Brazil’s Desktop takes over rival in third acquisition since IPO

Brazilian fiber internet service provider Desktop completed the acquisition of rival ISP LPNet for 340mn reais (US$60.1mn), the company said in a market filing.

Of the total, 210mn reais will be paid upfront in cash and the other 130mn reais in four annual installments. Another 90mn reals are subject to performance goals by LPNet.

The acquisition is Desktop’s third since it raised 715mn reais in an IPO in July. 

In November, the company completed the acquisition of ISP Net Barretos and prior to that of ISP Startnet.

Desktop is focused on acquiring companies located in geographic areas adjacent to its current operations. Both Desktop and LPNet operate in São Paulo state.

LPNet operates in more than 40 municipalities in the state. With the acquisition, Desktop said its footprint jumps to 100 municipalities with a population of 9mn, and over 3mn homes passed with fiber, 600,000 of which are subscribers.

Source: Desktop

Desktop ended September with 387,000 broadband accesses, accounting for roughly 1% of the Brazilian market, according to regulator Anatel. The figures do not reflect Desktop’s latest acquisitions.

In São Paulo state, the company is now the third player, with 3.6% of all 12.2mn accesses at end-September, only behind São Paulo market leaders Claro (36.4%) and Telefônica Brasil (31.8%).

In fiber broadband, however, Desktop is number two in the state, with 5.9% of total accesses. Telefônica leads with 45.1%.

“We expect the company to continue its shopping spree and become an alternative for those ISPs not big enough to remain competitive in a market in consolidation,” BTG Pactual analysts wrote in September, when Desktop's acquisition of LPNet was first announced.

According to BTG Pactual, the acquisition of LPNet puts Desktop even further ahead of AmericaNet, the second largest ISP in São Paulo state.