Tech Roundup: Brazil 5G auction gets for increasingly political

. Nov 27, 2020
5G huawei brazil President Jair Bolsonaro meets Zou Zhilei, CEO of Huawei Latin America, in November 2019. Photo: Marcos Corrêa/PR

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the political fight over 5G gets heated, frauds increase on Black Friday, and Brazilians increase use of biometric security. 

5G: Brazil heading for increasingly political auction

With China and the U.S. staging a Cold War-like race for 5G supremacy, governments’ choices over who gets to implement their countries’ fifth-generation wireless networks are becoming increasingly political. In Brazil — where the auction will take place in the first half of 2021 — President Jair Bolsonaro is making no attempt to ensure an ideology-free bidding process.

  • Earlier in the week, Congressman Eduardo Bolsonaro — the president’s third-eldest son — said on Twitter that Brazil will choose a 5G grid “without Chinese espionage,” hinting that Chinese firm Huawei could be banned from bidding.
  • Days later, the president and his chief security officer Augusto Heleno met with Carlos Baigorri, a board member at telecoms regulator Anatel — and the appointed rapporteur of the 5G auction. This is the first time a member of the regulatory agency has had a private meeting with the head of state. In theory, the president has no power over Mr. Baigorri’s recommendations on the 5G auction, or a potential Huawei ban.
  • Communications Minister Fabio Faria said the government wants the auction to take place as soon as possible.

Internal struggles. Military officers within the administration are in favor of taking a pragmatic approach on Huawei, pointing out that U.S. technology is by no means espionage-free.

Backlash. Telecom companies already depend heavily on Huawei equipment and warn that a ban would set the country’s 5G implementation back several years.

Moves. While the political battle rages on the federal level, states and private players are moving ahead with their own 5G regulations. Lawmakers in Rio de Janeiro presented a bill to establish rules for antenna installations.

Cyberattacks Brazil’s biggest Black Friday concern

In a year marked by the high-profile hacks of government systems and major corporations, retailers have prepared for the threats of fraud attempts during Black Friday. On November 27, fraudulent sales topped BRL 21 million, making up for at least 1 percent of total purchases, according to data from Movimento Compre e Confie and cybersecurity company Clearsale.

Increase. A report by cybersecurity company Kaspersky showed that, in the weeks leading up to Black Friday, fraud attempts increased by 9 percent in Latin America from the previous 15 days. This translates into 196 phishing attacks being detected every minute.

  • This increase is attributed to early sales during the pandemic.

Preparing. Restrictive measures across Brazil caused a boom in e-commerce sales. In response, retailers invested in bulking up their cybersecurity infrastructure. 

  • “Our Brazilian customers have invested more in cybersecurity since the beginning of the pandemic and not only for Black Friday,” Fernando De Falchi, Security Engineering Manager at CheckPoint Brasil, tells The Brazilian Report. “The most sought-after solutions are firewalls with threat prevention, cloud security, endpoint security, and remote access,” he explains.

Brazilians increase use of biometric security

Brazilians are becoming increasingly fond of biometric security tools, particularly when it comes to mobile phones. According to a survey by Opinion Box, 59 percent of smartphone users unlock their handsets using fingerprint scans, which is already being considered the safest method by 36 percent of respondents. Other methods, such as facial recognition, are also becoming more popular. 

  • Biometrics have overtaken other methods, such as Android’s pattern passwords, which was the go-to method for 19 percent of the sample — 5 percentage points fewer than a year ago. 

Yes, but… Simple passcodes are still widely used – and poorly handled. At least 28 percent use rudimentary passcodes, such as birthdays, and nearly 60 percent use the same password on various different websites. Only 12 percent of the survey respondents said they used passcode managers to store their sensitive data, while 63 percent preferred learning their passcodes by heart. 

Reputation. Storing biometric data is an added challenge for companies, especially while they adapt to Brazil’s new General Data Protection Law (LGDP). Amid business sectors, respondents said they placed the most trust in banks to keep their personal information secure — albeit only 22 percent said they fully trusted financial institutions to protect their data and not share it with third-parties. 

  • Social media websites, meanwhile, came last in this ranking with only 8 percent trusting their data management abilities.  

Take note

  • Restructuring. The week brought two pieces of positive news for telecom operator Oi. The company sold its mobile telecom towers to Highline — a Brazilian firm owned by American private fund Digital Colony, specialized in digital infrastructure — for BRL 1.067 billion, and data centers were sold to Piemonte for BRL 325 million. The inflow of cash is crucial for Oi’s hefty court-supervised recovery plan, which got another boost thanks to the Senate’s approval of changes to Brazil’s bankruptcy legislation, making it easier for distressed companies to renegotiate their debts with the government. Per BTG Pactual analysts, the bill reduces Oi’s debt with Anatel from BRL 13 billion in debts and fines to BRL 4.1 billion. Factoring in tax breaks and the money Oi has already provisioned, its net debt stands at BRL 1.26 billion. 
  • News. News website Huffington Post closed its doors in Brazil after seven years. The website was recently acquired by BuzzFeed, which sold its local operations to media holding firm Flagcx and, therefore, could not remain open in Brazil. At the time of BuzzFeed Brazil’s acquisition, new head Viviane Duarte told Exame magazine the company did not intend to revive its news division. 
  • Innovation. Cosmetics maker Natura inaugurated a new innovation center, including labs, equipment, and storage facilities. The building in the city of Cajamar, near São Paulo, cost the company BRL 35 million and is expected to reduce the time it takes to build prototypes. The center will host activities such as developing new natural ingredients for the products, as well as packaging and R&D. 
  • Revenues. Telecom operator TIM posted the largest revenue growth out of any other company in Brazil last year. According to a study by Exame Magazine, its revenues grew by 397.5 percent thanks to a new prepaid phone plan and bundle offers including subscriptions to streaming services.  
  • Corporate deals. Itaú will transfer its 41-percent stake in stock brokerage firm XP to a NewCo corporate spin-off. The bank will also reduce its ownership, selling a 5-percent stake in the process. The decision must now be approved in a shareholders’ meeting. At the same time, Itaú is distancing itself from its partner by creating a new investment platform — named íon — and turning its 9,000 bank managers into investment agents. The decision comes after the Brazilian Securities Commission moved to allow investment agents to be independent from brokerages — a move that threatens XP’s grip on the sector.
  • Fixed telephony. Anatel approved a new universalization plan for fixed telephony for the period of 2021-2025. This will be the last of the kind, as concessions expire in 2025 and companies will then be able to operate for less-binding permit models for telephony operations. Anatel scrapped its requirement for companies to invest to make up for the loss of public phones: instead of funneling the money into 4G investments, the agency now wants companies to increase the offer of fiber optic broadband internet in cities that do not have access to the service. [/restricted]
Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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