re: GSM Expansion & Latin America PCS Auctions: Uruguay - Colombia - Ecuador
GSM continues to make inroads into the region to the detriment of TDMA.
Latin American "Flips" already announced:
* Telcel (Mexico) -> TDMA to GSM/GPRS overlay
* Telecom Personal - TIM (Argentina) -> TDMA to GSM/GPRS overlay
* Entel (Bolivia) -> TDMA to GSM/GPRS overlay
* CTE (El Salvador) -> TDMA to GSM replacement
* TIM various (Brazil) -> TDMA to GSM/GPRS overlay
>> PCS Auctions Under Way Again
Mike Davies
EMC Cellular
October 18, 2001
e-searchwireless.com
After several delays and much uncertainty, the auction processes for PCS licences in Uruguay and Colombia are finally starting to make progress. The auction in Uruguay is due to take place in November 2001, while the one in Colombia is set for January 2002. The auction of WLL licences and at least one wireless licence in Ecuador, however, has been postponed from its scheduled date of Q4 2001 . It will now also start in January 2002. Following the unsuccessful auction of the C-block PCS spectrum in Brazil and the unfavourable economic conditions, it remains to be seen what interest will be shown in these auctions in the coming months.
Ursec, the Uruguayan telecoms regulator, has published a draft on auction procedures and methodology for its spectrum auction which is to take place in November 2001. According to the draft, the government of Uruguay will offer 50MHz in the 1800MHz band, 50MHz in the 1900MHz band and 30MHz in the 2100MHz band for the provision of mobile telecommunications services with the intention to:
* Promote the telecommunications sector as a dynamic economic force
* Introduce competition in the telecommunications market fostering the entry of new companies and the provision of new services
* Attract domestic and foreign investment to the sector
* Grant spectrum rights of use at market prices, allowing the government to obtain fiscal revenues from the auction, in accordance with the value of this scarce resource
* Provide a platform for the deployment of the most recent technologies currently under development.
According to Ursec's draft, application materials must be submitted by 30 October 2001 and deposits made by 13 November 2001, while the auction will start no later than 26 November 2001. The licences will be granted two weeks after the closure of the auction.
The spectrum on offer comes from five bands, A to E, and will have a licensing term of 20 years. The winners will be required to start making commercial use of the spectrum within 30 months, but a 30-month extension will be granted if the operators are unable to meet this deadline for technical reasons. Any technology will be permitted, as long as it lies within Ursec's technical specifications and site sharing will neither be prohibited or limited. There will, however, be spectrum caps of 15MHz in each spectrum segment, while no participant will be allowed to hold more than 60MHz across all five bands.
Speculation that a 1900MHz auction was imminent began in June 2000. The DNC, as the telecoms regulator was known then, refuted this while admitting that the possibility was being evaluated. An auction date was set for April 2001, but was then delayed as Ursec was not yet fully incorporated as the new regulator.
Colombia
The situation in Colombia has been beset by even more delays. The Ministry of Communications first reported its intentions to initiate a PCS auction process in January 1998 . The auction, for nationwide networks in the A- and B-Blocks was to take place in H1 1998. However, the auction never took place. In October 2001, the Ministry of Communications announced that it would start the bidding process for its C-block PCS spectrum in November 2001. One licence in each of the three regions, East, West and Atlantic, will be available. The auction will follow in January 2002.
Ecuador
The auction of a 1900MHz wireless in November 2001 was due to be the end of a series of spectrum auctions that would include WLL and LMDS licences. The auctions have been delayed by three months which should mean that the wireless licence will be auctioned in March 2002. The incumbent wireline operators, Andinatel and Pacifitel, have already pre-qualified for the auction .
Potential Licensing Revenues
Several other PCS auctions have taken place in the region since 1999, notably in Argentina and Brazil. The average licence fee for Region 2 in Argentina, the Area Metropolitan Buenos Aires (AMBA), was USD 325.5 million compared to USD 49.5 million for Regions 1 & 3. A similar regional discrepancy, while less severe, can be seen in comparing Region 3, Sao Paulo State, with Regions 1 & 2 in Brazil. Among the reasons for this are that these two areas, Region 2 in Argentina and Region 3 in Brazil, have a higher concentration of people per square kilometre and a larger percent of the population in urbanised. One might also expect these regions to have a higher than average income per household. The licensees have paid a premium to gain access to these regions.
< snip chart >
A similar regional difference is likely to been seen in Colombia as a higher proportion of the 40.5 million population is located in the Eastern region. As this region includes Bogota, income levels and urbanisation are likely to be higher here too. All these factors should have a positive effect on the price of the PCS licence. While the Ministry of Communications has not announced its minimum price, it has been reported that it has said that it would hope to receive more than the USD 1.3 billion it earned from cellular licences in 1994.
<snip chart >
Uruguay's population of 3.3 million people will mean that the total revenue from the auction will not approach that of the larger countries. As its GDP/capita, however, is approximately USD 9,300 compared to Bolivia's USD 2,600, one could expect the price/POP to be higher than the USD 1.90/POP paid by Nuevatel in Bolivia in 1999. Ecuador, with its GDP/capita of approximately USD 3,000 and population of 13.2 million, may expect something more in line with Nuevatel.
Who Might Be Interested?
All the auctions should be of interest to various international investors. At present, BellSouth is the only foreign investor in Uruguay. Movicom BellSouth rents its spectrum from ANTEL, the state-owned wireline operator. ANTEL also provides a wireless service through its subsidiary, ANCEL. Movicom BellSouth may use this opportunity to buy its own licence. Telefonica, America Movil's Telecom Americas, TIM and, possibly, Millicom International Cellular (MIC) may all look to expand their regional wireless footprints.
The same players would be involved in Colombia. France Telecom has also reportedly expressed interest. BellSouth already has a nationwide footprint AMPS/TDMA network, while Telecom Americas has licences in the East and West regions. MIC has a 73.2% stake in Celcaribe which operators in the North. According to press reports, ETB, a telephone local service provider, has been in discussion with Telefonica and TIM.
BellSouth and America Movil are also involved in the Ecuadorian wireless market. If CONATEL chooses to auction only one PCS licence, the auction might be reasonably competitive with both incumbent wireline operators pre-qualified and several of the other international investors, including BellSouth and America Movil, likely to be interested.
Conclusion
It is unlikely that the current economic situation, both on a regional and international level, will not influence these auctions in some way. However, the fact that the auctions will provide an important opportunity for several international investors to expand their regional footprints will mean that there will undoubtedly be more than a little interest in these auctions.
The open-ended nature of the auction in Uruguay will also be interesting as it is unclear whether operators will chose to deploy technologies in the 1800MHz or 1900MHz bands or 2G or 3G networks.
The technology choice will also be a further point of interest in the other countries as GSM continues to make inroads into the region to the detriment of TDMA. <<
- Eric - |
