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Telefónica Considering Shut Down of Brazilian CDMA Network

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Telef nica has outlined plans to spend upwards of US$17 $20 billion on its Latin American networks over the next five years and plans to shut down its CDMA networks eventually.

"Probably by year 2010, if things keep going in the same direction in terms of commercial activity in GSM, we'll be starting thinking of switching off the CDMA network," Telefonica's General Manager for Latin America Jose Maria Alvarez-Pallete said during a conference call.

In Mexico Telefnica occupies a distant second place and is the largest operator in Chile, Venezuela, Brazil (in partnership with Portugal Telecom) and Peru. The company announced its GSM overlay for Brazil in June 2006 and said it would take about three years to complete the overlay.

"In terms of OpEx, as most of our new adds are coming in GSM, or roughly 90% in the case of Brazil, the level of subsidies in terms of CDMA handsets has been significantly reduced, so the impact on the margin is already there" he added, noting that the situation is similar in Venezuela where the company also operates a network.

According to a recent briefing from the Mobile World, the number of CDMA mobile customers in CALA (Caribbean and Latin America) has plummeted by almost 13m in the year to 31st March 2008, ending on 50.6m, after a seventh successive quarter of decline in Q1 08.

CANTV in Venezuela is the last remaining CDMA operator in the Caribbean and Latin America region not to also have an active GSM network (excepting a handful of very small providers in markets such as Belize and the Cayman Islands) and even here a launch is due later in the year.

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Tags: cdma  telefonica  portugal telecom  gsm  latin america  caribbean  Brazil  Venezuela