MVNOs in Brazil: Porto Seguro steps ahead

Friday, September 23, 2011

New winds are blowing in Brazil's telecommunication sector. After the congressional approval of a highly anticipated bill allowing companies from different segments to operate in the telco market as Mobile Virtual Network Operators (MVNOs), some unexpected players - such as Porto Seguro, one of Brazil's largest insurance companies - have already moved toward that direction.

Porto Seguro created a telecom branch, Porto Seguro Telecomunições, partnering with mobile operator TIM, Ericsson and Datora Telecom, to become the first company granted an MVNO license from the government

BNamericas spoke to Porto Seguro's IT director, Italo Flammia, about the company's new challenge, what he expects from this new market, and future plans and investments.

BNamericas: Why has Porto Seguro, in this partnership with TIM, Ericsson and Datora, decided to enter the telecommunications market and become an MVNO? What's the purpose of the company, and what kind of MVNO does Porto want to be?

Flammia: Porto Seguro Telecommunications intends to add value to its clients and insurance brokers, providing quality mobile telephony services, under fair prices and through differentiated services, all integrated to the company's other services and products and thus increasing the loyalty of our clients to the Porto Seguro brand.

We believe the MVNO model in Brazil has a very promising path concerning niche offers. We don't want to be a mass mobile carrier, or compete with current operators. Our focus is a demanding public that is already our client and that trusts our products and services and treasures quality.

BNamericas: But what do you mean by "fair prices" and "add value?" Does that mean Porto Seguro intends to offer prices that are comparable, a bit higher or lower than what is on the market?

Flammia: That means we will offer what the market currently doesn't offer, at a reasonable price. We want to provide brand new services, to a reduced public - our public, in particular. We don't want to enter the market offering minutes, for instance.

Therefore, our prices may not be lower than others. They can eventually be higher. But the kind of exclusive services we will offer - and which regular telecom operators do not – will make people want to pay for it, because it will be worth it for them. That's added value.

BNamericas: Which criteria did Porto Seguro use in choosing to partner with these companies, and not others?

Flammia: We've chosen these companies for their expertise in the areas where they operate and also because they're considered references in terms of innovation in the market. Creating this business, being a pioneer, requires people with lots of energy, partners with an extra dose of innovation and willingness to take risks.

BNamericas: How's the rollout schedule?

Flammia: It's all preliminary and the process is very complex. But what I can say is that we expect to launch one of our MVNO services this year. We can also start 2012 launching the other services as well. We're most interested in getting this engine going.

BNamericas: Porto Seguro is one of the main companies in the local insurance market. In this sense, which IT strategies does the company have in mind to optimize services to the costumer?

Flammia: We're always improving our internal procedures and seeking new ways of applying the technology to better serve our clients and brokers. To achieve that, it's necessary to use IT in a proper way, with the correct adjustments, assessing opportunities available in each business process.

When it comes to IT, quality is not negotiable. This new business niche [MVNO] also contributes to streamlining and improving the company's telecommunication cost management.

BNamericas: Is the international financial instability a concern to the company? Are next year's investments secured?

Flammia: The international financial situation shouldn't affect our businesses. We will invest in various and different fronts - telecom being a good example of that - and grow in a sustainable way.

BNamericas: What are Porto Seguro Comunicações' next steps? Is the company considering, for instance, working with its own equipment?

Flammia: Like I said, it's not yet possible to detail strategies, as well as products and services that will be offered with our new enterprise. We're in the process of implementing infrastructure, which is a huge challenge, and we're also defining the business model.

We'll probably make several other partnerships with specialized companies to bring to the market truly outstanding solutions. There are no MVNOs of reference in Brazil, which adds to the difficulties and excitement of the project.

BNamericas: Is Porto looking at new niches and eyeing a possible increase in the demand brought by the major international events the country will host?

Flammia: We still don't have anything defined in that sense. We're always alert, as has been the case with MVNOs, for opportunities that differentiate our products and services and delight our clients and brokers. We have to keep our radar on all the time.

About Italo Flammia

Italo Flammia has been Porto Seguro's IT director since September 2009. Previously, he was operations and IT head at Sodexo Vouchers and Cards, consultant manager at Natura Cosmetics and consultant at Andersen Consulting (Accenture).

Flammia has a bachelor's degree in business administration from FASP – Faculdades Associadas de São Paulo. He also holds graduate degrees from FIA-USP and the London Business School.

About the company

Porto Seguro began operating in property and casualty insurance and reinsurance in 1945 with 50 employees. It now employs 10,000 people directly, plus 10,000 suppliers through its service providers chain. It has 135 branches and regional offices to serve more than 20,000 brokers and 5mn customers across the country. Outside Brazil, it has offices in Uruguay.

Porto Seguro currently operates with all types of insurance - auto, health, business, property, life and transport. It also has business related to pension, investment, finance, credit cards, protection and telecommunications.