IDB releases US$2bn loan for Brazil connectivity projects

The Inter-American Development Bank (IDB) has released a US$2bn credit to finance connectivity and broadband projects in Brazil.

Half of the total will go to initiatives in the Amazon region. The announcement was made by IDB president Mauricio Claver-Carone, together with Brazil’s communications minister Fábio Faria in a video released by the latter.

A source at the communications ministry told BNamericas that resources should become available “soon.” 

The ministry aims to use most of them to take fiber and transport networks to remote areas, particularly in the Amazon, where it is promoting programs to reduce the digital divide.

This is one of the largest financings ever approved by the IDB for connectivity projects in Brazil.

Faria is part of a government delegation visiting the US during the week to learn about secure communication networks and discuss technology and telecommunications partnerships, among other topics.

Visits to mobile network providers, meetings with investment funds and other multilateral agencies, are also planned.

On Thursday, the delegation visited Ericsson's headquarters in New York. In a video posted on his social networks, Faria said the objective was to discuss the private network the Swedish company provides to the US government.

Earlier this week, the delegation had visited Nokia's local office, where it watched a demo of “how the private 5G network that the company implemented for the US government works”, Faria said in the video.

The delegation is also visiting Qualcomm, Motorola, IBM, AT&T before returning to Brazil on Friday.

PRIVATE GOVERNMENT NETWORK

The financing of a private government network is among the obligations winners of the upcoming 5G spectrum tender must comply with.

While announcing the trip last week, Faria said that “all countries that are holding 5G tenders are also doing private government networks,” including the US, Japan, South Korea, Finland and Germany.

This statement is not entirely accurate, however, as not all countries are demanding private government networks as part of 5G auctions, with Chile being just one example.

DIPLOMACY

Yet, this private government network allows the Bolsonaro administration to exclude Chinese technologies without having to ban them from commercial networks and further antagonize Beijing.

One requirement is that providers of the government's network be listed on stock exchanges – and of the largest suppliers, only China’s Huawei is not listed.

The Biden administration is also wary of the geoeconomics of Chinese technology in the region, which fosters integration into Beijing’s political economy, although Washington’s tone is more measured now than during Donald Trump’s term. 

The US still is monitoring the performance of Ericsson and Nokia in Brazil and Latin America, as both and Huawei dominate the regional more than other markets.

Throughout the region, Huawei has expanded its market share in the last years, focusing mainly on cost-efficient deliveries.

While in Latin America Ericsson, Huawei and Nokia together account for 95% of the market, their joint share globally is 61%, according to data shared by the Dell'Oro research group with BNamericas. 

But Huawei has snatched regional and global market share from other players.

In 2020, Huawei concentrated 31% of global telecom equipment revenue, up from 28% in 2019, Nokia had 15% (compared to 16%) and Ericsson 15% (compared to 14%), according to the consultancy.

The rest of the market is divided among ZTE, Cisco, Ciena and Samsung, none of which have a relevant presence in this segment in Latin America.