Snapshot: The latest M&A deals in Brazil's ISP sector

Brazil's internet service provider (ISP) market remains one of the world's most competitive, with around 12,000 formally registered companies operating in different regions and segments, a situation which has long been fueling M&As in the sector.

The need for heavy investments in infrastructure and scale issues for negotiations with suppliers are two key factors favoring the consolidation of companies. 

In the last few months alone, there have been several dozen acquisitions of smaller players by larger ISPs, with other negotiations underway.

At least two executives in the sector confirmed to BNamericas, on condition of anonymity due to the strategic nature of the deals, that their mid-sized companies will both announce acquisitions in the coming weeks, one in southeast Brazil and the other in the north. 

After a 23% decline in M&A deals last year, the technology, media and telecommunications (TMT) sector as a whole recorded 216 transactions in the second quarter of 2024, an increase of 11% compared with the same period of last year, when 194 transactions were reported, according to a study of the segment by KPMG.

Last month, Brasil TecPar announced a deal to acquire control of the ISPs ALT, GGNet and ItelFibra, a group known as “ALT-GGNet”, for 376 million reais (US$67mn), its biggest M&A to date.

In July, the company acquired ISP Nova Telecom, based in Minas Gerais, for 74.7mn reais. Brasil TecPar has set itself the goal of being one of the 10 largest ISPs in the country. The company is also betting on the corporate market to expand.

“Brasil TecPar has been growing exponentially, making several acquisitions and also expanding organically. The same thing is happening on the corporate front. A big task now is to leverage the synergy of the new networks,” Márcio Estefan, CCO of Brasil TecPar’s B2B arm Ávato Tecnologia, told BNamericas in January.

In June, Alares acquired São Paulo state-focused Azza Telecom for 188mn reais. At the time, the company said that the deal would push it to become the sixth largest ISP in the country and the fourth largest in São Paulo state.

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

Also in May, Sky, owned by Argentina's Grupo Werthein, made its first two acquisitions of fiber ISPs as part its bid to grow in fixed broadband. It acquired the client base and the assets of operators Netsulminas, in Minas Gerais state, and Level Link, in Ceará.

The company has said that it intends to continue making acquisitions in the sector, while also betting on the use of neutral fiber networks to expand its footprint.

Meanwhile, Master Internet, from Minas Gerais state, announced in May that it was acquiring four ISPs to strengthen its presence in the interior of São Paulo state. Previously, in February, Paraíba’s Proxxima Telecom acquired a group of providers belonging to Grupo Rex in Bahia state for an undisclosed amount.

Vero, which merged its operations with AmericaNet last year, is also trying to consolidate. 

Recently, CEO Fabiano Ferreira said that the company had several deals on the table regarding potential acquisitions of other ISPs. 

Desktop, which confirmed that it is in talks with Telefônica Brasil for the possible sale of its network, also intends to resume acquisitions of smaller companies.

In a conference call last month, Desktop's CFO, and M&A and investor relations director Bruno Leão said that the company is “in advanced talks for M&As” especially of companies in areas adjacent to its operations. 

At the time, Leão said that the ISP market in Brazil had regained a good “price balance” for consolidation.