Brazil’s Surf cleared to issue US$170mn in bonds for telecom infra projects

Brazil’s communications ministry has cleared ICT group Surf Tech, sister company of Surf Telecom group, to issue up to 925mn reais (US$170mn) in debentures (special infrastructure bonds) for investments in fiber telecom infrastructure projects in nine states.

The projects involve the deployment of fiber networks and related data transport infrastructure in Tocantins, Goiás, Mato Grosso, Mato Grosso do Sul, Paraná, Santa Catarina, Rio Grande do Sul and São Paulo states, in addition to the federal district of Brasília.

Last year, Surf Telecom obtained permission to issue up to 500mn reais in debentures for projects in São Paulo and Rio de Janeiro states.

Debentures are special infrastructure bonds that have become popular among investors because they come with tax breaks.

Financing via such bonds has been commonplace for years in the logistics, energy and sanitation sectors, and a regulation in 2020 authorized telecom operators to use this instrument too.

Companies in the sector can use the paper to finance network access projects (user connection), transport networks (fiber backbone and backhaul), satellite communications systems, underwater cables, datacenters, virtualization projects and 5G networks, among others.

According to the communications ministry, 14 debenture-financed projects were approved in 2021, exceeding total investments of 13.5bn reais.