BNamericas – We will continue to be consolidating in this…

We will continue to be consolidators in this Brazilian ISP Alares market

Amid the continued consolidation of the internet market, Brazilian internet service provider (ISP) Alares wants to be seen as a buyer rather than a seller.

Alares is a protagonist in this movement and we will continue to be consolidators in this market, CEO Denis Ferreira told BNamericas.

The group, one of the 10 largest ISPs in the country in terms of fiber access, is planning new M&A and betting on the corporate segment as growth vectors.

The company has just announced a new brand, Alares Empresas, under a renewed strategy to address the corporate segment, in which competitors such as Americanet (now called Vero), are well positioned. Brasil TecPar is another ISP shifting its focus to B2B.

About 5% of Alare’s current customer base are B2B customers, which together represent approximately 10% of the company’s revenue. Alares operates in 180 cities in seven Brazilian states.

The B2B focus will be primarily on the wholesale market, providing capacity to third parties with its fiber backbone, as well as services to small, medium and even large companies, Ferreira said.

Alares’ national backbone stretches over 23,000 km and, according to the executive, recently underwent a process to improve capacity. The CEO rules out relying on neutral networks to expand the firm’s fiber infrastructure.

Regarding green expansion, he sees the market again moving sideways in terms of fiber rollout in 2024.

I don’t see the market making the big moves it used to in terms of fiber deployment. Companies, including ours, are now focusing much more on growing where they already are, adding customers to the established network and increasing ARPU, he said.

Alares’ main network equipment suppliers include ZTE, Zyxel Networks, Huawei and Nokia. Alares’ invoicing and CRM system was developed by local firm Interfocus and its ERP by Brazil’s Totvs.

In early June, Alares completed the consolidation of all its systems into a single network operations center (NOC). This facility is located in Ourinhos in the state of São Paulo.

Ferreira did not mention the capital, but said the investment in this NOC was substantial and most of the money went to infrastructure and staff.

M&A

Traditionally active in M&A, Alares made its last acquisition in October 2023 when it took over Webby. Since then, the company has focused on completing the integration process, including back office, systems and personnel.

With this process now complete, the next step is to eliminate the Webby brand and replace it with Alares.

Ferreira remained tight-lipped on the details of the new M&A deals, but said the company is looking at opportunities and hinted that a new acquisition could be announced before the end of the year.

Despite intense competition and an ongoing “price war,” Alares has been gaining customers month after month since last year, not counting its acquisitions, he said.

However, he said the price war is distorting the market.

It’s not healthy and creates profitability problems, especially for high-traffic companies. If you have high braking and price cuts, you will have serious problems, the executive underlined.

consolidation

The fiber broadband market is undergoing a new wave of M&A. In 2023, two important players, Vero and Americanet, announced a merger.

Also last year, as first reported by BNamericas, Ligga, the largest ISP in the state of Paran, began negotiations with the neutral network V.tal, whose partners include Oi and funds linked to BTG Pactual.

Recently, Telefnica admitted it was engaged in talks to buy Desktop, the largest ISP in the state of São Paulo. Market sources say the acquisition has been settled but has not yet been announced.

All these deals between stronger and more established players are coming in parallel with the takeover of smaller ISPs by larger firms, something that has been happening for some time.

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