Latam Wrap-Up: Telecom Italia’s future in Brazil, Argentina; data center boom

When Spain-based Telefónica announced plans to bolster its stake in the Telco holding company, which controls about 22% of Telecom Italia, it started a huge discussion in Brazil and Argentina’s telecom markets about what would happen to TIM in Brazil and Telecom Argentina, which are both controlled by Telecom Italia.

Members of the Brazilian regulatory agency Anatel told RCR Wireless News at a Telcomp Seminário event in São Paulo last week that at the moment, everything remains the same since Telefónica didn’t increase its voting shares. If this scenario changes—and Telefónica has noted it intends to raise its stake—then there could be potential regulatory hurdles.

One telecom lawyer said there wouldn’t be any problem if Telefónica acquired TIM, but the telco would encounter some regulations, such as giving spectrum back (also there would be some technical difficulty determining the number of customers both companies would have together). Brazil currently has 267 million mobile lines. Telefónica’s Vivo leads with 76,588,945 accesses followed by TIM with 72,677,853.

Another issue is getting approval from Cade (Administrative Council for Economic Defense), which might not allow the top ranked carrier to take over the second ranked carrier.

A Macquarie Capital analyst believes that Telefónica intends to have its Vivo subsidiary bid on the majority of TIM’s assets while Oi and Claro buy the required divestitures.

Data center boom—The region received a boost from data center companies that launched new installations last week. Equinix’s Alog has opened a second data center in Rio de Janeiro. Known as RJ2, the new site will enable Equinix to meet strong customer demand for data center services in the rapidly growing region. Equinix noted that 2014 and 2016 represent significant milestones for Brazil. RJ2 currently has capacity for 320 cabinets. With an additional U.S.$36 million invested in the next two phases of construction, it will grow to 1,170 cabinets.

Portugal Telecom (PT) launched a data center in the Portuguese town of Covilhã following a €90 million investment in the project that will create 1,400 jobs. The launch impacts Brazilian carrier Oi, in which PT owns a stake. PT focuses on providing cloud computing services and is using Oi’s SmartCloud offering to enhance its presence in the country.

IBM announced a planned investment of U.S.$17 million for a new data center in Bogota, Colombia to expand cloud computing and big data services. IBM had already invested $8 million in a Colombian data center in 2011.

Movistar Chile—The Chilean unit of Telefónica is investing U.S.$1.25 million this year to strengthen fixed and mobile networks aiming to double its capacity. To date, the company has implemented 65% of the total planned investment for this year. The carrier forecasts investing a similar amount next year. Movistar is investing in a national LTE launch, TV streaming services called Movistar Play, Internet via satellite and network expansion.

More news from Latin America:

• Entel Chile plans to expand the number of radio base antennas of the recently acquired Nextel Peru from the current 600 to 2,000. 
• América Móvil no longer expects the launch of the voluntary public offer in cash for all issued and outstanding ordinary shares in the capital of KPN to occur in September 2013.
• Virgin Mobile is expecting to begin its MVNO operations in Mexico next year.
• Tablet penetration in Mexico has reached 4% with 4.9 million users. In the second quarter 2013, tablet adoption grew 53 percentage points compared to the same period of 2012. 
• Starting in September, Datora Mobile, which belongs to Datora Telecom, has assumed the Vodafone Brasil brand. The company is expected to launch two M2M projects. 
• Chilean VTR is redesigning its mobile business, enhancing its focus on postpaid customers and roaming extension. 
• Changes in Nokia Brazil: Almir Narcizo is leaving the cellphone maker to assume the position of vice president at NSN Latin America. A new executive will be nominated to lead Brazilian operations.
• The three main operators in Bolivia—Entel, Tigo and Viva—have invested U.S.$330 million in Internet upgrades. 
• 4G Americas released a report noting the importance of the mobile Internet to connectivity and quality of service in Latin America. 
• Brazilian telecommunications operator Linktel has deployed the Aptilo Service Management Platform to enable and manage mobile data services across Linktel’s network of Wi-Fi hotspots. 
• ABI Research forecasts that total smart card shipments within the Latin American region will increase from 752 million in 2013 to 1.15 billion in 2018. 
• In Argentina, spectrum auction delay is hindering LTE deployment, and smartphones are fueling data traffic, according to a report from Pyramid Research.

Be sure not to miss what’s happening in Latin America’s wireless markets. Check out RCR Wireless News wrap ups.