Speaker 1: 0:02

Welcome to Uplink, where we explore the world of digital infrastructure, uncovering the technology fueling AI and cloud innovation, with the leaders making it happen, carlos great to see you, man.

Speaker 1: 0:33

Yeah, yeah, thank you for coming. You've got an awesome background. We were chatting before and I wanted to capture this for the cameras, but you've been a bit of a serial entrepreneur, starting in the 90s or late 90s with Dialog. You're in Brazil, so you're connecting folks into the platform and then you built some really cool stuff. I'd love you to just share quickly a little bit of background on how you did that. And now you're the CEO of a really interesting company as well. We'll talk about that. But where did you come from? How did that start? Good, good.

Speaker 2: 1:05

Thank you very much for the opportunity to talk to you. I will try to do my best accents okay to talk perfect. Uh, it's not my mother tongue, but I, I will put all my, all my effort to you know. Uh, let's, let's uh talk a little bit about my background. I studied economy, economics.

Speaker 2: 1:24

So, uh, and I start to to, I, I've created the first dial dial up a company in 99 wow I was in a traveling uh with my friends and we saw like free internet services and was very, very uh something that impacted us because that time in brazil the the internet was like in the beginning yeah, very early, yeah very very few people used to use internet at that time. So, uh, we, we came with the idea to make internet more popular in brazil and we launched yeah, there you go, yeah, and we launched our first, our Super 11, in 1999.

Speaker 2: 2:07

At the end of the month I remember and after this I've created myself with some partners and some amazing people that I found other two companies. One was Samba, which is a that time national ISP yeah, using the concept. Yeah, that's really yeah it's interesting, in fact, because I don't know how it's developing in other countries, but in Brazil I felt this because there were, like, like, local companies with local infrastructure. So, for example, if I live in a city without internet, I should do a long distance call to the nearest city with infrastructure.

Speaker 1: 2:58

Yeah, like a long distance phone call. We should pay for that. Yeah, very expensive.

Speaker 2: 3:05

A lot of money because it was built per minute. Imagine, and that time, as you remember, to download the music.

Speaker 1: 3:13

Yeah 10 minutes to get to the end. 10 minutes, 20 minutes.

Speaker 2: 3:17

And you're paying like you were doing, like a long distance call. So we've created a national number, a non-geographical number, which is a concept that you have the same number to capture all the incoming calls nationwide, with a flat fee.

Speaker 1: 3:41

It's almost like making a local call everywhere the same price, flat fee. Yes, it's almost like making a local call everywhere, everywhere, yeah.

Speaker 2: 3:47

The same price and fixed price, because there were some rules in Brazil that time that allows, that time allows you to connect, for example, paying less, depending on in the weekend, for example during depending on in the weekend, for example, during the weekend. The rates were reduced, was reduced for dialogue connections and our intention was to provide a non-geographical number, the same number in Brazil. We fixed the price.

Speaker 1: 4:26

Yeah, so good. Yeah, it's good, you brought the internet to Brazil.

Speaker 2: 4:30

No, no, no, Not really, but after that I have joined Megatelecom.

Speaker 1: 4:37

Yeah.

Speaker 2: 4:38

Now we are. It's important thing. I will do a spoiler here. Yeah, we are rebranding our company to SAM. I saw that.

Speaker 1: 4:44

I will do a spoiler here. Yeah, we are rebranding our company to SAM. I saw that. Yeah, cool, all the graphics.

Speaker 2: 4:47

Yeah, yeah, I've showed you, but SAM was the last acquisition we made. Megatelecom is a group of seven acquisitions.

Speaker 1: 4:57

Okay, how long have you been at Megatelecom? 15 years 15?.

Speaker 2: 5:02

Yeah, yeah yeah, it's a journey man. It's not something. We cannot create something big in the short term? Yeah, of course, I believe that Demands time and energy.

Speaker 1: 5:15

What was it 15 years ago when you started? Was it one of your companies that was acquired, or did you start to build, or was it an acquisition? Or how was the 15?

Speaker 2: 5:23

And then you've obviously acquired good, good, good point we, we have started as as a provider uh of uh of uh fiber connection to to final customers like a b2c company. Yeah, and when I joined the company, my mission was to start to develop the b2b market.

Speaker 1: 5:43

Okay, yes, move from business to consumer.

Speaker 2: 5:46

Business to consumer.

Speaker 1: 5:48

It was retail consumer at home or a company office. Yeah, office, okay, yes, that's like a last mile.

