ANATEL (the Brazilian Telecommunications Agency) recently held Invitation to Bid 002/2002 concerning certain personal mobile service coverage areas in sub-bands 'D' and 'E'. These sub-bands were either left over from previous invitations to bid or waived by successful bidders.

ANATEL created a technical advisory commission to help the Special Bidding Commission in analyzing requests for:

  • clarification of the notice of invitation to bid;
  • conformity between price proposals in the bidding process; and
  • the required identification and qualification documentation.

The bidding process began on November 12 2002. Four groups already operating in the telecommunications market submitted proposals through seven companies.

All proposals were opened on November 19 and the Special Bidding Commission, overseen by ANATEL's superintendent of private services, categorized those proposals which matched or exceeded the minimum price established in the invitation to bid. The classification criterion adopted by ANATEL for the proposals was the value of the best proposal for each lot. If the runner-up's offer was at least 80% of the winning bidder, it was given the opportunity to bid again until one of them was declared successful.

The invitation to bid concerned 10 lots relating to the 1.8 gigahertz (GHz) frequency for the provision of personal mobile services, in which two companies currently operate: Oi and TIM. The users of this service, which utilizes GSM (Global System for Mobiles) technology, currently represent 1.59% of Brazilian mobile service users.

The following companies were declared successful bidders:

  • Lot 1 (Band E) - Alecan Telecomunicações Ltda, offering R309,750,000 (exceeding the minimum price by 148.99%);
  • Lot 2 ( Band E) - Brazzaville, through payment of the minimum price of R115,701,000 (the only proposal submitted for Lot 2, which covers those cities of São Paulo not included in Lot 1);
  • Lot 3 (Band E) - Vésper SMP S/A, paying R91,000,000 (exceeding the minimum price by 47.44%);
  • Lot 4 (Band E) - Brazil Telecom S/A, offering R73,989,430 (exceeding the minimum price by 7%);
  • Lot 5 (Band E) - Brazil Telecom S/A, offering R48,240,920 (exceeding the minimum price by 1.5%);
  • Lot 6 (Band E) - Brazil Telecom S/A, for the price of R69,264,615 (exceeding the minimum price by 1.5%);
  • Lot 7 (Band E) - Stemar Telecomunicações S/A, paying the minimum proposal of R52,490,000;
  • Lot 8 (Band E) - Vésper SMP S/A, offering R93,195,000 (the minimum price); and
  • Lot 9 (Band D) - Albra Telecomunicações, paying R67,032,000 (the minimum price).

Lot 10 (Band D) was abandoned by the Special Bidding Commission owing to a lack of interested parties.

The fiercest competition (and highest bidding) occurred in Lot 1, for which Alecan was declared the successful bidder after 10 successive bids.

The winning proposals are payable in seven instalments over eight years. Ten percent must be paid when the relevant authorization is executed. The second instalment falls due three years after execution and the remainder in the 48th, 60th, 72nd, 84th and 96th month after execution.

In the bidding session held on November 22, the Special Bidding Commission set dates for the representatives of each of the companies to examine all the documentation.

After analyzing the conformity of the documentation with the notice with invitation to bid, the Special Bidding Commission formally announced the winners of the contest (all the successful bidders were adjudicated).

ANATEL signed the authorization instruments related to most of the winners on December 12 and intends to sign the rest before the end of the year. The companies have 12 months from the execution date to commence operations.

For further information on this topic please contact Ricardo Barretto or Eduardo Carvalhaes at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados by telephone (+55 11 3066 5999) or by fax (+55 11 3167 4735) or by email ([email protected] or [email protected]).