Upon winning her second term in office in October 2014, Brazil's President Dilma Rousseff published budgetary and development plans for the telecoms sector far in excess of the attention given to this sector in her first term.

Rousseff's initial outline for continuing the national broadband program (PNBL) is that PNBL 2.0 will lead to investment of around 50 billion reais (US$17.4 billion) by end-2018. How does that compare with PNBL 1.0? Operators have not detailed how much of their 2011-14 investments contributed to PNBL 1.0, but in 2009 Telefônica estimated that the private sector would put up 12 billion reais, on top of 3 billion reais invested by the state. On its website, state operator Telebras - the main public sector component of PNBL - details investments of 1.4 billion reais made during 2011-2014, obviously falling short of the original 3 billion-real goal.

It certainly looks like PNBL 2.0 will mobilize more than double the investment achieved with PNBL 1.0. In November the government authorized the extension of the 2013 REPNBL tax breaks program - applicable to broadband-related infrastructure projects - through June 2015. The program had attracted investment proposals worth a total of 15 billion reais by June 2014, and in November government officials said they expected another 15 billion reais-worth of investment to be proposed by June 2015.

The 50 billion-reais target therefore has 30 billion reais already pledged, but one caveat to bear in mind is that the communications ministry Minicom has so far approved projects totaling only half of the first 15 billion reais. This includes a single project proposed by Telefónica, to invest 1.8 billion reais in 3G and 4G mobile access infrastructure in all 36 of the country's states, as well as a multitude of projects submitted by América Móvil group for a total of 1.5 billion reais.

In all cases - including projects submitted during the extension period to June 2015 - the taxes will be waived only until year-end 2016.

Figure 1 - Evolution of Service Penetration 2011-14


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