Speaker 2: 5:55

I came to the company to develop this market. Imagine we have fiber spread in that time two or three cities and we said, okay, we are just our addressable market. Now is just a final customer. Let's go to the business customers. So I've started in the company, on the company, just with this mission to develop the B2B market, to develop the B2B market. And of course, after this I started to, I've created a business unit to provide services to B2B. And of course, a long story short. But in two, three years this business unit was increasing fast, demanding investments, demanding time.

Speaker 2: 6:45

So we decided to split the company into two legal entities one for just for b2c and the other one for b2b, and that time I have assumed as the CEO of the company 10 years, 11 years ago from now.

Speaker 1: 7:12

And we have started to. We created a roadmap of acquisitions that we could do to leverage the company, and that's acquisitions of fiber assets and building assets as well. Is that what's up with you?

Speaker 2: 7:19

Yeah, good question. Okay, our first acquisitions was to increase our addressable market, to increase in terms of locals or cities that we attended that time, and products and services. So we acquired a company to provide IT services, like cloud services data center services Great, yeah, like a managed services, yeah, yeah yeah, and the last three acquisitions we made. Sun was the last and previous to this, we acquired Internex operation in Brazil, internex Colombia, which is a company, a regional company for LATAM.

Speaker 1: 8:05

And it's just Brazil that you're servicing, or it expands beyond Brazil, no, just Brazil. Yes, you took the Brazilian arm of that company.

Speaker 2: 8:13

Yeah, we took the Brazilian operation of them and a group of companies in the center of Brazil. So when you see our network coverage, we have this from the center to the south. We start on Brasilia and Goiânia and on Central-Oeste, going to the south, to Porto Alegre.

Speaker 2: 8:35

So, we have a very, very good coverage. We have a backbone including roadways, OPGWs, and it's a very resilient network. But, going from where we started, we started to create a ring to connect data centers in São Paulo, because you have a lot of data centers there demanding services.

Speaker 1: 9:01

A lot of those. I mean we're building that in 13, I think. And you're helping us connect to pretty much all of those.

Speaker 2: 9:07

Yes, yes, it's a good point. Yeah, because we have created this network, underground network, very resilient, to connect the data centers.

Speaker 1: 9:16

That's important. It's not running across lines that can be cut.

Speaker 2: 9:19

Yes, much more resilient Cost is a lot well cost much more to implement but along the time if you see it makes sense because you cut your OPEX costs, okay, along the time.

Speaker 1: 9:36

Yeah.

Speaker 2: 9:36

And we have created this powerful network to connect to the data centers with Beyond, fibers, with infrastructure, racs, energy, all set to provide services from any data center. And then we started to attract the business to business customers, because today it's something that you, you can feel in your business, but, uh, the, the, the big telcos is are not be able to customize solutions. You know to come very fast, you know, yeah, they, they sell what they want to do. And we have a completely new approach to go to market with our customers. For example, we hear more than we speak, because we must understand what kind of conflict situation we have.

Speaker 1: 10:34

You don't know, that was how we got engaged. I mean, you're doing stuff for us that I don't think anyone's ever done in that market, which is cool. You know, software-defined networking is very new.

Speaker 2: 10:44

It's.

Speaker 1: 10:45

NAS space very new to Brazil. So, yeah, we appreciate your support on that. Good, good.

Speaker 2: 11:05

And I believe, as I have told you, because the customers are willing to establish communications and relationships with companies that understand their demands. So that's something that Megatelecom has like a value proposition to hear the customer to create the solution. Value proposition to hear the customer to create the solution. You know, because, as I have told you, we have sectors in Brazil it's the same here or in Australia or anywhere Banks. They have specific demands for fraud detections for scamming for something like this.

Speaker 2: 11:34

Cyber security is an issue. Industries are pretty different. They have other demands. We have a very good case in Brazil with MercadoLibre. Yeah, it's our long-term customer, it's an amazing company.

Speaker 1: 11:52

Yeah, it's amazing Not well-known in the US or globally, but servicing the region. It's like for us in the US, it's the equivalent of Amazon. Yes, yes, it's our Amazon. Not Amazon Web Services, but actual Amazon.

Speaker 2: 12:07

Yes, yes, yes, you can order anything get it delivered. They have started to make e-commerce popular at that time. They was born in Merc time, they was born in Mercado Livre, was born in Argentina.

Speaker 1: 12:22

Yes, yes.

Speaker 2: 12:24

It's an Argentina company, but their most relevant operations is in Brazil.

