Brazilian NET Serviços, owned by América Móvil, plays an important role for the company by selling triple play services (fixed broadband, pay-TV and wireline phone). América Móvil attributes its Brazilian second quarter revenue growth—which was up 4.1% year-on-year to U.S.$3.7 billion (R$7.5 billion)— to the increase in both fixed-broadband and pay-TV services, which climbed 28.6% and 26.6% respectively. NET Serviços’ net revenue for the same period reached almost U.S. $1 billion (R$1.927 billion).
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The company’s goals include increasing the number of municipalities that it provides cable TV, fixed telephony and broadband services from 93 to more than 200. Strategies also include continuing to deploy Wi-Fi hotspots in the cities of São Paulo and Rio de Janeiro. NET Serviços began a pilot hotspot program last year with the objective of adding value for customers, creating loyalty. The company has already installed Wi-Fi hotspots in some cities where it provides services. Hotspots were installed in places where people tend to congregate, such as malls, universities, airports and restaurants.
During this week’s ABTA trade show and congress held in São Paulo, NET Serviços’ president, José Antonio Félix, told members of the press that their investments have been growing year over year. According to the numbers presented at the press conference, NET Serviços’ investments are set to rise by 58% from 2011 to this year, almost double rate they rose from 2010 to 2011. The forecasted investment for this year is U.S.$1.32 billion (R$2.7 billion), more than U.S.$830 million (R$1.7 billion) related to 2011 and U.S.$635 million (R$1.3 billion) from 2010. Félix did not release investment projections for 2013, but he said it might follow a growth trend.
“We expect to keep investments at the same level. This year is a milestone because it marks the beginning of the new regulation (law 12,485), which opened the market nationwide, making the concession national instead of municipal,” said Félix.
As a consequence, NET has already started the licensing process to expand its coverage with the goal of providing services to more than 200 municipalities. “After so many years with operations restricted to the municipalities where we had been granted a cable TV concession, NET will build new networks to offer services in new cities. We are only waiting for the licenses from the Anatel,” said Félix, who leads a company with 5 million customers. “We are the third biggest cable TV operator in the Americas, only behind Comcast and Time Warner Cable.”
When deploying to new cities, NET faces cost challenges, since the operator gets its revenues in Brazilian reals but spends in U.S. dollars to acquire equipment. “The current exchange rate is not favorable, but we will keep expanding. Another issue is the lack of infrastructure, a lot of restrictions and a shortage in the labor force,” he said.
When asked about the possibility of América Móvil unifying the Claro and Net Serviços brands, Félix said it will not happen, at least in the near future. “If it happens, it would greatly benefit our competitors,” he noted.
(The currency exchange rate at time of report: 1 USD = 2.04731 BRL)
