Operating Segments

GRI 102-4, 102-6

Telecom Segment

We are part of the everyday lives of individual consumers, small, micro and medium companies, large corporations and telecommunications industry in Brazil, providing safe, modern, robust and integrated solutions with backup always close at hand. Currently, we have a network of around 61,000 km of fiber optic in 16 states (São Paulo, Minas Gerais, Rio de Janeiro, Espírito Santo, Goiás, Mato Grosso do Sul, Paraná, Santa Catarina, Rio Grande do Sul, Alagoas, Bahia, Ceará, Paraíba, Pernambuco, Rio Grande do Norte and Sergipe), in addition to the Federal District, totaling 350 cities.

With our modern infrastructure and the quality of our service, we have achieved a high level of customer satisfaction. In corporate contracts, the renewal rate reached 89% in 2018. In addition, in a two-yearly survey carried out by Expertise’s consultants showed that, in 2018, 94% of our large and medium-sized B2B customers were happy or very happy with our products and services. Our retail business (B2C) shows similar results: ReclameAQUI’s website (for consumer complaints) recognized us, for the third consecutive year, as the Best Company for Consumers in the Telecom Segment, among internet, landline and mobile services. Throughout 2018, we also ranked in first in the Service Performance Index (IDA), published monthly by the National Telecommunications Agency (Anatel), as a provider of telecommunications services with the best service in fixed broadband services, landlines and mobile telephony and paid TV.

Consolidated gross revenue of the Telecom segment reached R$2,698.4 million in 2018, representing 3% growth on 2017. The EBITDA margin reached 42%, up 4 p.p. year-over-year.

Performance Map

Corporate Customers (B2B)

We offer an extensive infrastructure, built with modern technology and supported by a network of around 61,000 km of fiber optics, where:

• 50,000 km, with capillarity and access in the Brazilian Southeast, South, Midwest and Northeast, including 26,514 km in metropolitan regions and connecting over 3,300 buildings (on-net buildings);
• 11,000 km of submarine cable connecting the cities of Praia Grande (SP) and Fortaleza (CE) to Boca Raton (Florida, USA).

We currently have 34 regional offices, ensuring that we can get closer to our corporate clients. Our sales and advisory services include our own units with technical and commercial advisors, making it possible for us to grow in this market and deliver more added value to our customers.

B2B customers are the main focus for Algar Telecom’s growth. We are working to expand our networks in Brazilian regions, in which there are low penetration rates of data services. In addition, we have invested in the densification of the networks already installed, offering products and services to B2B customers, making possible to gain scale and efficiency in the services provided.

Retail Customers (B2C)

The Company is the leader in provision of telecommunications services in 87 municipalities of the states of Minas Gerais, São Paulo, Goiás and Mato Grosso do Sul. In these regions, we have a market share of 76% in fixed broadband, 34% in paid TV and 33% in mobile telephony, according to Anatel’s numbers in December 2018.

Our convergent x-play strategy, with duo-play, triple-play and quadruple-play options (fixed and mobile broadband, landlines and mobile telephony, paid TV and added-value services), meets the needs of over 1.2 million B2C customers, supported by a modern mobile network (3G, 4G and 4.5G) in the 700 MHz, 850 MHz, 1800 MHz and 2100 MHz frequencies. We also have an extensive fixed broadband network, with 58% of customers with UBB services (speeds ranging from 10Mbps to 200Mbps), with xDSLI, HFC and GPON technologies.

Sustainable Development Goals
1 – No Poverty – SDG 1

Algar Telecom has the philosophy of Serving the Region and presents solutions to all audiences, regardless of their purchasing power and social class. To achieve the goal of having access to basic services and new technologies by 2030, we offer fixed and mobile broadband in all regions where we operate in retail, regardless of the city’s size. We promote access to basic services and the due telephony and internet technologies to communities within our concession region, located in over 87 municipalities, with over 1.2 million customers.

We are very proud to have been the first operator in the countryside of Brazil to sell prepaid plans and the first to effectively sell unlocked mobile phones, with initiatives that favor less-favored communities. We have affordable plans for low-income population, keeping a superior quality and excellence in services provided to all our customers, since telephony is a vital service for inclusive education and to make jobs and income generation feasible.

9 – Industry, Innovation and Infrastructure
We are committed to and actively working in two goals of this SDG:

1.    Significantly increase the access to information and communication technologies and strive to maximize the provision of universal and affordable internet access in the least developed countries by 2020.

• Increasing access to technologies through the community is intrinsic to Algar Telecom’s business, which has specific indicators on the access to affordable technologies;
• We provide access to broadband (fixed and mobile) in all municipalities of the retail region in which we operate;
• We remain committed to improving sustainable infrastructures with quality, to guarantee services that can be easily accessed by community in an equitable manner.

2.    Develop quality, reliable, sustainable and resilient infrastructure, including regional and cross-border infrastructure, to support the economic development and the human well-being, focused on the equitable and affordable access for all.

• To achieve this goal, we regularly carry out internal and external audits and we are committed to developing the infrastructure in a sustainable manner, supporting the economic development and human well-being;
• We are committed and structured to be the reference company in digital solutions for the B2B segment in the regions we operate;
• Recognizing our results in 2018 to achieve this goal, we were awarded in the areas of corporate governance, people management, sustainability, innovation and customer service.

TECH – BPO/IT Management Segment

Our Tech – BPO (Business Process Outsourcing)/IT Management Segment operates throughout Latin America, with offices in Colombia, Argentina and Mexico. In Brazil, we have 73 offices and 2 data centers, and we have over 11,000 professionals to ensure the best customer experience and promote innovation and deliveries with excellence.

In 2018, we offer more digital tools to increase operational productivity and better results for our customers. As a result, the segment had an EBITDA margin of 13% in 2018, up 6.3 pp over 2017.

In the Tech segment, our business is divided into three operating fronts: Customer Relationship Management, Technology Environment Management and Telecom Services Management. Our main services are the following:

Customer Relationship Management

• Digital Relationship – Algar Tech simplifies and optimizes the entire service experience, aligning the relationship with the customer to the real needs of the business. Our solution is based on intelligence and automation, allowing a better interaction, at the right time, with the right message, in the most convenient channel for the client. We generate more value to the business with the ongoing evolution of operations.
• Digital Collection – Algar Tech ensures the receipt of debts within the maturity and increase of credit recovery, increasing revenue. We provide identification of business needs, mapping of the customer journey, intelligent segmentation of the profile, data intelligence to prevent non-payment and maximize recovery.
• Digital BackOffice – Our solution automates tasks and business rules, making processes smarter and more efficient to improve corporate governance and the end-customer experience. The Company is consolidated in six BackOffice specialties: Customer Complaint Management; Regulatory (regulatory management); Fraud Prevention (prevention and treatment); Customer Onboarding (automation of documents and business rules); Transactional (second service level); Management and Governance (management of service provision). 

Management of the Technology Environment

• Intuitive Service Desk – Guarantees the maximum productivity for the user. Our solution delivers the best user experience through a single multi-channel point of contact and the automation to ensure a more efficient service. This means less time spent on support and more productivity for the team, which can solve calls with less human interaction.
• ICT Infrastructure Management – Guarantees the availability and continuity of services at all times. Our solution maximizes the IT availability and ensures the service’s continuity. Our proactive and reactive operations handle the management, monitoring and support of the company’s ICT infrastructure through specialists in high-impact demands, also delivering customized solutions that improve business results.

Telecom Services Management

• Implementing, maintaining and monitoring the Telecom networks with a close and effective service.