WDC Networks: Cloudy solar outlook, but bright ICT sales

Brazilian distributor WDC Networks expects increases in telecoms, security and hardware sales this year, but a drop in photovoltaic and inverter shipments, CEO Vanderlei Rigatieri told BNamericas.

The company is a major reseller of energy and telecoms products manufactured by Huawei, Fiberhome, Nokia, Solis and Panduit, among others.

“2023 was a really challenging year. We have three major businesses: telecom, corporate and photovoltaic solar energy. In 2023, solar in Brazil was under a lot of pressure. We sellers of distributed generation products, mainly for residential and small businesses, suffered a strong blow due to the international situation and domestic issues,” the executive said.

The sector was hit by high interest rates, limited availability of bank loans for solar equipment installations and by a concentration of orders in 2022 as an incentive program expired last year.

Around 70% of the distributed generation business requires financing to set up the projects and install photovoltaic equipment, according to the executive.

Also, the price of Chinese products dropped considerably due to an increase in stock, Rigatieri said. In late 2022, companies were selling solar equipment at US$0.25/watt. Now, WDC is buying the same devices for US$0.11/watt. “Everybody then had to sell below cost prices.”

WDC is yet to disclose full 2023 results. In 3Q22, total sales tumbled 37% year-on-year to 274mn reais (US$55.7mn).

TELECOM

Telecom accounted for 40% of the total, but these sales still fell 55.2% as ISPs slowed fiber deployments amid market saturation to focus on utilizing existing networks.

Rigatieri expects the telecom segment to “move sideways” in 2024, with sales of optical products and cables to ISPs remaining weak, but with the prospect of upselling other products.

In 2023, WDC managed to increase market share, albeit selling smaller volumes at lower prices, according to the executive.

Many providers are now looking to diversify their business and offer new services to end-customers. Besides, new financing from development bank BNDES for providers is also seen as an opportunity, he added.

Lots of opportunities are arising in the business sector, in addition to homes, according to Rigatieri. “About 90% of ISPs are retail oriented. We need to look at the enterprises.”

In addition to the complicated scenario, the company’s telecoms results have been adversely affected by irregular supply since 2022, due to the shortage of semiconductors. 

“This situation led us this year to strengthen our partnership with Finnish company Nokia in the FTTH, IP router and DWDM segments, and deliver our first 5G private network with this technology. For 2024, we are expanding our partnership with Chinese giant Huawei for all technologies marketed by it in Brazil. We also developed our own Easy4Link brand for fiber optic cables,” the company said in its 3Q23 financial report.

In Brazil, WDC is the exclusive distributor of Huawei datacenter solutions and has the Chinese company's complete telecom portfolio.

CORPORATE AND HARDWARE

Among WDC's highlights last year were the sales of equipment for electronic and property security and equipment for so-called out-of-home media, such as LED panels and billboards.

Main opportunities for this year include sales of equipment and accessories for companies' private datacenters and for universities and schools. 

WDC recently won a contract with a large education group in Brazil, with hundreds of units in the country, for the supply of different types of hardware, especially aimed at datacenters, Rigatieri said. 

"We are directing WDC’s work from now on not only in terms of product. We are looking to be more customer-oriented, vertical-oriented. We want to take advantage of the portfolio to offer different solutions combined. Energy, mini datacenters, interactive screens for the classroom, Wi-Fi circuits, access control, facial recognition."

Rigatieri also sees opportunities in the supply of equipment, together with partners, for urban mobility concession projects, as well as for remote monitoring of power substations, including with drones.

The company is a supplier, for example, for the Rodovia dos Tamoios highway concessionaire in São Paulo state.

COLOMBIA

Another prominent market where WDC operates is Colombia.

Rigatieri sees that market as being around five years behind Brazil in terms of digitization and evolution of the ISP segment, which opens up great opportunities, especially for the sale of fiber and optical equipment.

The executive did not give details of investments in Colombia, but said WDC has increased its office area fivefold and expanded relationships with companies and prospective customers.

Colombia’s ICT ministry is offering subsidies for ISPs to modernize and expand their networks to underserved areas.

“We have won several projects, with Huawei equipment, together with the providers that are participating,” said Rigatieri.

The company does not offer the solar line in Colombia, but is increasing its overall product portfolio in the country.

Recently, WDC also won a contract with a local integrator to supply cameras to the TransMilenio bus system in Bogotá.

The launch of 5G after the auction is expected to increase sales of fiber equipment. “There is no 5G without fiber. There will have to be fiber infrastructure to interconnect the towers. We see good opportunities there,” Rigatieri said.