Renowned financier George Soros plans to inject a minimum of US$150m into Brazilian fixed wireless broadband operator On Telecom.
The investment, to be made via Soros Funds Management, will give him a majority stake in the start-up according to On’s…
Renowned financier George Soros plans to inject a minimum of US$150m into Brazilian fixed wireless broadband operator On Telecom.
The investment, to be made via Soros Funds Management, will give him a majority stake in the start-up according to On’s CEO Fares Nassar, quoted by reporters in Sao Paulo.
Nassar also said that the operator may consider an IPO in future to raise funds, and seek additional partners.
Nasser and Zaki Rakib – who is currently the major shareholder – along with Soros, reportedly plan to put as much as R$500m (US$217m) into the venture, which runs off regional 4G licences acquired by On’s parent Sunrise Telecomunicacoes last summer.
The move has been welcomed by the Brazilian authorities. Communications minister Paulo Bernado was quoted as saying he hoped On would shake up the market. Meanwhile, the head of telecoms regulator Anatel, Joao Batista de Resende, said he hoped Soros would be a bidder for some of the additional frequencies that will be auctioned soon, according to local reports.
The spectrum licences acquired by Sunrise in 2012 only cover certain regions. The start-up is first concentrating on the Sao Paulo state, Brazil’s economic powerhouse. As a whole the region has a GDP on a par with Indonesia, and the area which On will concentrate on – outside the state’s eponymous capital – generates close to the same as Chile.
Speaking to TelecomFinance by email, Informa analyst Ari Lopes said there was a “good market” there and that it had “good potential” for a new entrant that wanted to focus on underserved areas.
“I believe [On] might have a significant, but regional, impact,” Lopes said, adding that it increases “the pressure that incumbents are suffering from other fronts in fixed broadband”.
He explained that the government was supporting On because it will expand internet coverage outside urban areas, a goal of the government and a popular move in a country where quality of service is a consistent consumer complaint.
On offers fixed wireless broadband, a type of high-speed access where connections use radio signals via towers, as opposed to traditional cabling – a service particularly suitable for a vast country such as Brazil which has limited fixed-line infrastructure.
