"Spending on fixed broadband equipment in Brazil stalled in 2013 as telco operators slowed their purchases of new equipment after higher spending the prior two years," said Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics Research. "However, we expect the pause to be short-lived, as increased competition due to regulatory restrictions being lifted will drive new investments this year and beyond."
Broadband users are primarily located in the urban areas of Rio and São Paulo, Brazil's two largest cities, where penetration rates are near 35%. Conversely, penetration rates in rural areas are low due to a history of underinvestment by the major private operators in the fixed access, backbone and middle mile networks required to connect rural municipalities.
Significant consolidation has taken place among Brazil's largest operators, with América Móvil combining Claro, Embratel, and NET Servicos, the country's largest cable operator.
Heynen added: "The wave of consolidation among Brazil's broadband providers will continue, as Telefónica looks to solidify its market leadership and build scale, especially in the highly competitive markets of Rio and São Paulo."
ARRIS is the overall broadband revenue share leader in Brazil in 2013, while Alcatel-Lucent led in DSL equipment revenue and Huawei headed PON equipment revenue. Infonetics forecasts fixed broadband revenue in Brazil to reach $288 million by 2018 as telcos continue G.Fast and GPON upgrades and cable operators roll out DOCSIS 3.1.