For the history of Brazilian telecommunications, the year 2021 will be marked by having been the founding basis for the deployment of a huge number of solutions and services that will grow in the coming years from the massive deployment of 5G. In turn, 2022 will set the pace for this deployment and solutions will be sought to several of the sector's problems, in a year plagued by political movements for the presidential elections to be held on next October.
But also, the upcoming months may witness the end of one of the main mobile operators in the country, Oi Móvil, whereby the market will be reduced to three large operators, without being clear yet if that will be beneficial or not for the consumer.
Once the tender by which spectrum was distributed to the operators at the beginning of November 2021 was finalized, most of them immediately started the necessary tasks to begin, as soon as possible, the deployment of their 5G networks. It should be remembered that one of the conditions imposed in the contest was that all state capital cities in the country must have 5G service by the end of next June, imposition of electoral origin since the current President of the Republic, Jair Bolsonaro, intends to go for his re-election and the issue of 5G technology will be one of his mainstays in the electoral campaign.
But this haste in the deployment of 5G attempts, in principle, against the need for operators to maximize the efficiency of their investments, especially if one takes into account that the history of the last decade has shown a very low relationship between the income obtained and the capital invested by the companies. According to some specialists, this relationship will be even more negative in the short term until the new services that will be created from the use of 5G networks can have a substantial participation in the income.
It is estimated that just after 2025 will the income generated by the new services become a substantial part of the operators' revenews, based on a significant improvement in the connectivity and speed of the fixed and mobile broadband networks .
The decline of Oi Móvil. So far, although they have not yet made an official statement, regulatory bodies such as the Agencia Nacional de Telecomunicaciones (Anatel) (Telecom regulator) and the Consejo Administrativo de Defensa Económica (CADE) (Administrative Council for Economic Defense) are likely to finally approve this operation, for an approximate value of US$3.26 billion. Surely they will impose a series of conditions on the buyers in order to maintain the current levels of competition in that market.
The companies have already reached an internal agreement on the way in which the assets of Oi Móvil will be divided, an issue that is also already in the hands of the regulatory bodies: each of them will use these networks to strengthen themselves in areas where they currently did not have significant presence. However, this operation, which appears to be beneficial for the three operators, will also mean adding a huge expense to their coffers that already have to face 5G investments.
These companies will also have to face the expenses of the construction of the private network of the Federal Government, another imposition of the spectrum competition, which even today does not have an exact amount of the cost that its implementation will demand.
If to all this is added the postponement of the announced tax reduction for companies and, on the contrary, there is an increase in some tax or the creation of new ones, as often happens in electoral years, it can be concluded that the year 2022 presents considerable complications for the finances of telecommunications companies.