Brazil orders América Móvil’s Claro to build 700km of fiber after acquisitions

América Móvil’s Brazilian subsidiary Claro Brasil must build over 700km of fiber backhaul networks, with a minimum capacity of 10Gbps, as compensation for the acquisitions of Nextel and Primesys, under a ruling from telecom regulator Anatel.

Although the acquisitions took place a few years ago, this type of requirement is considered normal in deals of this kind.

The decision involves two different processes. In the case of Nextel, the backhaul network to be built must be at least 135km. In that referring to the acquisition of Primesys, the network must be at least 597km.

Anatel's ruling, published in the federal gazette on Tuesday, states that the networks must have DWDM [Dense Wavelength Division Multiplexing] equipment and connect municipalities currently lacking this infrastructure.

The exact localities are yet to be defined. Claro has up to 45 days to present the list of cities and the implementation schedule. The network extension, however, must be in line with the minimum length established by the agency.

Claro announced the acquisition of Nextel Brasil from NII Holdings and its subsidiaries in April 2019, for US$905mn less debt.

At the time, under the conditions imposed by Anatel and antitrust watchdog Cade to approve the deal, Claro had to return part of the spectrum acquired in the 850MHz band that exceeded the regulatory limit.

Nextel's assets included 4G networks in Rio de Janeiro and São Paulo and spectrum in the 1.8GHz, 2.1GHz and 800MHz bands.

The acquisition of Primesys, in turn, was carried out in 2005 by Embratel, América Móvil's Brazilian B2B subsidiary, for 232mn reais (US$44mn at the present exchange rate). Primesys belonged to Portugal Telecom.

Claro ended July with 9.7mn fixed broadband accesses, 86mn mobile telephony lines, 6.4mn pay-TV subscriptions and 8.4mn landline accesses in Brazil. The group leads all such segments except for mobile telephony, where it trails Telefônica Vivo.