As future international business growth depends more heavily on wireless communications, Brazil has made the ambitious move to stimulate growth of its 3G and 4G wireless infrastructure. This move presents new opportunities for both providers and users of Internet and mobile phone services.
Brazil is a large country that boasts the 6th largest economy and the 5th largest population. And as of 2011, it was the 9th largest user of Internet broadband. In spite of these impressive statistics, as of 2012 3G wireless communication represented only 28.8% of the entire mobile phone market. With so many users stuck depending on slow wireless communication speeds, Brazil has been facing a challenge that threatens its economic and technological advancement.
Brazil’s Multi-Billion Wireless Infrastructure Tax Stimulus
Brazil recently announced plans to give telecommunications companies large tax breaks if they make infrastructure investments totaling between R$16 to $R18 billion before 2016. The tax breaks are estimated to save telecommunications companies between R$3.8 and R$6 billion by the December 31st 2016 project completion date.
An exciting aspect of this tax stimulus program is that it encourages collaboration. Telecommunications companies that submit network project plans that include the sharing of infrastructure with another company in the industry will be prioritized. And although there is a requirement that 50% of the equipment used in the building of the next-generation network be manufactured in Brazil, lucrative contracting and subcontracting opportunities still remain for foreign investors.
The Big Wireless Winners
Such a huge investment in the nationwide wireless communications infrastructure benefits everyone who builds, maintains, and uses the new wireless 3G or 4G network. The national and international 3G and 4G providers, equipment suppliers, construction firms, and backbone operators will all reap substantial benefits.
The companies likely to come out as the biggest winners include Ericsson, Cisco Systems, and Alcatel-Lucent due to their existing relationships with major Brazilian operators and government regulatory bodies. However, that should not deter new and smaller companies from investigating ways to take advantage of contracting opportunities as they arise.
The Practical Impact on Foreign Investment
The short-term and long-term impact on foreign investment is substantial. When Brazil’s major upgrade in wireless communications is complete, every company that relies heavily on broadband communication will benefit. Soon, a slow an antiquated communication system will no longer be a challenge to foreign investment for companies who demand fast and dependable wireless communication.
