Two Brazilian ISPs in year-end consolidation mode

Two of Brazil's largest internet service providers (ISPs) added new companies to their post-IPO portfolio as an active M&A year in the country's regional telecoms segment draws to an end.

Desktop, a company with a significant footprint in São Paulo state, announced three transactions in December. The group went public in July.

The most recent was the signing of a contract to acquire ISP Infolog, which offers fiber broadband in the state’s coastal region, for 10mn reais (US$1.76mn).

Infolog is projected to end the year with 16,000 subscribers and gross revenue of 17mn reais, according to Desktop, for whom the acquisition is seen generating 2mn reais in synergies, according to a disclosure. 

The deal also strengthens Desktop's presence in the greater Santos region of São Paulo state.

Also this month, Desktop completed the incorporation of ISP Isso Internet and Telecomunicações, which operates in the greater São Paulo region, and the purchase of LPNet, which operates in the interior of the state.

According to regulator Anatel, Desktop ended November with over 500,000 clients, 395,000 of which were for fiber broadband, 96,000 for fixed telephony and 9,100 for pay TV.

UNIFIQUE

Unifique, for its part, announced on December 23 the acquisition of ISP Guaíba Telecomunicações, which operates in Rio Grande do Sul state, for 60.9mn reais.

Unifique completed its IPO in August.

Of the total, 13.4mn reais are in debt to be assumed by Unifique and 47.5mn reais in equity, according to a disclosure. 

Of the equity part, 20% will be paid in an initial instalment and the other 80% is due to be disbursed in monthly and consecutive instalments divided into three tranches.

Guaíba has 20,000 subscribers (80% via fiber optics) in the cities of Porto Alegre, Eldorado do Sul, Mariana Pimentel, Guaíba, Barra do Ribeiro and Sertão Santana, said Unifique, whose footprint is largely concentrated on Santa Catarina state, with smaller operations also in Paraná and Rio Grande do Sul.

The geographic region in which Guaíba operates is adjacent to Unifique's current operations in Rio Grande do Sul, which the latter sees as an opportunity to capture "relevant operational synergies."

Guaíba also has a portfolio of products with plans and speeds in line with those offered by Unifique and has a base of corporate customers and access revenue similar to those of Unifique.

Unifique had 541,000 clients as of November, according to Anatel. Of these, 460,000 were fiber broadband customers, 19,300 pay TV and 61,000 fixed telephony. 

The company acquired spectrum in Brazil's 5G tender, held in November, becoming one of the new players in the country's mobile market.

Brazil's largest ISPs and regional operators, by fiber broadband accesses, are Brisanet (3.3% of the fiber market in November), Algar (2.8%), Unifique (1.8%), Desktop (1.6%), Sumicity (1.5%) and AmericaNet (1.5%).