Investment In Telecoms Infrastructure In Brazil: RAN Sharing Is Inevitable

• Published date: 10 November 2020
• Subject Matter: Corporate/Commercial Law, Media, Telecoms, IT, Entertainment, Corporate and Company Law, Mobile & Cable Communications
• Law Firm: Fleichman Sociedade de Advogados
• Author: Mr Luciano Costa

As many investment opportunities in Brazil, telecoms infrastructure can be as challenging as rewarding. Complex regulations and tax uncertainties are some of the hurdles, to name just two. Nevertheless, it is an infrastructure sector dominated by private players, rather than state owned companies, which reduces political risks. Also, the need for investment is huge, profits are almost guaranteed, and users continue showing appetite for new services and faster connections, even during the pandemic. Good news is that RAN sharing may bring costs down and new investors to the market, and regulators are happy with that.

Since the privatization of the telecom sector in Brazil, in the mid-90s, the telecoms regulatory agency (ANATEL) has been encouraging the sharing of infrastructure among players in the market. To this end, many regulations have been, but with limited success, as operators for a long-time have favored to control their own infrastructure, even if that would lead, at some point, to an excess of offer and less efficiency in the sector. That trend started to shift after the 2008 crisis, which impacted the investment capacity of major operators. The first wave of outsourcing involved antennas and the growth of "tower companies" in Brazil. Nowadays, according to the main association of the sector (www.abrintel.org.br) there are circa 65000 towers in Brazil, 65% owned by infrastructure companies. Now, we are seeing telecom companies outsourcing the construction of network, to be built and owned by a third party, and then leased back to the operator. Recent agreements between major operators have also involved the sharing of existing infrastructure, including spectrum facilities. Indeed, with the prospect of the 5G auctions in early 2021 (hopefully), RAN sharing seems to be a natural path for operators going forward.

RAN (Radio Access Network) sharing means both the sharing of network infrastructure (stations, radios, antennas) and the sharing of spectrum itself. Since 2013, regulatory authorities have reviewed more than nine RAN sharing agreements between mobile operators, all approved. The scope of such agreements is becoming more and more broad. Arguably, the last one involving Telefonica and TIM, executed in 2019, was the most comprehensible, aiming at not only expanding network but also eliminating duplicity and establishing single grid networks.

When reviewing infrastructure sharing agreements, authorities have been considering aspects like the...