Recent Brazilian Satellite Exploitation Rights Auction

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Introduction

For the purpose of reinforcing the telecommunications infrastructurein Brazil, the auction offour Brazilian Satellite Exploitation Rights was carried outby Anatelin the first semester of 2014. These rights are granted for a period of15 years, with the option of renewal for additional15 years.

The winning bidder could request to use orbital positionsandfrequency bandsthatwere in coordination or notification process on behalf of Brazilor resulting fromcoordination proceduresto be initiatedbefore theInternational TelecommunicationUnion (ITU).

A total of R$ 153,15 million (approximately U$ 58.9 million for an exchange rate of U$ 1.00 = R$ 2,60) wasraised for4 Brazilian Satellite Exploitation Rights, which represents anaverage premiumof213.25% over the minimum reference price.

Theminimum reference pricefor each Brazilian Satellite Exploitation Right was set at R$ 12.223.484,27 (U$ 4,701,340.10). Sevencompanies submitted their proposals for this bidding (Eutelsat do BrasilLtda., HispamarSatellitesSA, Navigation Ventures Limited, SES DTH do Brasil Ltda., Star One S.A., Star Satellite Communications Company, Telesat Brasil Capacidade de Satélites Ltda.), which means that most of the main world satellite operators have participated through their Brazilian affiliates.

Winners

HispamarSatellitesSAsubmitted the best offerfor the firstBrazilian Satellite Exploitation Right (R$ 65 million, about US$ 25 million) and selected the 61o W Orbital Position associated with the Region 2 frequency bands of the Appendices 30and30Aof theRadioRegulations.

SESDTH do Brasil Ltda. presentedthe best offers for the secondandthird Brazilian Satellite Exploitation Rights (R$ 33 millionandR$ 26,8 million, respectively, which are equivalent to US$ 12.7 million and US$ 10.3 million), and subsequently selected the 48o W Orbital Position, associated withthe C, Ku and Ka non planned bands, andthe64° W Orbital Position, associated with the Appendices 30and30A bands.

Eutelsat do Brasil Ltda presented the best offer for the fourth Brazilian Satellite Landing Right, and selected the 69.45o W Orbital Position, associated with the frequency bands of the Appendix 30B of the RR.

Those companies shall launch and put their satellites in service at the chosen orbital positions and frequency bands within a 4 to 6 year period, and shall providepermanentcoverage of 100% of the Brazilian territory, in accordancewith the provisions of the document signedwith Anatel. This does notmean that companies cannot beginthe operation of their satelliteimmediately, if they havethe capability to do so.

In this context, it should be notedthatHispamarSatellitesSA has alreadyput the satelliteAmazonas4Ainto operationat the 61o W Orbital Position, in the Appendices 30 and 30A planned bands, for DTH services.

The NSS-806 satellitehas also beenput into operation by SESDTH do Brasil Ltda. at the 48o W Orbital Position, in CandKubands. The capacity of this satellite is being used for several different telecommunicationsservices in Brazil.

Applicable rules

The bidding process for granting Brazilian Satellite Exploitation Rights is conducted in accordance with the provisions of the Brazilian Telecommunications General Law (Law nº 9.472, of 16 July 1997).

The above mentioned Law establishes that a bidding process for granting such rights may or may not be required, depending upon the situation. It is worth mentioning that the bidding is not required in the event that only one party can provide the satellite capacity in the established conditions or when all interested parties can do so simultaneously, without adversely affecting one another.

The procedures applicable must be, in any case, subject to the fundamental principles of the public administration, such as publicity and morality, for example, in order to evaluate the technical, operational, economical and legal conditions of the interested party.

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