Brazil's Brisanet plans to cut network investments in 2025

Brisanet, Brazil's second largest internet service provider, projects a reduction in investments in 2025 despite the expansion of its 5G network.

The company is targeting capex of 700mn reais (US$123mn) for this year, CEO José Roberto Nogueira said in a Q4 earnings call, down 30% from 995mn reais in 2024.

In 2023, Brisanet's capex was 464mn reais, down from 857mn in 2022 and 1.04bn in 2021.

Last year was the second largest amount mainly due to the launch and roll-out of its mobile operation.

Final capex was 24% higher than Brisanet's initial guidance for 2024, which was 800mn reais.

Nogueira partially attributed the increase to greater equipment inventory on the back of 5G and of client base growth. It is precisely this inventory that will allow the company to moderate investments this year, he said.

Brisanet's capex-to-revenue ratio of nearly 70% in 2024 is one of the highest among telecom companies, whose rates rarely exceed 50%.

Brazil market leader Telefônica reported a 16.4% capex-to-revenue ratio in 2024. 

One explanation is that Brisanet is in a growth stage compared to established players.

Breakdown

Of the total invested last year, 50% went to the 5G operation compared to 15% in 2023 and 33% in 2022.

A further 25% of 2024 capex went to the activation of residential customers, compared to 38% in 2023 and 24% in 2022. Backbone and network, in turn, accounted for 13%, up from 3% and 11%, respectively.

Brisanet ended 2024 with a net debt to Ebitda ratio of 2.25, compared to 1.29 in 2023.

The company posted full-year net revenues of 1.43bn reais, up 16% but the capex increase and financial expenses led the company's net profit to plummet 65% to 60.8mn reais.

Auctions

Brisanet has been particularly eager for spectrum auctions.

It was the main winner of a second mobile reverse auction carried out to connect small locations in the country.

Last year, the company had already acquired important lots in the first of these auctions.