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Portugal Telecom CEO Predicts Growth as Brazil Network Develops

Portugal Telecom SGPS SA (PTC) has great potential for growth in Brazil as investments in the country’s communication network will let it reach new Internet, television and telephone clients, Chief Executive Officer Zeinal Bava said.

“What we have verified in Brazil is that there is a big growth market,” Bava said in a speech in Lisbon late yesterday. Investments in infrastructure ahead of the 2014 soccer World Cup and the Olympics in 2016 will lead to “enormous jumps” in the quality of telecommunication services in Brazil, he said.

Portugal Telecom is betting on its Brazilian unit Oi SA (OIBR4) to counter falling sales in its home country, which is in its third year of recession after seeking a bailout in 2011. Oi, Brazil’s largest landline carrier, is investing about 20 percent of its revenue each year, or 6 billion reais ($2.97 billion), in its network to offer video, Internet and voice calls on mobile devices and landlines, Bava said.

Portugal Telecom’s decision in 2011 to buy a stake in Oi, formerly known as Telemar Norte Leste SA, has been “fundamental” for the company to continue to grow, Bava said.

Mobile penetration in Brazil is about 130 percent compared with a penetration rate of 43 percent for fixed broadband Internet, according to Bava. That means there are 1.3 mobile SIM cards for each person. As the country expands its communication network, this “big asymmetry” is expected to diminish, he said.

Mexico has a broadband Internet penetration of 73 percent to 75 percent and there is no reason for Brazil not to have the same penetration rate,” he said. Penetration in pay television will “probably triple,” he said.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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