After a three-year effort, Telenor Satellite Services received the necessary concession from the Brazilian government to offer Inmarsat satellite service directly to customers in the country rather than through Telenor’s partnership with state-sponsored telecommunications services provider Embratel. For Telenor, the agreement with the Brazilian government allow the company to market its services to a wider range of customers, a company official said.

Having the landing rights to offer Inmarsat services “allows us to diversify and focus on integrators that make a living off of integrating satellite solutions,” Edward Cornely, director of sales in Latin America for Telenor, told Satellite News. “Embratel has a very large sales force that is selling portfolio services. We will strengthen our relationship and continue to work with Embratel. But this [government concession] opens up possibilities for us to broaden our distribution channel into niches in the telecommunications sector.”

A Strong Brazilian Market

The concession is particularly significant for Telenor as the company views Brazil to be one of the stronger markets in the Latin American region because of its population size and geography.

“You have countries that have large populations but concentrated in a small area, like Columbia for example,” Cornely said. “In the case of Brazil, you have a huge geographic area that is pretty close to the size of the continental U.S. You have a population of approximately 175 million. So there are a lot of people in remote areas that do not have access to traditional telecommunications services. That is a primary reasons why Brazil is such a big market.”

Another reason that makes Brazil and other countries in the Latin American market a key part of Telenor’s business strategy is the stabilizing economy in the region is opening up the market to increased spending on satellite services.

“Most of Latin America is in a more favorable position over the last few years,” Cornely said. “Most economies are growing, with growth rates as low as 3 percent in some countries and as high as 10 percent in others. The growth rates have been great.

“They are developing countries, so you don’t have stable GDPs (gross domestic product). But the GDP is high, and inflation is lower than it has been in many, many years,” he said. “The consumer price index is very stable.” Demand for services has increased as the value of local currencies across the region has appreciated against the U.S. dollar, encouraging people to purchase services from the United States, Cornely added.

Driving Demand

A few specific markets that are driving Telenor’s business in Brazil are the maritime, merchant transport and aeronautical markets, Cornely said. “The growth is in different areas, as opposed to the traditional vertical markets of humanitarian organizations, government and military, oil and gas. It is diversified,” he said.

“Then you have the terrestrial market,” Cornely continued. “What is growing in Brazil at this time is a sales force that works in remote areas. [Consumers] have a GSM phone, but when they are [outside the terrestrial wireless network] they need satellite communications, whether it be for voice or primarily data. There is a keen interest for BGAN (Broadband Global Area Network), where you can take your SIM (subscriber identification module) card from your GSM phone.”

Being able to use the SIM card in a GSM wireless phone and a BGAN phone opens up opportunities for Telenor to partner with Embratel and others offering GSM wireless services, Cornely said.

Another area now open to Telenor is the integrator market. “The opening up of the market allows us to expand our offerings to companies that are focused in mobile satellite communications and integrating specialized solutions for corporate customers,” Cornely said. Embratel was not focused on this market during the time when Telenor had to sell services through the state-run telecom provider. “Embratel has large portfolio services,” he said “They do the traditional telephony, Internet access and we were just one part of the broad portfolio it has. They don’t sell through channels. They sell to large accounts and the end user as opposed to working through indirect sales channel.”

–Gregory Twachtman

(Tom Surface, Telenor, 301/838-7805)