São Paulo – Egyptian businessman Zaki Rakib and the Lebanese Fares Nassar presented on Tuesday (06) the services of On Telecom, a company to offer fixed broadband internet, the so-called 4G, in 133 cities in the interior of São Paulo. The company, whose corporate name is Quattro Holding, will make an initial investment of R$ 500 million over the next three years to meet about 10 million users in the cities covered. Of this amount, US$ 150 million will come from Soros Fund Management, owned by Hungarian-American mega investor George Soros.
On’s 4G fixed internet will be offered via a modem that does not need to be connected to a telephone line or cable. The device works simply plugged into a power outlet, using Wi-Fi (in which the internet signal is transmitted without the use of wires).As it is portable, the modem may be plugged into any room of the user’s home or even be taken for use in another residence, provided it is within the coverage area of the carrier.
Since March this year, the company has been working on user testing in the city of Itatiba, and the On Telecom brand will only be released in the first week of September, when the company will start operating in Campinas, one of the largest cities in the interior of São Paulo state.
According Rakib, On "will come to Brazilians whose demand was not met or who were poorly served" by the current internet broadband operators in Brazil. The company started with Rakib’s and Nassar’s, acquisition of Sunrise Telecom, which offered pay TV service in São Paulo, in cities like São José do Rio Preto and Ribeirão Preto. With Soros entry into the business, the entrepreneurs were able to expand their area of operation and acquired packages for operations in regions with long-distance call codes 12 and 19 in the 4G frequency auction promoted by the National Telecommunications Agency (Anatel), in June 2012.
"We have more than enough capital," said Nassar. "We aim to grow beyond the state of São Paulo, and have aggressive growth plans," said the businessman, adding that the company is considering the possibility of attracting new partners or opening its capital.
On is starting with most of its capital belonging to Rakib. As the Soros capital flows in, over the next two or three years, however, the American fund will have a majority stake in the carrier.
As to consumer prices, the On services will start at R$ 99.90 (US$ 43.50) for 5 Mbps surfing speed and 10GB download capacity. There are also R$ 129.90 (US$ 56.50 – 10Mbps/30GB) and R$ 169.90 (US$ 74.00 – 10Mbps/100GB)."The package gives Internet users a unique experience," said Fares.
More internet access
Telecommunications Minister Paulo Bernardo and Anatel president João Rezende also attended the event. "Brazil has a very small volume of fixed broadband connections," said Bernardo, who criticized internet operators in the country.
"Large companies in the sector in Brazil do not see the periphery," he said. "Middle class income has grown 50% over the last ten years, but the periphery remains invisible to these companies," he said.
The minister said that the mission of his team is "to improve the business environment in telecommunications", and called for new entrepreneurs to invest heavily in the expansion of Internet access in the country. "Eat the legs off competitors who are just standing there," he added.
Rezende told businessmen that they need to look towards other regions in Brazil. "There are markets outside São Paulo that are very important. The modality you are exploring has an important niche because there are difficulties in using mobile internet in the house," said the executive, referring to the poor quality of Brazilian mobile broadband.
The Anatel president also noted that there will be auctions to work in other areas such as the interior of Bahia and Pernambuco, and brought that to the attention of Waldemar Szlezak, managing director of Soros Fund Management, who attended the event, but did not comment. "We have further bands that will be auctioned and Soros will hopefully open its pocket," he said.
The partners
Zaki Rakib is the president of On Telecom and is currently the owner a majority stake in the company. Born in Egypt, the entrepreneur is Jewish and lived in Israel for 15 years, where he obtained two PhDs, one in Engineering and one in Applied Mathematics.
He established his career as an entrepreneur in the United States, where he established Terayon, a pioneer in the creation of cable modems. In 1997, Rakib brought this technology to Brazil, with Net as the main client.
The son of a Brazilian mother, from Rio de Janeiro, Fares Nasser, is the CEO of On Telecom. He was born in Lebanon but naturalized himself Brazilian. He began his career at IBM, in the United States, and then went on to Ericsson. He came to Brazil in 1996 and, along with Rakib, set up Terayon Brazil. Later, he was responsible for the installation of Chello Latin America, a producer and distributor of content for pay TV channels.
According to Rakib, On also plans to start offering voice and video services starting next year, when the company should already be offering services in a larger number of cities.
*Translated by Mark Ament
