At the end of 2013, telecom operators found themselves in a fairly solid position globally, having increased industry revenue to approximately $2 trillion by the end of the year according to Infonetics Research. Looking ahead, sector growth in the U.S. is to remain steady in the short term, but the biggest drivers will be emerging markets like Brazil.


Telecom Market Growth in Brazil


2013 telecommunications statistics from Brazil make it abundantly clear that the country is a perfect target for providers looking to expand their international reach and grow their business. For instance, Brazil’s broadband connections grew by a staggering 55 percent last year at an average of 1.5 new connections per second. According to Frost & Sullivan, the telecommunications services market in Brazil is expected to reach almost $100 billion by 2017 — up from just over $73 billion 2011 — representing a CAGR of more than five percent.


Furthermore, mobile broadband on 3G and 4G networks drove massive broadband expansion last year, reaching 111 million connections by the end of December. Still, in part because 4G is still relatively sparse across the country, Brazil typically ranks below 70th in download speed for countries throughout the world, according to conducts about five million Internet speeds tests from more than 2,500 servers every day and compiles a speed ranking based on the mean speed over the previous 30 days.


Driver’s of Growth for 2014


The combination of a hunger for 4G and the fact that two of the world’s biggest sporting events are to be held in Brazil over the next three years is part of what makes the country a unique and exciting opportunity for telecom operators. The first of the two events, the World Cup, will take place in stadiums across Brazil later this year and is expected to draw about 350 million television viewers worldwide. This is about equal to the Winter Games opening ceremony, closing ceremony, and the Super Bowl—combined.


The popularity of soccer and anticipation for the World Cup is already driving demand for connection to applications like social media and gaming. Not only will Brazilians be looking to get their hands on World Cup content, but the influx of an estimated 600,000 tourists will be looking to connect as well.


Soon after the World Cup ends, the country will ramp up preparations for the 2016 Summer Games, to be held in Rio de Janeiro. About three-quarters of contracts for The Games will be completed over the next two years, giving telecoms the opportunity to submit RFPs and secure the right to provide services and equipment for the event itself.


Market Development for Telecom Operators


Adding to the scope of opportunity in Brazil is deregulation of the country’s cable TV market. Telecoms are now permitted to offer cable and Internet Protocol television services (IPTV) together, which is expected to expedite adoption. Development of over-the-top (OTT) applications on broadband networks; standalone and bundle offerings with pay TV services; and innovative mobile solutions will drive revenue as well.


“The pay TV, fixed broadband, mobile data, and value-added service segments in Brazil are expected to grow the fastest due to their low penetration rates,” said Frost & Sullivan Telecommunications Industry Manager Renato Pasquini.


Finally, telecom operators may soon also have opportunities to improve their security using big data analytics. Customers’ fears about the security of their information on a provider’s network can lead to high rates of churn and significant loss for telecom operators. But, by contrast, establishing a reputation as an operator committed to security can raise retention rates and profits. According to Research and Markets’ study, entitled “Insights into Big Data and Analytics in Brazil,” some financial companies, retailers, and telecoms have already started examining potential partnerships with IT firms to implement fraud analytics and other security solutions.


Infrastructure, Collaborations, and Government Agencies


While telecom operators should certainly look at Brazil as a major opportunity for growth, there remain some hurdles to be jumped. For example, taxes on network services and equipment have come down in recent years but still remain among the highest in South America. For that reason, providers may need to find creative ways to keep expenses low.


“Telecom operators need to negotiate with each other, with utilities and road concessionaires, with the Government, and with third-party companies,” Pasquini adds. “This will enable them to minimize costs, avoid bureaucracy for infrastructure deployment and infrastructure sharing, and receive regulatory incentives such as unbundling, leased lines, and interconnection regimes.”


Challenges aside, the next three to five years in Brazil represent a rare opportunity for expansion. One of the most critical factors in deciding whether or not to expand a business internationally is determining whether demand for the product justifies the move. For telecom operators in Brazil, that question has already been answered.


The only question that remains, then, is which operators will seize the opportunity and which will watch helplessly from the sidelines.


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