No speculation allowed in 5G auction, says regulator

Along with its deep reformist agenda, the Brazilian government is moving to approve pro-market regulatory changes in order to encourage investment. In this field, the telecoms sector is high on the government’s priority list for alterations. Earlier this year, Congress passed an update to the sector’s legal framework and now, the National Telecoms Agency (Anatel) is working toward auctioning off 5G frequencies in 2020.

The head of the regulatory body, Leonardo de Morais, explained to The Brazilian Report that the priority is to ensure the proper amount of investment. However, the upcoming auction comes with a tough nut to crack: Anatel must ensure true competition—reducing the risk of speculators making bids in order to re-sell frequencies to large groups, resulting in a concentrated market which is already a major problem in Brazil’s telecom sector.

Another challenge relates to international relations—more specifically concerning Brazil’s role in the U.S.-China trade war. Donald Trump’s White House has put pressure on Brazil to ban Huawei from the auction, claiming the company shares sensitive information with the Chinese government.

Read the main takes of The Brazilian Report‘s exclusive with Mr. Morais at Anatel’s headquarters, in Brasília. (Disclaimer: This interview was edited for brevity and clarity.)

What are Anatel’s next steps after approving the new Telecoms Law?

2019 was a very productive year and Anatel was a source of much good news for Brazil. Regarding the new law, I’ve said it was the most important microeconomic reform since the privatization of telecoms in the late 1990s. Its sanctioning, without vetoes, opens a window of opportunities for us to put broadband internet in the center of public policy and shift the focus from landline telephony. The law also provides legal security. Once you have a concession agreement, it allows the contract to be changed as long as there is a consensus between the interests of the public and private sector. To achieve a better balance, it is necessary that the amount calculated after the migration from concessions to authorizations and the required investment should have a fair value.

Anatel worked hand in hand with the approval of the new regulation. So, all the regulatory impact analysis by technicians, developing drafts, sending these to the prosecutor’s office and then to Anatel’s board, we have already completed this. But the pricing and required investment is still...