Speaker 1: 12:31

And that's the interesting part. I mean we were talking with them and they were also doing banking services and all these other things that they've added into the platform. Yes, yes, it's a massive distribution company, a sales company for like retail.

Speaker 2: 12:46

It's a banking sort of regulations, A huge yeah, yeah, they understood the game you know digital is another game is another way to capture the customers, to monetize the customers. So they are very good company. Clearly they are one of the winners in this game.

Speaker 1: 13:05

That's what we've found is some phenomenal companies that are doing some really big things that are not well known outside of the Latin America, but particularly Brazil. So that's what we were so excited when we landed just to see the innovation that's happening and, I think, things that you wouldn't have thought looking externally. So we're learning a lot.

Speaker 2: 13:25

Yeah, yeah, yeah. Brazil is. You know we are a poor country but reaching resources in water in our agribusiness is huge, it's huge, it's something, but unfortunately we are not a rich country. We have many, many, many challenges there. When I said to you that my intention, the first time we have created SuperLevel was to make internet more popular is because I understand that digital, when you have access to content, to experiences, to knowledge, you can transform impact very, very.

Speaker 1: 14:12

it's the digital divide. It still happens in the United States as well, where there's, like internet, you cannot access in certain areas because they haven't rolled that out and the difference between the kids they don't have access to the content in the school. It's just a totally. It pushes the poverty line. Yeah, yeah, so it's super important.

Speaker 2: 14:31

And the technology should help us to achieve the knowledge, but it's doing the opposite. It's even increasing the difference between the rich and the poor. So that's something that, of course, living in a poor country is something that touched me very deeply. And beyond that, just back to Megatelecom. Now we have acquired the companies to increase our addressable market, to bring new services and products and IT. It's something important because we, Megatelecom, was the first company in Brazil the select company, like operator, competitive, operator company to put a lot of effort and energy to develop the IT services.

Speaker 1: 15:33

Okay, that's something that we believe it's different, as opposed to just providing the connectivity You're able to go beyond. Yeah.

Speaker 2: 15:41

Yes, and now, of course, it's obvious, but that time, 10 years ago, it was something that was not obvious, and the last three acquisitions we acquired Backpots, so now we have this coverage in Brazil. That is something. Diverse fiber pads. Yes, diverse and underground and high availability. So I believe that this is something very, very unique. You know, it's something different.

Speaker 1: 16:16

It's not easy to reply. Yeah, it needs to be available and reliable, Otherwise you can't run the tech services that you need. Yes, yes.

Speaker 2: 16:25

And our intention is to attract more complex customers like e-commerces, like banks, fintechs traders.

Speaker 1: 16:36

Well, there's a lot of banks. The thing that I found amazing was, however, the regulations from a telco perspective. Someone's saying there's like 30,000 telecommunications companies in the world. That's very different. Some countries have one, some countries have like three or four or five maybe, but in your case it's thousands and thousands. What is that? Is that because of the way it's regulated or how it played out, or just the remote nature of things?

Speaker 2: 17:04

I think it's a mix of things. When the public companies became private, I believe 20 something years ago, the regulation was not so clear about the fiber optics. Okay, there was a room to occupy and a lot of small companies started to do this. When you see the Brazilian situation, what I think? There are a lot of companies, but few of them will survive in the next 5, 10 years.

Speaker 1: 17:49

I think it's consolidation consolidation and scale.

Speaker 2: 17:53

But telecom is a scale business. You must scale to have money to do the capex to scale. So it's like a cycle, and when you have very small operations you don't have access to money you don't have access to technology to scale so it's a little bit confusing. So for me the natural path to the future is to combine those two businesses.

Speaker 1: 18:19

Yeah, Okay. So, and that's part of your story was that you're looking for acquisitions to bring into your portfolio as you expand, so you've got access to enough capital to do that. So, from a strategy perspective, you'll keep acquiring, keep building. Do you also build and roll out new fiber, or is it purely acquisition?

Speaker 2: 18:38

Yeah, it's both.

Speaker 1: 18:39

We are investing.

Speaker 2: 18:44

Okay, the cost of capital in Brazil now is very, very high. It's something that I must say to you, because it's like 20% per year. That I must say to you because it's like a 20% per year. So it's something you know. It's not easy to create a return over 20%, 20% 20%. Wow, I'm wrong because our basic interest tax now is like around 15%, wow. So it's very, very, very high and of course you never will get money for 15%. You must pay a plus.

