Telecom Italia Mobile (TIM) has revealed plans to pump USD2.5 billion into TIM Brasil over the next three years, as part of a plan to expand its network to fight competition from its larger rivals. The operator said it will invest around USD1 billion into its Brazilian unit by the end of 2004, a figure which is estimated to represent almost 10% of all foreign direct investment in the country. It then plans to make two equal investments of USD750,000 in 2005 and 2006. The operator hopes that the additional funds will enable it to increase its market share in the country and close the gap on its rivals.
TIM Brasil is currently the third largest cellco in the country, with 18.56% of the market at the end of March 2004, behind Telefónica/Portugal Telecom joint venture Vivo, which had 44.5% and Telecom Americas (Claro) with 20.3%. Although the sector has seen a great deal of consolidation over the past few years, there are still four smaller operators in addition to the big three – Amazônia/Telemig Celular, Oi, Sercomtel and CTBC Telecom. TIM Brasil’s expansion comes at a time when competition in the market looks to increase further. In October 2002 regulator Anatel sold seven E-band PCS licences to Brasil Telecom, Telecom Americas and Vésper. The regulator has also revealed plans to sell a further six PCS licences, as well as re-auction four mobile concessions that were returned to it. In 2001 Anatel announced that it would award 3G licences during 2002, but later changed its plans after taking into account the cautious approach shown by operators regarding the PCS auction. It now does not expect the sale to go ahead until 2005 at the earliest and has not released any further details. TIM Brasil hopes that by the time the new players start launching services, it will have established its position in the market. At the end of May 2004 there were 52.4 million wireless subscribers in the country, up from 49.14 million two months earlier and 46.14 million at the end of 2003.