Brisanet gets ready to compete in 5G auction

Brisanet faz IPO hoje e se torna a 9ª empresa cearense a abrir capital na  Bolsa - Negócios - Diário do Nordeste

After lining up R$1.4 billion with its debut offer on the stock exchange this year, the fiber-optic internet provider Brisanet is getting ready to compete for the 3.5 GHz regional lot in the 5G auction next month.

The lot includes one of the least profitable parts of the sector, which is the commitment to take the internet to 1,423 municipalities with less than 30,000 inhabitants in the Northeast region. Still, Brisanet CEO Roberto Nogueira believes there will be more than one interested.

The regional lots cannot be contested by large telecommunications companies but may be the target of new market entrants, such as investment funds. In an interview with Valor, Mr. Nogueira said Brisanet will enter the dispute alone, without forming a consortium. “We won’t have a partnership, we’ll fill this space,” he said.

For Mr. Nogueira, the challenge of taking fiber internet to remote areas in the Northeast region is not as big for Brisanet as for other companies in the sector. Over the past 11 years, the company has been connecting to small municipalities in the region, with significant growth as of 2015.

“We have a competitive advantage. The challenge for other companies is not just to invest in 5G, but to have capillarity and a business model with returns like the one we have structured over the last 15 years,” he says.

For Mr. Nogueira, revenues for regional lots should not be that large, as they would make an investment by companies unfeasible.

In 1998, in the city of Pereiro (Ceará state), Mr. Nogueira, then a 26-year-old small entrepreneur, implemented in town the first low-cost internet by radio in the country. That year, the municipality still did not have a telephone line, which was crucial for establishing a connection. About 23 years later, last June, Brisanet launched an IPO.

In recent years, the company’s operation has grown to the point of challenging large telecommunications companies in the region. The company ended September with 790,731 customers spread across seven states in the Northeast region – Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas, Piauí, and Sergipe –, and with its fiber cabling passing in front of more than 3.7 million households in 110 cities. During the month, 129,000 ports were added, corresponding to 213,000 homes.

In an initial coverage report of Brisanet’s shares, BTG stated that, in the Northeast region, the company benefits from an environment of less competition in relation to other regions of the country.

However, according to the company itself, competition with small providers has grown. In September, the increase in the customer base was 17,800, lower than initially estimated.

“Even being the largest organic growth among internet providers, Brisanet expected to be growing at a faster pace. However, the current situation, in which inflation has affected the purchasing power of families, especially in the Northeast region, where the poor are more numerous, and competition for prices with small providers has made the migration process to more gradual and slower Brisanet”, the company said in a statement.

Source: Valor international