Following our latest article on Brazil, Brazil Only Second to the US, in which we discussed just how Brazil has become the leading and biggest economy in South America, The CEO Game moves the focus to the Brazilian communications and the possible effects of the 2016 Olympic games to be held in Rio de Janeiro, on them.
Beside being well famous for their wave surfing skills, the Brazilian people are also the world’s record holders of web surfing. Why are we telling you this? Good question. The answer is that Brazil is booming in terms of communication, everywhere you look around there are investors who are bringing in big bucks. Take GVT’s acquisition for instance, GVT is a communications company operating in Brazil, which was bought last month for 4.2$ millions. Big bucks indeed. Their success is protruded by the country’s status ten years ago, when vast areas of Brazil lacked telephony infrastructure like the rain forests and the Amazonas.
Until a couple of years ago, the situation in the big cities resembled the one of a developing country in the 70’s: the citizens would have to wait for years in order to get a phone line in home and would suffer from poor and sluggish services. Today, Brazil has got 140 million mobile users, 40 million registered phone lines and more than 10 million broadband Internet users.
Considering the fact that 192 million people live in Brazil, these three “quotes” are still far from fulfilling their potential. In the field of mobile phones, the most satiated field of all three, 80% of the users- most of them belonging to the low class, do it by a prepaid card. If Brazil continues to grow, it is obvious that the number of users who pay monthly to the cellular companies will rise. In the end of the 90’s, the government had decided to expand the wired communications infrastructure in the country by increasing the competition.
Therefore, Brazil began creating “mirror auctions“, which allowed private companies to found all across Brazil, rival phone companies that will compete with the big government’s companies which ruled over all the place. “The transition that Brazil has made in the field of telecommunications, goes hand in hand with the vast changes the country is going through in the last decade”, explains the CEO of the aforementioned GVT. “What happened in GVT- couldn’t happen in a different developing country- the rise in the life quality of entire demographic layers, created a huge demand and market, which is growing on a daily basis” he added.
One of the reasons for the competitiveness in the field is the very existence of a strong and independent regulator. This regulator answers to the name of Anatel and is composed from 5 officials that where appointed by the Brazilian congress and cannot be fired. Sweet working conditions. “A strong regulator can make decisions that don’t serve the companies’ interests and no communications company can stand in the way“, the CEO says. The Brazilians are notorious for being web addicts, like mentioned above they lead in the number of surfing hours per person. Yet, only 10 million citizens are surfing via a broadband connection and even in the main cities it is sometimes hard to find wireless networks.
They surf by using a regular phone line. This antique method of surfing, has a different tariff from a regular phone call and in the weekends and nights the prices are real low. The Brazilians simply prefer this because the price for a broadband connection is 30$ a month. Many companies earn millions of dollars just from the customers who use the phone line in order to surf the web.
The Olympics and the World Cup soccer games are expected to give a huge bolster to the broadband connection. In fact, the government has initiated a new national project its goal- in the year 2014 some 90% of the population will have a broadband connection (hurray). The project is just another step for the telecommunication market in Brazil.
In conclusion, as far as the Brazilian communications go, there is still a huge potential. After the mobile phones and Internet bandwidth, the next profitable area will be cable TV. Because of legal problems, there is only a small infiltration of cable TV in Brazil. In spite of it, there are signs that things are starting to change and there is a big chance for profits.
The CEO Game.