Claro, Vivo and Tim win auction of main 5G tracks

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The largest mobile phone operators in the country, Claro, Vivo and Tim, won the main ranges of the 5G auction held this Thursday (4) by Anatel (National Telecommunications Agency).

Together, these companies will pay R$6.8 billion in grants to the Union. Licenses in the frequencies of 700 MHz (megahertz) and 2.3 and 3.5 GHz (gigahertz) were purchased. Anatel decided to leave the batches in the 26 GHz band for Friday (5). Frequencies are avenues in the air through which telecoms make their signals travel.

The government’s expectation is to collect, at most, R$ 9 billion with the auction in all frequency bands. They were valued at R$49 billion by Anatel, but the notice imposed mandatory investments (approximately R$40 billion) for up to the next 20 years, which will be deducted from the price of the licenses. The difference will go into the treasury box.

The event confirmed the expectation that large operators would get the 3.5 GHz (gigahertz) frequencies, the so-called “filet mignon” of 5G with national coverage, a range that will allow speeds up to one hundred times faster than those of 4G .

This frequency was separated into four batches – one of them did not receive a proposal. The expectation at Anatel is that 80% of the frequencies will be auctioned, which would lead the agency to, in the future, carry out a new round of auctions with the leftovers.

The lack of interest in the fourth 3.5 GHz block is explained by the absence of Oi, which sold its mobile arm to the three competitors (Claro, Tim and Vivo). The deal is awaiting analysis by Cade (Administrative Council for Economic Defense) and Anatel.

Claro won the first lot for R$ 338 million. Vivo’s offer for the second slice was R$420 million. Tim, in turn, won the third lot for R$351 million.

At the 700 MHz (megahertz) frequency, which allows the expansion of 4G networks, the first batch marked the entry of the Patria fund into telephony. He bought the 700 MHz frequency with national coverage, offering a bid of R$ 1.4 billion, with a premium of 805.8%.

As the winner of this lot, Patria will have to take 4G to more than 1,100 stretches of federal highways.

There is an expectation that the fund will not create an operator like the big three, but act as a supplier, including for small providers.

The auction continued with the opening of lots with regional coverage in the 3.5 GHz band. There was a dispute for blocks in the Northeast and South regions.

In the Northeast, the company Brisanet won the dispute with a bid of R$ 1.25 billion, a premium of 13,741.7%. It will be able to offer 5G throughout the region. The group, based in Ceará, also took 3.5 GHz frequencies to cover the Midwest region.

In the southern region block, there was an intense dispute between the 5G Sul Consortium, formed by União Copel (an affiliate of Sercomtel) and Unifique (an operator that serves Santa Catarina and Rio Grande do Sul), and Meganet. After 15 bids, the 5G Sul Consortium won with an offer of R$73.6 million, recording a premium of 1,454.74%

Cloud2U became a new telephone company by winning the lot that covers Rio de Janeiro, Espírito Santo and Minas Gerais with a bid of R$ 405 million, a premium of 6.266%.

Algar took the last regional lot covering the Minas triangle and parts of Mato Grosso do Sul and Goiás, areas already served by the company as a fixed telephony concessionaire. The company offered R$ 2.35 billion, a premium of 358.5%.

Of course, Brisanet and Vivo bought lots smaller than 2.3 GHz, paying, in total, R$ 1.4 billion for the licenses.

Included in the PPI (Investment Partnership Program), the 5G auction will reinforce the list of concessions made in the government and will be used by Jair Bolsonaro (non-party) as a political platform during the campaign for re-election in 2022.

By July 2022, fifth-generation telephone service should be available in all national capitals.

The government insisted that this schedule be maintained even with a slight delay in the approval of the notice.

The Minister of Communications, Fábio Faria (PSD-RN), pressured Anatel (National Telecommunications Agency) and the TCU (Court of Accounts of the Union) so that the analysis of the rules of the notice could be done in time for the auction to take place this year. —and already over a year late. The initial idea was for the auction to be held at the end of last year.

Another requirement of the minister, taken over by President Bolsonaro, was the technological standard to be imposed on the new networks.

Operators intended to use the current networks (4G and 3G) by adding 5G equipment on top of them, but Anatel, under the guidance of the ministry, imposed a more modern standard, the so-called “release 16”, which requires the construction of networks that are totally independent from the current ones. dedicated exclusively to 5G.

Bolsonaro even said publicly that only with this network will it be possible to stimulate the economy through new applications, such as telemedicine (with remote care and surgery, for example), guided cars, intelligent factories and fully connected crops.

These modalities should increase not only the economy’s productivity but also generate more wealth. Consultants specializing in telecommunications estimate that the GDP (Gross Domestic Product) of Brazil could grow up to R$ 6.5 trillion over three decades if the 5G is implemented in its most modern version.

Bolsonaro, who has so far failed to deliver most of the promised structural reforms, is experiencing problems in conducting the pandemic and is suffering from a drop in popularity, is looking for good news to try and make his re-election viable — the arrival of 5G is one of them.

Much of the delay in the auction, however, is due to the government itself, which threatened to impose restrictions and even ban China’s Huawei from the construction of 5G networks.

This was because Bolsonaro strategically aligned himself with former US President Donald Trump, who entered a geopolitical war with China.

One of the chosen targets was Huawei, the largest telecommunications equipment manufacturer in the world. At that time, imposing a sanction of this magnitude —as happened in some partner countries of the USA— would mean forcing operators to change practically the entire park of antennas and equipment in use.

That’s because 5G devices from other manufacturers don’t talk to Huawei’s 4G and 3G devices. The telecoms calculated a delay of at least three years to carry out this exchange at a cost of at least R$100 billion, an amount that would have to be compensated by the government.

The solution found by Minister Fábio Faria was to determine that the winners of the auction should build a private network for the federal public administration. In this network there would be no Chinese equipment.

Another measure was to make investment in the connection of the Amazon region mandatory, a project defended mainly by the military of the government’s ideological wing. The GSI (Institutional Security Office) was one of the most resistant to Huawei’s participation in the domestic market.

Currently, the Chinese company is present in practically all operators. It dominates over 80% of this market.

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