Brazil assigned frequencies on Tuesday for next-generation wireless broadband coverage required for the 2014 World Cup, racing ahead with forth generation (4G) cell service in host cities even as coverage for older technologies lags in the rest of the country.
Anatel president João Rezende said the results exceeded expectations, with carriers such as Telefonica Brasil, the Brazilian unit of Telefonica (Madrid) paying as much as two thirds more than the minimum bids in the auction. Shares of Telefonica Brasil rose 1.4% on Tuesday, less than the 1.9% advance of the benchmark Bovespa stock index.
Locally-listed rivals Grupo Oi (Rio de Janeiro, Brazil) and TIM Participacoes (Rio de Janeiro, Brazil) rose 3.5% and 4.5%, respectively, after they won licenses at a much slimmer premium.
Wireless company Claro, a unit of Mexican tycoon Carlos Slim's America Movil (Mexico City, Mexico), also won a slice of 4G spectrum.
The licenses came with obligations of minimum investments to provide 4G coverage in host cities for the Confederations Cup next year, a dress rehearsal for the World Cup in 2014.
Winners of the auction were also required to assume responsibility for providing less-profitable rural broadband service, a policy priority for President Dilma Rousseff.
The licenses stipulated at least 60% Brazilian content in hardware for the new frequencies, a requirement challenged by the United States and the European Union at the World Trade Organization.
The accumulated obligations associated with the new 4G spectrum led some in the industry to question whether additional costs would ultimately end up in the bill paid by users of the new technology. But bidding at the auction suggested the full range of carriers would be competing for customers.
Still, analysts and executives say the biggest challenge for wireless carriers in coming years is not providing cutting-edge 4G service, but rather bolstering coverage of third-generation technologies that remain spotty in much of the country.
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