The successful consolidation of Brazilian ISPs could be the blueprint for operators in similar LATAM markets

Brazil’s broadband market is unique due to the large number of internet service providers (ISPs) (over 19 000) operating in the country. The broadband market is highly fragmented. Small ISPs collectively account for 56% of all broadband connections, while the remaining 44% is distributed among the five largest providers. Due to the fragmentation of the market, the majority of ISPs are too small to be viable long term. There has already been market-wide consolidation of ISPs in recent years, with more mergers expected in the near future. Smaller brands are merging to better compete regionally, while medium-sized players consolidate as a form of competition control and inorganic growth. Operators are acquiring ISPs in order to obtain their customer base.

Operators that aggressively acquire ISPs will be best suited to position themselves as market leaders. The largest operators (Claro and Oi) have avoided consolidation thus far, which has put them at risk of losing their market positions.