Brazil approves nearly US$4bn in telecom financing in two years

The Brazilian government has approved around 20bn reais (US$3.85bn) in funding for telecom project investments since 2020, mostly in the form of debentures (special tax-exempted infrastructure bonds), the communications ministry reported.

The debentures provide income tax breaks for private investors and have become a popular funding source among telcos after a rule change in 2020 authorized carriers to use them.

Of the total funding outlined by the ministry, 18.5bn reais has come from debenture issues, with another 1.2bn reais from the telecoms technology development fund (Funttel). Funttel’s resources are managed by development bank BNDES and project financing entity Finep for research, development and innovation (RDI) projects

These Funttel resources are expected to be used by telecom operators and internet service-providers in 2022-24.

Another 819mn reais outlined by the ministry involves money from the telecom universalization fund (Fust), which was unfrozen after new legislation allowed it to be used for services other than expanding fixed telephony, which was the original aim of the fund. 

According to telco association Conexis Brasil Digital, since 2001, when Fust was created, telcos contributed over 44bn reais in inflation-adjusted terms that have not been used. 

Last month, the ministry approved its 2023 budget for Fust, earmarking 651mn reais for projects to expand connectivity in the country. 

Of this total, 641mn reais will be allocated to initiatives to expand, use and improve telecom networks and services, while the remaining 10mn reais has been set aside for projects to expand access to broadband internet in public schools.