Brazil looks to boost revenue, ease rules in 4G auction -source
By Leonardo Goy
BRASILIA, March 6 (Reuters) - Brazil is considering ways to push up the cost of wireless broadcast permits in exchange for accepting worse coverage, a government source told Reuters on Thursday, highlighting the tradeoffs that may be required to hit a tough fiscal target.
Treasury officials have pushed regulators to ease coverage requirements or offer fewer permits in an August auction of next-generation (4G) cell spectrum, the source said. New rules could boost the minimum price of permits to between 12 billion and 15 billion reais ($5.2 billion and $6.5 billion) from 6 billion reais.
"When you set requirements the auction price falls, because you swap money that would go to the treasury in exchange for investment in better service. Removing obligations ... the auction raises more money," said the source, who spoke on condition of anonymity because the discussions are ongoing.
Authorities at the treasury and the communications ministry did not immediately respond to requests for comment. Brazil's telecommunications regulator Anatel declined to comment.
The possible tradeoff underscored the lengths to which President Dilma Rousseff may need to go in order to meet a strict budget target she has set as she prepares to seek re-election in October. Brazil's looser fiscal policy and reliance on one-time revenues have drawn fire from investors, who also complain about unpredictable rules for concessions.
For the country's big phone companies, missing out on the next round of permits could hurt the value of 4G investments they have already made and discourage future capital spending.
Brazilian telecom companies are already struggling to sustain profitability in the face of a sluggish economy and heavy investments to roll out 4G coverage and build out pre-existing networks ahead of the soccer World Cup in June.
Telefonica Brasil SA, the local unit of Spain's Telefonica, is the country's biggest wireless carrier and leading 4G provider. TIM Participações SA, a unit of Telecom Italia, is Brazil's second-largest mobile company. Mexican tycoon Carlos Slim's America Movil and Grupo Oi SA, which is in the process of merging with Portugal Telecom, are also major players in Brazil. Continuación...