Nextel plans Brazilian 3G after spectrum win

Nextel Brazil, a subsidiary of NII holdings, has won 20MHz licences in the 1.9 – 2.1GHz band in an auction conducted by Brazilian regulator Anatel. Nextel was successful in its bids for 11 of the 13 lots on offer, which will give it coverage of 182.4 million people, or 97 per cent of the population.

The licences also cover 97 per cent of the areas of Brazil that generate the nation’s GDP, and include the major metropolitan centres of Sao Paulo, Rio de Janeiro and Brasilia. The firm bid $714.4m for the licences, which will enable it to deploy a nationwide 3G network to run alongside its proprietary iDEN network.

Nextel’s success in the auction was widely expected, said Marceli Passoni, senior analyst for Latin America at Informa Telecoms & Media, and the firm is under pressure to grow its business. As a late entrant the carrier sits in a distant fifth place with 3.1 million subscribers at the end of the third quarter, according to Informa’s WCIS. Fourth placed Oi had more than 37 million subscribers at the same point, with market leader Vivo on 57.7 million and Claro and TIM Brasil on 49.5 million and 46.9 million respectively.

Nextel has focussed so far on selling its Push to Talk services to the SME market and the challenge the company now faces is to generate return on its costly spectrum investment, Passoni said. She also warned of “the future investment required to build a totally new network on a national scale, including the coverage obligations imposed by Anatel.”

She continued: “Nextel has to find a way to differentiate its 3G services given that the mobile market is consolidated with penetration of over 100 per cent. High network quality could be a key differentiator as the company cannot compete in terms of network coverage. Nextel will have to keep its differentials when targeting the consumer markets by being able to offer value beyond the PTT functionality, offering high quality services and specific data applications for different consumer niches.”