Japanese company plans to go beyond telecommunications segment with digital services
José Renato Gonçalves — Foto: Ana Paula Paiva/Valor
Nearing the end of its 55th year in the country, the Japanese company NEC plans to diversify its range of services in order to grow beyond the telecommunications segment, which represents about 70% of its earnings in Brazil. The goal is to double revenues in three years with digital services related to smart cities, digital identification, agribusiness, and health.
Listed in Japan, NEC does not disclose figures on its Brazilian operation — the company’s president in the country, José Renato Gonçalves, only discloses that the earnings from Latin America grew “about 20%” in the fiscal year 2022, which ended on March 31. The percentage is about twice that reported globally. In the same period (April 2022 to March 2023), NEC Corporation’s revenues increased 9.9% compared to the previous fiscal year.
NEC Corporation ended fiscal 2022 with consolidated revenues of 3.3 trillion yen (about $111 billion at Wednesday’s exchange rate). Net income reached 114.5 billion yen (almost R$4 billion).
In the case of Brazil, part of revenue increase came from 5G. Although the timeline set by the telecoms regulator Anatel for the deployment of the technology extends to 2030, in practice, operators are anticipating coverage targets. “It’s a pillar of our growth for the medium term: 2024 and 2025,” said Mr. Gonçalves, who has led the company since September 2022.
To stand out in a fiercely competitive market, the Japanese company is positioning itself as an “integrator” of networks and technologies. It sells equipment from partners that may even be competitors in certain markets, such as Cisco in the United States, but increases its profit margin by acting as a consultant in the implementation of networks using products from different manufacturers.
In Brazil, it is common for large carriers to use base transceiver station from at least two different vendors. BMSs are the devices responsible for connecting mobile phones to the operator.
Within this logic of not being dependent on a single supplier, NEC is betting on the global growth of unbundled access networks (OpenRAN). These are networks with open standards that allow equipment from different manufacturers to be used within the same network to provide telecommunications services.
“It is an open [network] architecture that gives you the ability to build applications on top of it. And create an ecosystem,” said Mr. Gonçalves, who was previously vice president of Latin American operations at Orange Business Services.
Services to large carriers account for 70% of NEC’s revenues in Brazil and will continue to be the company’s focus, but it is expected to accelerate the expansion of the business lines that generate the remaining 30%.
For example, the company is seeking new revenues in the agribusiness sector through a service package that combines artificial intelligence with satellite and drone imagery, in addition to information collected by meteorological sensors.
The idea is to have customized data for each type of crop and charge customers based on the number of acres monitored. The service package is in a pilot phase in agricultural cooperatives in Pernambuco and Minas Gerais.
In the area of smart cities, NEC is active in Argentina with services related to urban mobility and public safety (using cameras, biometrics, and artificial intelligence resources).
The Japanese company brings to Brazil a technology to identify babies through their fingerprints. In the case of newborns, the technical difficulty in implementing this type of biometrics is that the lines that make up the child’s fingerprints are more difficult to “read.”
In Africa, this digital baby identification technology is being used for immunization control in the absence of immunization records. In Brazil, a pilot program will be launched in the next two months, focusing on safety in maternity hospitals.
*Por Rodrigo Carro — Rio de Janeiro
Source: Valor International