Telecom Italia has set aside US$4.5 billion to improve its mobile and fixed broadband network in Brazil, as the European telecom giant shelves its plans to buy out its Brazilian rival Oi.
Much of this money will be spent on expanding the coverage of its 3G and LTE networks across Brazil, although the company also has plans to roll out fiber optic cables in major towns and cities.
In addition to voice and data, Italia is also talking of building infrastructure to launch cloud computing and data center services in both Italy and Brazil. Furthermore,it is going to add about 4,000 people to its global workforce over the next four years.
Network upgrades, according to the firm, will boost its subscriber base. Italia, which operates under TIM Brazil, hopes to increase its customers from 130,000 to 500,000 by the end of 2017.
There is a growing demand for 4G/LTE service in Brazil. According to recent data released by the regulator Anatel, 6.76 million new customers signed up for the service last year, an increase of 400% compared to the previous year.
The Italian firm has confirmed that it is no longer bidding to buy a controlling stake in Oi, Brazil’s fourth largest telecom operator, which owns a broad fixed telecom infrastructure. Instead of buying out its rival, Italia has opted to focus on bolstering its own infrastructure in order to make its service more attractive.
Analysts have described it as a significant strategic decision, noting that the Brazilian operation can help Italia continue its growth after the European telecom market has become more or less saturated.
Although Oi has a large fixed-line network, its infrastructure, analysts say, is old and would not have added great value to Italia’s operations.
Italia’s revenue, including its Brazilian business, fell 7.8% to US$24.5 billion in 2014.