August 21, 2014 / 7:00 PM / 3 years ago

Brazil announces terms for 4G auction as fiscal goal eyed

BRASILIA, Aug 21 (Reuters) - Brazil’s telecommunications regulator Anatel announced on Thursday the terms of a rights auction for fourth-generation (4G) data services, which should throw an over $3 billion lifeline to the government as it struggles to meet its year-end fiscal goal.

The auction to run the 700 MHz spectrum is scheduled to take place on Sept. 30, according to a statement from Anatel, and will raise, at a minimum, 7.71 billion reais ($3.43 billion).

The cash will provide some relief to President Dilma Rousseff, who pledged to save at least 99 billion reais this year in primary surplus, or 1.9 percent of the country’s gross domestic product.

The primary surplus represents the public sector’s excess revenue over expenditures before debt interest payments.

Brazil’s public finances have deteriorated rapidly under Rousseff, however, after she gave tax breaks to dozens of industries in an attempt to restart the country’s stagnant economy ahead of October’s presidential election. Most analysts are skeptical that the government will reach its goal given disappointing budget numbers over the past few months.

Each of the three nationwide slots being auctioned will require a minimum bid of 1.927 billion reais, Anatel said.

Bidding for a fourth national slot, which excludes regions covered by local firms CTBC and Sercomtel, will start at 1.893 billion reais. CTBC’s zone requires a minimum bid of 29.6 million reais while Sercomtel’s area requires at least 5.3 million reais.

Telefonica Brasil SA, TIM Participações SA , America Movil SAB de CV and Grupo Oi SA paid a combined 2.56 billion reais in 2012 for the first round of 4G permits on the 2.5 gigahertz spectrum.

Auction winners will be responsible for the 3.6 billion reais in costs to resolve interference issues relating to signals currently operating on the frequency band, Anatel said.

($1 = 2.25 Brazilian reais)

Reporting by Leonardo Goy; Writing by Asher Levine and Marguerita Choy

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