Telefonica to Bid for Airwaves in Brazil, Chile This Year

Telefonica SA (TEF), Spain’s largest telephone company, plans to bid for airwaves in Brazil and Chile this year for building faster networks as it prepares for a boom in demand for mobile data in Latin America.

The company, which gets about half of its revenue from the region, needs the wireless frequencies for networks based on the long-term evolution standard already used in the U.S. and in parts of Europe, Chief Technology Officer Enrique Blanco said in an interview yesterday. The Madrid-based operator will invest “all the money it needs,” he said.

“We plan to bid for LTE radio frequencies in Chile and Brazil toward the second half this year,” Blanco said in Barcelona before the start of the Mobile World Congress. In Spain, Telefonica is gearing up for a potential LTE deployment in 2014, he added.

Phone companies including Telefonica need to bolster strained networks as more customers use increasingly high- quality video, music and games. Spain’s former monopoly is struggling to stop a loss in market share as Spaniards switch to cheaper rivals amid a weak economy and high unemployment.

Instant Messaging

Telefonica and a group of operators including Vodafone Group Plc (VOD) and France Telecom SA (FTE)’s Orange are working on a project for the so-called Rich Communications Suite that will include instant messaging, Blanco said.

The JOYN instant messaging application, which can transfer voice and data, will be part of the suite, Inaki Cabrera, innovation director for Vodafone Spain, said today at a press conference in Barcelona. It is now in beta testing and will be available to customers in Spain in the summer, he said. The software will come with new tariffs to help customers improve control over spending, he added.

“Ten years ago SMS wasn’t very popular because you could only send a message to other people within your own operator,” Ian Miller, Telefonica’s director for radio access networks, said in a separate interview. “We need to partner with other vendors because this will be the only way that this new generation of messages will be become popular and take off. This needs to be inter-operable between all operators.”

After Chile and Brazil, Telefonica predicts it will bid for LTE frequencies in other Latin American markets such as Argentina, Uruguay, Mexico or Peru within 18 months, said Miller.

“These markets are catching up, but the real challenge is the devices, whether they become cost effective enough to be massively available,” Miller said. “How much we’re willing to invest and whether we team up or not with other operators will vary market to market.”

Alcatel-Lucent

Chief Executive Officer Cesar Alierta is also counting on Latin America’s economic growth to win back investors. Telefonica said last week sales in the region climbed 13.5 percent to 29.2 billion euros ($39.3 billion) last year. Telefonica operates in 14 countries in the region.

Telefonica shares fell 0.1 percent to 12.85 euros as of 3:19 p.m. in Madrid.

Telefonica is working with Firefox browser maker Mozilla on mobile applications using HTML5 language, Carlos Domingo, director of product development and innovation at Telefonica, said today in Barcelona. Deutsche Telekom AG (DTE) and other phone operators are also involved in the Mozilla accord, he said.

“The performance of devices can be much higher thanks to this, while it can also lower prices for smartphones and bring them to the mass market in emerging markets in Latin America,” Domingo said.

4G Trial

Telefonica yesterday unveiled a 4G trial in Barcelona based on Alcatel-Lucent (ALU)’s light radio technology and Samsung Electronics Co. (005930)’s Galaxy S II LTE smartphone and Tab. 8.9 tablet. This trial will be extended to other cities across Spain depending on demand and radio frequencies and devices, which are the two biggest challenges, according to Blanco.

Besides Spain, this technology is set to expand in other European cities, Miller added.

“We are planning to do other trials like this one in Barcelona in other European cities in Germany, Czech Republic, U.K., and so on,” Miller said. “We are now also considering network sharing with other operators for LTE where we can’t get all the frequencies need.”

To contact the reporter on this story: Manuel Baigorri in Barcelona via mbaigorri@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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