Vesper apparently has no fall-back plan if it fails to win permission for use of the 1900 MHz band to offer PCS wireless service. This platform is the linchpin of its strategic planning. Well-informed sources say controlling shareholder Qualcomm isn?t remotely interested in investing in an operation that doesn?t use technologies it owns, such as GSM. In October 2002, Vesper CEO Luiz Kaufmann raised the possibility of using CDMA at 1800 MHz if Vesper won licenses in D and E band licenses. He was speaking at Futurecom. Vesper did win the licenses but took a different route, knowing it might not be granted permission to use 1900 MHz for PCS. Indeed, it has invested relatively little in wireless to date. It has completed a marketing and product plan but interrupted the process of choosing suppliers to upgrade its network and expand coverage. And it hasn?t even begun acquiring more expensive systems such as SMS or prepaid. Expenditure on information technology has also been skimpy.
Now that Anatel?s board has definitively turned down its request for permission to use 1900 MHz, Vesper can seek judicial review or simply give up on PCS. In the latter case it faces serious problems. People inside Vesper know the carrier?s survival depends to a large extent on success in wireless, since the fixed-line operation looks ever farther from breakeven. If worst comes to worst, some speculate, Qualcomm could sell up and leave Brazil unless it can operate PCS in the desired band. Given the lack of a plan B, it doesn?t seem to be bluffing.
Qualcomm was prepared to invest even more in Vesper as long as it could use a frequency for which it has its own technology. At one time Vesper considered using CDMA at 1800 MHz, but the idea was dropped after the PCS auction. Now Qualcomm isn?t expected to invest any more in Vesper until it?s quite sure it will be able to use the 1900 MHz band. It may even decide not to pay the PCS license fees still outstanding, according to well-informed sources. Marco Aurélio Rodrigues, president of Qualcomm Brazil, told TELETIME News that top management has yet to determine a strategy on this. Vesper bid some 299 million Brazilian Reals for its PCS licenses (due in installments). It will have to pay a fine if it gives the licenses back.
Strategy