Speaker 2: 19:22

So I'm talking about 20, but sometimes it's 30% 30% return on investment makes sense. Depends on how the company is structured. So, in our case, what we see as the future scenario, we do both. We do CapEx for increase our own network, our existing network, but on the other hand, we have a very, very I'm looking all the time for opportunities to buy because I know that there are regional companies that could plug in. Extend you, yeah, because we I understand SAN has now a platform, okay, fiber.

Speaker 2: 20:09

We own seven data centers edge data centers, not hyperscales, but edge data centers in no obvious cities like countryside, instead of Sao Paulo, like Rio de Janeiro, goiânia, okay.

Speaker 1: 20:25

So then you can connect, bring back to those pops in effect, and then expand that into the business. Sure.

Speaker 2: 20:31

Using the backbone, using the edge data centers, using our platform, we can bring this business and combine the business. Combined, one plus one will be three, yeah, and it lowers your costs, you can deliver more.

Speaker 1: 20:47

That's the vision. I think you were talking before where you want to take the company. You want to get bigger and bigger and bigger and then potentially IPO maybe.

Speaker 2: 20:55

Yeah, it's our plan, that's so cool. Our desire is to create a public company, because we understand that we have space to do this. The Brazilian market, as I have told you, must be consolidated and we want to be one of the guys that is doing this all together.

Speaker 1: 21:16

Yeah, the whole space is together.

Speaker 2: 21:18

When you said that there are hundreds and thousands of companies, most of them 95% are B2C companies.

Speaker 1: 21:30

Yes, the consumers doing it in local internet In.

Speaker 2: 21:33

B2B. We have a few companies, but I understand that, as you have told, we don't have enough business to more than 20, 30 companies nationwide. So that's something that I believe our investment thesis is to consolidate the B2B and to become one of the big independent telecom companies doing just B2B, Because in Brazil we have companies doing B2B and B2C and mobile. It's like huge telcos like Vivo, like Claro, and they do everything.

Speaker 1: 22:15

We just do B2B, yeah, b2b.

Speaker 2: 22:18

So that's why we choose it to be focused on B2B, 100% focused on B2B, and to provide much more beyond connectivity to provide.

Speaker 1: 22:27

IT services.

Speaker 2: 22:29

And quality services and a good relationship with the customer is something that we must. You know, it's one of our big values you know Well, I love your statement.

Speaker 1: 22:44

Listen more than you should have. Yeah, which is rare, because the point is most companies have got a product and they're just going to deliver that, whereas what you're saying is you're listening to what they need to achieve and ideally, trying to design that, and in most cases, we're the same. Actually, we constantly get feedback from our customers on a product that they would love us to deliver, typically, if one customer wants it more than the next one, so you build it into a repeatable product and then you realize that actually, yes, most companies are interested in that. So I mean, we see that with you guys, we appreciate the partnership. By the way, it's exciting for us to land there because we're 26 countries now. Brazil is one of the more challenging to land in, but it's certainly an exciting space and, particularly with partners like yourself, we couldn't have really done it actually. So, yeah, we're really excited.

Speaker 2: 23:32

We're going to rock together in brazil because, uh, as as I have told, we have, we have the demand. We have the demand, our, our b2b customers need to be uh more attended, need to need to have more uh connectivity options and quality Choice yeah. You know and your product is amazing.

Speaker 2: 23:58

Let me tell you something A few years ago, I don't know, maybe seven years ago, I was here here, itw, itw, talking with a Brazilian guy or better American company that was entering in Brazil, doing the debut, starting to operate in Brazil. They told me there is a company, megaport, very nice company, and I started to try to reach you, not you in person, but to reach someone from Megaport, to try to, you know, to reach you, to reach you, not not you in person, but to reach someone from Megaport, to try to develop something, because when I understood what you did and what you do, I was like very impressive yeah, I said I want to be a partner of this.

Speaker 2: 24:50

I want to bring them to use my infrastructure in Brazil. Of course, that time I was a very local and small company, but now it's for us.

Speaker 1: 25:02

I'm proud to be here exactly.

Speaker 2: 25:06

The same place, ITW, to celebrate this partnership that we're gonna create in Brazil. That's cool. And I really believe that we will develop good things together. We'll be amazing, you know.

Speaker 1: 25:21

Yeah, super exciting.

Speaker 2: 25:22

Yeah.

Speaker 1: 25:23

I love that you had the vision way back seven years ago. We finally got there. Yeah, Well, it's a pleasure man. Thank you so much yeah.

Speaker 2: 25:31

I thank you very much for your time and good to see you. You come to Brazil, call to me and let's rock it yeah, thank you very much yeah.