Brazilian LTE spectrum bonanza fizzles

City coverage by 2016.

The Brazilian Government has faced poor demand for newly available LTE spectrum from the country's telcos, raising significantly less revenue than expected from sale of the licenses.

It garnered $US1.4 billion during auction of 2.5GHz and 450 MHz spectrum to local competitors, substantially below initial estimates that placed the value of the radio frequencies at approximately $US2 billion.

In contrast, many expect the Australian communications watchdog to raise up to $4 bilion from the sale of digital dividend spectrum – 700 MHz and 2.6 GHz – later this year.

Brazilian telco regulator Anatel said all 269 frequency blocks across the country – amounting to 60 MHz of total spectrum – had been sold.

Among the buyers are the Brazilian arm of Spain’s Telefonica, which bought 20 MHz of spectrum nation-wide, and Mexico’s America Movil, which purchased a similar block.

However, president Joao Rezende said there was lower-than-expected demand for the spectrum, despite a growing market.

Brazil will host the next FIFA World Cup in 2014, and spectrum owners will use their frequencies to build LTE networks in the cities hosting the games.

Services such as high definition video for handheld devices with instant replays of World Cup games are expected to be popular in the football-mad country, which already counts 253 million mobile subscribers; larger than the entire population.

As part of the auction rules, bidders must commit to rolling out LTE in all state capitals and cities with more than 500,000 people by the end of 2014, with all towns of at least 10,000 citizens receiving network coverage by 2016.