Anatel, under President Carlos Baigorri’s leadership, recently green-lit the sharing agreement between Winity and Vivo, a decision accompanied by stringent restrictions that might impede its implementation. The final phase of Anatel’s approval process witnessed fervent lobbying from both companies, striving to avoid proposed remedies limiting Vivo’s engagement in network sharing in cities with populations below 100,000, specifically utilising the 3.5 GHz and 2.3 GHz spectrum bands.
The profitability of densely populated areas is evident, with 90% of telecom profits in Brazil stemming from its 320 largest cities. Limiting operators in these lucrative regions could discourage them from investing in remote, less populated areas. Smaller providers lack the capital to expand into these underserved regions, amplifying the digital divide. “However, Carlos Baigorri made a very thorough market analysis.” An independent telecommunications consultant with more than 10 years of experience in government relations continued, “He listened to all stakeholders, held meetings with experts and senior executives and understood that the measure protects smaller rivals,” such as local provider Brisanet; the limitation provides an opportunity to rival larger, international players. Brisanet had anticipated rolling out 5G in 40 cities across Brazil, building on prior testing and deployment efforts.
“The disappointment with Anatel’s decision comes from the lack of options of the conditions imposed to the [Vivo-Winity] deal,” remarked the telecommunications consultant. “However, the ban on Vivo to enter into specific RAN sharing agreements [in cities with 100,000 inhabitants], makes it almost impossible for this deal to progress.” These stringent conditions might push Vivo to withdraw from the agreement, jeopardising the partnership with Winity. Even the Ministry of Communications hinted at similar concerns, as indirectly conveyed by Vivo’s CEO, Christian Gebara, during discussions at the Telebrasil Panel.
“The disappointment with Anatel’s decision comes from the lack of options of the conditions imposed to the [Vivo-Winity] deal.”
Independent telecommunications consultant, Brazil
“As one of the main sector players in Brazil, Telefónica [Vivo] always adopts a conciliatory tone with regulators in the country.” An IT business director at a leading automotive company surmised, “I don’t think it will be different on this occasion.” Despite pressure, an unanimous position among councillors emerged – while approval of the agreement seemed viable, granting Vivo an advantage in entering smaller towns through RAN sharing agreements was deemed impractical. Concerns arose regarding potential imbalances for regional operators utilising the same spectrum bands, a point heavily emphasised by Brisanet as a significant condition for the Winity-Vivo agreement’s approval.
The pivotal question revolves around Vivo’s response to Anatel’s conditions. Anatel anticipates the introduction of similar RAN sharing limitations for other national operators in the specified spectrum bands and less populated cities through the upcoming General Competition Target Plan. An Anatel source reflected, “Vivo may maintain the agreement with Winity if competitors face similar restrictions, but we cannot solely rely on that assumption.”
During the crucial vote, the Winity representative argued against upholding the condition, citing its inclusion in the newly approved General Competition Target Plan’s public consultation. However, the argument failed to sway opinions and councillors voted in favour of Alexandre Freire’s report and Moisés Moreira’s additions. While Winity emerged victorious with the agreement approved after extensive negotiations, uncertainty looms over Vivo’s response, delaying the agreement’s finalisation.
The implications of Anatel’s decision encompass multifaceted considerations. By restricting Vivo’s network sharing capabilities in smaller cities, the aim is to create a levelled playing field for regional operators. This move aims to ensure fair competition, especially for smaller players like Brisanet, fostering a more inclusive telecom landscape across Brazil. The telecommunications consultant remarked, “it is almost impossible to believe that Vivo and Winity did not have an agreement before the tender, considering that the offer was five times higher than the runner-up.”
“it is almost impossible to believe that Vivo and Winity did not have an agreement before the tender, considering that the offer was five times higher than the runner-up.”
Telecommunications consultant, Brazil
However, the potential fallout from Vivo’s response remains a concern, as it could impact the intended benefits of the Winity-Vivo agreement. “It is difficult to see how PPPs [small telecommunications companies – in Portuguese: prestadora de pequeno porte] can provide services in cities with a population below 100,000, where large operators can operate in lower margins while also counting on more resources to carry out investments in remote areas,” retorted a member of a leading automotive company that has a 5G partnership with Vivo.
“large operators can operate in lower margins while also counting on more resources to carry out investments in remote areas.”
A member of a leading automotive company, Brazil
The decision underscores the balancing act between fostering fair competition and encouraging telecom expansion into underserved areas. While Anatel’s intentions appear geared towards equitable distribution of telecom services, the potential fallout from Vivo’s reaction remains a critical factor. The upcoming General Competition Target Plan holds promise in introducing uniform restrictions for competitors, potentially assuaging concerns about Vivo’s withdrawal from the agreement. “Of course, Telefónica [owner of Vivo] will continue to push for less restrictive regulatory frameworks, as these rulings impose barriers to the group’s business,” reflected the independent telecommunications consultant.
Anatel’s approval of the Winity-Vivo sharing agreement with stringent conditions reflects a concerted effort to level the playing field in Brazil’s telecom sector. “Baigorri has always praised the deployment of 5G in Brazil, but he has also admitted that he would have done things differently on the 700Mhz tender won by Winity,” added the telecommunications source. The delicate balance between fostering competition and ensuring telecom expansion into underserved regions underscores the complexities of regulatory decisions in shaping Brazil’s telecommunications landscape.