Brazilian ISP Alares’ Strategic Focus on M&A and the Corporate Segment
Amid the continued consolidation of the internet market, Brazilian internet service provider (ISP) Alares aims to be a buyer rather than a seller. Alares is positioning itself as a key player in this dynamic market transformation, planning new mergers and acquisitions (M&A) and focusing on the corporate segment as primary growth vectors.
Introducing Alares Empresas
Alares has recently unveiled its new brand, Alares Empresas, under a renewed strategy to address the corporate segment. This move positions Alares alongside competitors such as Americanet, now known as Vero, and Brasil TecPar, which are also focusing on B2B markets. Currently, about 5% of Alares’ customer base consists of B2B clients, contributing approximately 10% of the company’s revenue.
The focus for Alares Empresas will be primarily on the wholesale market, providing capacity to third parties through its extensive fiber backbone. The brand aims to serve small, medium, and even large enterprises, capitalizing on its robust infrastructure.
National Backbone and Investments
Alares operates in 180 cities across seven Brazilian states, supported by a national backbone that stretches over 23,000 km. This extensive network recently underwent significant capacity improvements, enhancing its ability to meet growing demand. The company’s main network equipment suppliers include industry giants like ZTE, Zyxel Networks, Huawei, and Nokia.
In early June, Alares completed the consolidation of all its systems into a single network operations center (NOC) located in Ourinhos, São Paulo. This investment was substantial, focusing on infrastructure and staffing to ensure seamless operations and superior service delivery.
Competitive Landscape and M&A Strategy
The Brazilian fiber broadband market is experiencing a new wave of M&A activities. Alares, traditionally active in M&A, acquired Webby in October 2023. Following the acquisition, Alares has focused on integrating Webby’s systems, personnel, and back-office functions. With this integration completed, Alares is set to phase out the Webby brand and replace it with Alares.
CEO Denis Ferreira hinted at potential new acquisitions before the end of the year, although specific details remain undisclosed. Despite a competitive environment marked by an ongoing “price war,” Alares continues to gain customers month after month, not counting its acquisitions. However, Ferreira noted that the price war is unhealthy, creating profitability challenges, especially for highly leveraged companies.
Market Consolidation Trends
The fiber broadband market’s consolidation is characterized by significant mergers among established players and the acquisition of smaller ISPs by larger firms. In 2023, Vero and Americanet announced a merger, while Ligga, the largest ISP in Paraná, began negotiations with the neutral network V.tal. Telefónica has also been involved in discussions to acquire Desktop, the largest ISP in São Paulo.
These consolidations indicate a trend towards stronger market positions for established players, with Alares poised to be a significant consolidator in this evolving landscape.
Conclusion
Alares’ strategic focus on M&A and the corporate segment, coupled with its robust infrastructure and recent investments, positions it as a key player in the Brazilian ISP market. With the unveiling of Alares Empresas and ongoing efforts to integrate new acquisitions, Alares is well-prepared to navigate the competitive landscape and continue its growth trajectory. As the market evolves, Alares aims to lead by example, leveraging its strengths to provide superior service and support to its corporate and retail customers.
Stay tuned for more updates as Alares continues to shape the future of Brazil’s internet service landscape.
Keep an eye on Alares’ journey and see how it continues to innovate and lead in the Brazilian ISP market.