NII Buys Brazil Airwaves for $715 Million to Fight Telefonica, Carlos Slim

Bloomberg | By Carla Simoes and Crayton Harrison  | Dec 14, 2010 11:37 AM CT
NII Holdings Inc., operator of the Nextel brand in Latin America, paid 1.21 billion reais ($715 million) in a Brazilian government auction to gain airwaves to compete with Telefonica SA andAmerica Movil SAB for users of high-speed wireless Internet.
NII won 11 of 13 lots in the auction, giving it 20 megahertz of airwaves in the 1.9 and 2.1 gigahertz bands across most of Brazil, according to results released today by telecommunications regulator Anatel. The lots include coverage of Sao Paulo, Rio de Janeiro and Brasilia.
The airwaves will double the growth potential of NII in Brazil by making the company a national competitor, Sergio Chaia, president of its Brazilian unit, told reporters today in Brasilia. The company plans to invest as much as 5 billion reais over five years on its expansion.
Tele Norte Leste Participacoes SA, Brazil’s fourth-largest wireless carrier, and Cia. de Telecomunicacoes do Brasil Central SA, the fifth-largest, each won a single lot of airwaves in less populous regions. The auction is continuing today with airwaves in other frequencies.
NII’s auction wins represent progress in its plan to begin offering third-generation services such as video downloads throughout Latin America. The company has a 3G network in Peru and is planning to build networks in Chile and Mexico, where it won airwaves in an auction that ended in July.
Larger Carriers
Larger carriers weren’t allowed to participate in bidding for many of the lots because they already have similar airwaves covering parts of the country. The carriers are eligible for the bidding on airwaves in other frequencies.
Vivo Telecomunicacoes SA, controlled by Madrid-based Telefonica, is Brazil’s biggest wireless carrier with 30 percent of the nation’s 194 million total subscribers as of October, according to Anatel.
America Movil, controlled by billionaire Carlos Slim, is second with 26 percent, followed by Telecom Italia SpA’s Tim Participacoes and Rio de Janeiro-based Tele Norte Leste.
Carriers have gravitated to Brazil, Latin America’s largest economy and biggest wireless market by subscribers, because it still offers growth even after the number of wireless lines surpassed the population in October. Subscriptions rose 15 percent in September from a year earlier, compared with growth of about 8.5 percent in Mexico, Latin America’s second-biggest economy, in the same span.
NII, based in Reston, Virginia, gained $1.03, or 2.4 percent, to $44 at 12:21 p.m. New York time in Nasdaq Stock Market trading. The shares had advanced 28 percent this year before today.
At the end of last quarter, NII had 3.1 million subscribers in Brazil, its second-largest market after Mexico, where it had 3.3 million clients.
To contact the reporters on this story: Carla Simoes in Brasilia at csimoes1@bloomberg.net;Crayton Harrison in Mexico City at tharrison5@bloomberg.net
To contact the editor responsible for this story: Francisco Marcelino atmdeoliveira@bloomberg.net
Article via Bloomberg