Brazil had 48 million active fixed broadband accesses at the end of September, with fiber broadband accounting for 73.6% of the total.
Market growth is driven primarily by Internet Service Providers (ISPs) and regional operators, companies that bring their networks and services to smaller cities that are often overlooked by large operators.
Through acquisitions and backed by investment funds, many have gained significant scale and even become leaders in certain fiber broadband segments.
Fierce competition has accelerated an ongoing process of consolidation, which now involves mergers between major ISPs and potential acquisitions of neutral fiber networks.
BNamericas takes a look at the investment strategies of some of the key players involved in this process.
ALLOHA (EB FIBER)
Through its various brands, Alloha is the largest internet provider in the country and had over 1.9 million customers at the end of September, with 1.5 million in the broadband segment.
The company’s goal is to invest 700 million reais ($89 million) this year, most of which will go into network, fiber deployment and construction. The amount does not include potential acquisitions.
The focus is on converting homes already passed with fiber to customers rather than sending fiber to new homes or entering new cities, and also on integrating its various businesses and brands.
According to market rumors, controller EB Capital is considering exiting its investment in Allahoha. However, Alloha CFO and EB partner Felipe Matsunaga denies this.
“Alloha is a long-term investment by EB and our message is only one: we will consolidate the market,” he told BNamericas earlier this year.
The company reports a network of 110,000 km of optical fiber and more than 7.8 million homes passed with fiber, with a presence in over 280 cities.
Alloha’s brands are Sumicity, Giga+, Click Telecom, Univox, VIP, NIU, Ligue, MOB and Wire.
Brisanet’s second largest ISP and leader in the Northeast region, Brisanet’s investment focus for the coming months is the 5G and edge data center segments.
Measured as additions to fixed assets and intangible assets, it invested 332 million reais in the first nine months compared to 741 million in the same period last year.
The Capex difference was mainly attributed to investments made last year to prepare its 5G business.
Another 527 million in real investments, related to equipment and infrastructure, are planned for the coming months, executives told a recent third-quarter earnings call.
As previously reported, Brisanet lowered its 2023 capex to around 700 million reais due to tougher macroeconomic conditions and a reduction in fiber deployment. In 2022, the company invested 857 million reais.
Brisanet reports that it has 280 “mini data centers” spread across its network, which are for its own use and to serve customers.
CEO José Roberto Nogueira recently told investors that the company is now considering offering this data structure for use by third parties.
Brisanet ended in September with over 7 million houses connected to fiber and 1.25 million fiber customers. Its network has over 37,400 km of backbone and 61,600 km of FTTH.
São Paulo state-focused Desktop invested 475 million reais in the first nine months, up from 393 million in the same period last year.
That included 215 million reais to pay installments linked to M&A activities. Another 121 million went to new client installations and 22 million was invested in technology, as part of a digital transformation process.
Desktop’s focus is on making its network profitable and converting homes transferred to FTTH customers, thereby controlling opex and capex.
In the third quarter, Desktop said it spent 15.4 million reais on backbone expansion and 22.7 million on network expansion (FTTH).
At the end of September, the company’s network spanned 55,000 km, consisting of 10,000 km of backbone and 45,000 km of FTTH, for 18% year-on-year growth.
The company also reported 4.3 million homes passed (up 15%), after reaching the symbolic threshold of 1 million FTTH customers at the end of the third quarter.
Vero reports that September ended with approximately 32,000 km of fiber in 205 cities, with 8,800 km of backbone and 23,000 km of FTTH. The company is controlled by Vinci Capital Partners, with 81.9% of the shares.
Vero reached 3 million approved homes at the end of September, up 11% year over year, with an addressable housing market of 4.7 million, including households and businesses. This measure refers to the expansion potential that has already been mapped.
The customer base grew by 15% compared to last September, with over 830,000 customers in the state of Minas Gerais, Goiás, the Federal District and the three states of the southern region (Paraná, Santa Catarina and Rio Grande do Sul).
“The regional broadband market is extremely competitive. We often have five or even six companies competing in the same city, CEO Fabiano Ferreira said in a statement. “That is why we invest in the quality of services and customer service, increase our market share where we are already present and take advantage of local opportunities to expand our business. As a result, the investments needed to expand the infrastructure are lower and profitability increases on the other hand.”
Ferreira did not provide specific information on capex.
Vero has made more than 18 acquisitions in its four-year history and recently announced a watershed merger with Americanet.
Some network overlap and geographic presence, complementary portfolios (Americanet is strong in B2B), in addition to the M&A-driven growth strategies of both companies are the main points of the merger. The combined company is estimated to have annual sales of 1.8 billion reais and more than 1.4 million subscribers.
The transaction has been approved by the antitrust agency Cade without restrictions, and is awaiting analysis by sector regulator Anatel.
Vero expects Anatel to give its blessing to the deal before the end of this year.
Although operating in various telecom segments, multiple regions and serving a wide range of customers for many years, Algar is not yet a national player but is moving towards becoming one.
The airline’s operating capex totaled 348 million reais in January-September, down 2.4% year-on-year. The focus is on optimizing the use of infrastructure already built in recent years, with a more rational investment strategy.
The conversion of its entire network to fiber and the activation of 5G networks form its investment focus.
Algar reported revenue of 705 million reais in the third quarter, up 4% from a year earlier, with the growth factor being the B2C market.
The total number of broadband accesses increased to 805,600 from 750,800. Of the total, 254,900 were B2B and 550,700 were B2C subscribers.
Mobile accesses increased to 4.48 minutes from 4.37 minutes. Of the total, 3.3 million were M2M, 1.07 million B2C and 108,700 were B2B customers.
Santa Catarina-based Unifique is focusing its capex on ramping up 5G, in addition to adding new FTTH customers.
This month, the company activated its first 5G mobile network in Garuva, Santa Catarina.
Unifique won the auction for regional bands in the south already in 2021 and must deploy 5G in all municipalities with less than 30,000 inhabitants in Santa Catarina and Rio Grande do Sul by the end of 2029
At the end of September, the company reported 3.23 million homes passed (+40.6% year-on-year), 2.16 million gateways (+34.6%) and 715,654 customers (+19.2%).
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