Telefónica to invest over US$700mn in Brazil under concession migration deal

Spain’s Telefónica is expected to invest 4.5bn reais (US$730mn) in broadband and fiber networks in Brazil as part of a deal to migrate its fixed telephony concession to a private regime known as authorization, according to market sources.

The company, the country’s second-largest fixed-line operator and leader in mobile telephony via its Vivo brand, had been negotiating the terms of the end of its concession with regulator Anatel, as well as with the federal audit court TCU and Brazil’s communications ministry.

The migration, which unlocks investments in services such as broadband rather than unused public payphones, for example, was permitted after a change in the country’s general telecommunications framework in 2019. 

In November, Oi, another fixed-line concessionaire, saw its concession migration agreement concluded. In the case of Oi, the process will free up 5bn reais in new investments.

Telefónica signed its deal, formally known as a self-composition agreement, on Monday, it said in a market disclosure. Now the telco is expected to conclude the migration through the signing of a single term of authorization to be issued by Anatel.

The 4.5bn reais committed by the company encompass the construction of fiber networks in 121 municipalities, the maintenance of fixed telephony in cities where there are no competitors until 2028 and the construction of mobile networks in 649 locations, among other things.