MIAMI – A ruling by Brazil’s telecom officials is expected to tee up a multi-billion bonanza in capital spending on telecom networks.
Anatel, Brazil’s equivalent of the U.S. Federal Communications Commission, last week barred all but one of the nation’s service providers from adding new subscribers until they showed plans to boost spending on their networks. The ruling came in the wake of extended network outages in many cities, lasting as long as a week in some cases.
One carrier, TIM Brazil, was quick to publically pledge it will double its capex spending to US$221 million through 2014, according to a Reuters report. A Brazilian regulator estimated the ruling will boost total annual telecom spending in the country to about US$12 billion, up from about US$8.5 billion today.
“Alcatel-Lucent, Ericsson, every switch maker and every telecom system provider is salivating over this situation—it’s going to be whirlwind for half a year,” said James Artimez, vice president of sales in South and Central America for Accedian Networks, a maker of telecom systems for Carrier Ethernet networks.
Representatives of both soccer’s World Cup and the Olympic committees also have been putting heat on Brazil as the country gears up to host games in 2014 and 2016, respectively.
“Carriers here haven’t spent enough money on network expansions for a long time,” said Artimez, a native of Brazil, speaking at the NetEvents conference here.
That’s not been for a lack of size or growth. Brazil’s smallest carrier is said to have 67 million subscribers, and previous to the Anatel ruling the country’s service providers added 1.18 million subs in a single month.
“They were bragging about it when the networks started crashing,” said Artimez.
The growth comes despite high prices for fashionable smartphones. The Apple iPhone is said to cost more than US$2,000 in Brazil. Alternatively, consumers can cash in points from carrier loyalty programs to get a free iPhone, but earning enough points can require spending the equivalent of $20,000 on telecom services.