Brasil raised $2.9 billion from 3G auctions

Brasil raised $2.9 billion from 3G auctions

Telecom groups paid a 90 percent premium over the minimum price to acquire third-generation (3G) operating licenses in Brazil, one of the world's fastest-growing large mobile phone markets, authorities said on Thursday. The government sold 44 licenses in 11 different regions. International and domestic operators paid a total of 5.3 billion reais ($2.94 billion) compared with the asking price of 2.8 billion reais for licenses to provide 3G mobile telephony, the National Telecommunications Agency, Anatel, said.

Third-generation mobile telephony allows operators to offer more advanced services, such as videoconferences, via cell phones. Operators should invest more than 4 billion reais to implement 3G in Brazil, Anatel said. Analysts expect the number of cellular phone users to increase to 131 million at the end of 2008 from 116 million in November. The market has been growing annually by about 17 percent.

Prices were considered to be extremely high, but the potential revenue "will more than compensate the investment," said Carlos Constantini, a telecom analyst at local bank Unibanco. The price for the first region, which included Rio de Janeiro, was elevated by aggressive bidding from telecommunications firm Nextel, which didn't win a license but forced Vivo, Tele Norte Leste Participacoes, or Oi, TIM and Claro to compete harder. The investments needed in 3G networks will only see returns in the long term, warned Luciano Leocadio, telecom analyst at the local Ativa brokerage firm.