How Upix Networks is increasing its fiber and datacenter footprints

With over 40,000km of networks, 1,500 customers and presence in 15 countries, connectivity service provider Upix Networks is investing to enlarge its footprint across Latin America, including through acquisitions.

Based in Miami and São Paulo, the company focuses on providing connectivity to global and regional internet companies and ISPs, through interconnection with major datacenters, with its own edge datacenters, and with fiber backbones providing last-mile connectivity to submarine cables in the US and Latin America.

In this interview, CEO Ronaldo Pelizon details these projects, talks about the competition, potential financing from investment funds and more.

BNamericas: How is Upix building its network and footprint in Latin America?

Pelizon: We are a telecom operator present in the US, Brazil, and we have now opened an operation in Colombia, with prospects of opening in Chile, Argentina and Mexico, in 2023 or 2024.

We want to consolidate ourselves over time as a major fiber and datacenter infrastructure operator – not with our own, proprietary large datacenters, but with smaller datacenters at the edge in several regions. And then make use of third-party large datacenters, all to offer infrastructure to our customers on a global level.

In terms of network, Upix has infrastructure today in nine countries [points of presence in Brazil, US, Chile, Colombia, Mexico, Spain, Portugal, Holland and France], approaching 10.

Our biggest infrastructure is in Brazil. 

We have a lot of fiber network in São Paulo, some fiber network in Rio de Janeiro, and a little bit in Fortaleza. In Manaus we recently built 40km of network. And we have a network in Porto Alegre, which is in the final stages of construction. This is all our own network, which is about 10,000km.

Taking into account fiber swaps, dark fiber acquisitions and other partnerships, we reach a total of 40,000km of illuminated (active) networks.

In the US, we have DWDM [dense wavelength division multiplexing, electromagnetic spectrum for optical transmission] spectrum between Miami and Jacksonville, which are two important arrival points for submarine cables. 

And we have contracted spectrum in the US between New York and New Jersey – submarine cables also arrive in New Jersey – and from New Jersey to Ashburn, which is also an important point of connectivity in the country and where some submarine cables equally anchor.

For the second half of 2023, we want to connect Ashburn to Jacksonville with our own network.

BNamericas: These are several investment fronts.

Pelizon: Yes. Upix was born as an US operator, with the aim of serving US companies in Latin America. And we realized that the opposite movement would also make sense.

So we built some infrastructure in the US to serve companies in Latin America. Mainly submarine cable companies, which arrive there and need to connect the cables to cable landing stations and datacenters. We have invested in the expansion of this infrastructure to serve this last mile, as demand has increased significantly in recent months.

BNamericas: The datacenter edge bet is to integrate with your own network?

Pelizon: Our idea of datacenter edge is to bring together various CDNs [content delivery networks] and OTT content. From these edges datacenter, in more remote locations, where submarine cables do not reach, the idea is to concentrate the contents and distribute them locally to ISPs.

We did this in Manaus with a very small edge datacenter. We are doing this in Porto Alegre as well. With that, ISPs don't have to go looking for content [for end-users] in São Paulo, for example.

For submarine cable operators, our proposal is to provide the last mile between cable landing stations and large datacenters, such as those of Equinix, Ascenty, or Digital Realty[in the US].

BNamericas: Have you defined the roadmap for these new markets in Latin America? Which structure comes first?

Pelizon: Our idea is to make acquisitions in these countries, just as we did the acquisition of 76 Telecom in São Paulo. Acquisitions of companies that fit our target, so we can start operations through an existing fiber optics infrastructure.

We are already talking to some operators. Some are already in the due diligence process.

Our roadmap relies heavily on these conversations. But we are well advanced in Colombia and Chile. In Mexico, which would be our third expansion leg, we are still in the prospecting phase.

BNamericas: How do you finance this expansion? With Upix's own cash?

Pelizon: Today we are carrying out all operations with our own cash, with resources coming from our growth. 

But from the second half onwards, we should start talking to funds that might want to finance our operation. It's still not our main idea. Our idea is to seek some kind of financing. But funds will naturally show up. 

We have some advisers looking on this front, but nothing concrete yet.

BNamericas: What is your current customer base?

Pelizon: We have around 1,500 unique corporate customers, divided into OTTs, banks, submarine cable companies and ISPs.

The biggest revenue is in Brazil. Because as much as the clients are multinationals, they pay locally. If we perform the service in Brazil, it counts as Brazil. If we have the invoicing in Colombia, then we open an operation there.

Prior to the acquisition of 76 Telecom, our largest customer base was international. Now, with the incorporation of the company's clients, our base is much larger in Brazil.

BNamericas: When do you expect to conclude this integration?

Pelizon: We expect to conclude it by the end of this quarter. As it is a small operation, approval from [antitrust regulator] Cade is not required.

BNamericas: How much do all these initiatives represent in investments for the year? And how big is your headcount?

Pelizon: Our budget, without acquisitions, only considering infrastructure expansion, should reach 80mn reais this year. With acquisitions, we are still calculating what we are going to spend. There are companies that we are looking at that are valued at over 100mn reais.

We have around 150 direct employees working for and with us, and hundreds more indirectly. 

Our employees are spread across São Paulo, Fortaleza, Rio de Janeiro and, now, Porto Alegre, with a team that should arrive by the end of the month. In Porto Alegre, we intend to launch an office in the second half of the year. We also have employees in Miami, Chicago and Bogotá, Colombia.

BNamericas: Do you have plans to open a local operation in Fortaleza?

Pelizon: We are present in all connectivity datacenters in Fortaleza. We are at GlobeNet [V.tal], Angonap [Angola Cables], Telxius, Ascenty, in all datacenters where customers are connected. We have a lot of leased infrastructure, our CTO is from there, we already have customers connected there.

We haven't built any edge structure in the city yet. We have an idea of doing so, but nothing planned. Maybe we'll sit down at the table mid-year to talk about these investments. But currently we already have several investment fronts to deal with.

In Porto Alegre, we are present in a local datacenter [owned by TriTelecom]. There are internet exchange points in Porto Alegre. We're assessing entering Elea Digital, among others.

Now, in March, we should finish the optical ring in the city. Then we will officially launch the operation there.

BNamericas: How big is this Porto Alegre optical network?

Pelizon: Approximately 35km, initially. It's going to connect some of the datacenters and some of the points where the ISPs are most connected. The idea is to set up a datacenter edge for the ISPs right in the center of the city.

BNamericas: What do you understand by edge?

Pelizon: We understand datacenter edge as a connectivity datacenter, to centralize content, in decentralized parts of the territories.

With the connections we have around the world, we are able to build an ecosystem of connectivity and routing to deliver content. Our concept is small datacenters. Not to lease space, but to concentrate what we need in terms of connectivity to deliver it all to customers, the ISPs.

BNamericas: How does Upix differentiate itself from the growing competition?

Pelizon: What sets us apart is having built a strong international structure. We are present in nine countries and, with interconnection, in 15 countries. All this infrastructure is our own, we have equipment in all these countries.

We build or rent data transport between countries. Our network operations center staff speaks three languages. 

And for ISPs, I would say that our biggest differential is the construction of these edges, which few companies are doing. I don't know many that are doing this, the way we are doing, in more remote areas to bring content closer to ISP customers so they can have a much better browsing experience.