Brasil and TIM) – deployment of optical transmission network (fiber backhaul) in an additional 27 municipalities, for a total of 530 municipalities.

• Regional 3.5GHz band (Sercomtel, Brisanet, Consórcio 5G Sul, Cloud2U and Algar Telecom) – deployment of 5G radio base stations (antennas and transmission/reception equipment) in up to 1,973 locations.

Other investments already provided for in the tender include 3.1bn reais for connectivity in schools, as part of the 26GHz band obligations, and 6.3bn reais for the cleaning up of 3.5GHz spectrum, the migration of satellite services operating on that frequency, construction of a private network for the federal government and sub-fluvial fiber networks in the Amazon.

According to Anatel, the amount owed to the government can be paid by the auction winners over the concession periods of the acquired licenses, which range from 10 to 20 years.

The decision to pay in cash or in installments is up to the winning companies, who will have a week to decide, Anatel officials said.

If all operators choose the installment plan for the longest period possible, the amount to be received by the government in the first year will be at least 240mn reais.

Anatel also set December 14 as the date to sign the spectrum authorization contracts.

The signing ceremony is expected to be attended by President Jair Bolsonaro and communications minister Fábio Faria.