- At least there could be if the government eventually sets a date for a spectrum auction
- Another delay means that the auction probably won’t happen until early 2021
- By that time Trump will likely be safely out of the way
For the last year the industry has been lip-licking over the 5G driven investment prospects in Brazil as the government there prepared to auction spectrum and issue licences. In fact the looming Brazilian spectrum auction was thought likely to be the biggest ($$) ever held with multiple frequencies going on the block at one time.
That auction was originally intended to take place in March this year, was then delayed to later in 2020 and now best estimates set the likeliest time frame as early in 2021.
That has come as an extreme annoyance to the companies lining up to invest in service providers or infrastructure there - in particular for Nokia and Ericsson.
Quite why the auction has been delayed remains uncertain. The Financial Times, which reported the latest delay, has pointed out that it could cost the country billions in lost taxes and spectrum revenues.
Certainly the market has been experiencing turbulence. As one example, we reported in September last year that a major operator, Oi, might be planning to sell off its mobile arm to free it up (and provide some ready cash) to double down on its fibre access market which isn’t in the best of health.
With 5G looming you might think that Oi would be keen to participate and win spectrum in the hope of sparking some growth. On the other hand, 5G costs are huge and its benefits are unlikely to materialise for several years. If 5G competition were to be fierce in Brazil and 5G itself was unable to live up to its huge expectations, that could be a death sentence for Oi if it chose heavy investment in 5G over consolidating its long-term position in fibre.
So why the delay exactly? The FT posited the reasonable theory that the Brazilian government had come under heavy pressure from the US to exclude Huawei from the 5G build and had decided to delay and avoid trouble.
The problem for the government is that it is also under heavy pressure from the Chinese to include Huawei and that seems to be influencing the Brazilian government most. The FT reports that the Brazilian vice president, Hamilton Mourão, has voiced support for Huawei on the basis that it had already worked “with many companies and Brazilian universities, so this topic [whether or not to exclude the Chinese vendor] is already closed.”
A Rock and a hard place
The best thing politically in these circumstances would surely be a delay, preferably a fuzzy one that could be moved even further back as circumstances and pressures changed. After all, the world is hoping that an already impeached Trump is unlikely to be re-elected. Once he’s out of the way by early 2021, it should be safe to say ‘yes’ to Huawei and fire up the auction without risking damaging retribution from the incoming US administration.
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