Pop to turn profit Sept. 2004

Brazilian Internet service provider Pop expects to report profits in September 2004 - a year after hitting operational breakeven, and two years after launching operations, Pop chief executive Sergio Creimer told BNamericas. Growth will come thanks to the launch this week of operations in the city of Sao Paulo, which will boost banner ads and sponsored link revenue, Creimer said. Pop expects to add one million subscribers to its customer base between now and year-end, reaching 2.5 million. Because the portal will be seen by more people, Pop will be able to charge advertisers more to place their ads and links. Ads and link revenue currently make up 40% of Pop's total billing, with 60% coming from e-commerce transactions. Pop uses the network of Brazilian telco GVT, which holds a 15% stake in Pop. Despite GVT's position as shareholder, Pop does not receive a share of the revenue the operator reaps from higher local call traffic, Creimer said. Pop is known as a "free ISP" in Brazil, meaning it does not charge for services, but local telephone companies charge users for the time they spend online, according to local telephony rates. To date Pop has operated only in Brazil's central-west and southern regions - matching GVT's concession area. "Competition is the same in Sao Paulo [compared to the central-west and south] except you have Telefonica's service iTelefonica in Sao Paulo as well," Creimer said. GVT launched operations in Sao Paulo in August. Pop plans to expand to the cities of Rio de Janeiro and Belo Horizonte in the first half of 2004, he said, adding that the company expects to invest 20mn reais in 2003, of which 1.5mn reais was spent on the purchase of new servers for the Sao Paulo expansion. Pop is controlled by a European investment fund called Inoweb.