BT turns its eyes to Latin America

Friday, November 4, 2011

After unveiling a long-term investment plan for the Asia-Pacific region, British Telecom (BT) is now turning its attention to Latin America.

The company recently presented a complete investment plan to boost operations in the region, including opening centers of excellence while increasing the number of professionals and channels.

And as Brazil is taking the biggest share of the BT investment pie, BNamericas spoke with the company's managing director in the country, Sérgio Paulo Gallindo, about the plan and the company's next steps in the region.

BNamericas: Where is BT in the development of the investment plan that involves opening three centers of excellence - one in Rio de Janeiro, one in Mexico City and another in Bogotá?

Gallindo: The plan was announced about four weeks ago, when BT's global board was in São Paulo. Our CEO, Jeff Kelly, along with the Europe and Latin America unit president, Luis Álvarez, formally announced it.

Since then, we've been in an implementation phase. We have several teams working on the ground on planning all the initiatives that have been reported. This is the second such plan - which internally we dub the "Prosperity Plan" - being implemented. The first was in Asia, which took into account the reality for the company in that market. It's quite different from the company's situation here in Latin America.

BNamericas: What are those differences?

Gallindo: First, due to the acquisitions we made, such as the [2007] acquisition of Comsat [Communications Satellite Corporation, which supplies Latin America], we have much more significant domestic business with local companies, with local clients, than in other areas of the world. Our business here involves both large multinationals and large local clients, such as [federal savings bank] Caixa Econômica Federal, [postal service] Correios, [state-run oil major] Petrobras.

BNamericas: And the public sphere ends up as one of BT's major clients.

Gallindo: I would say that locally, it's the main engine - but not the only client. For instance, in Colombia we have contracts with the communications ministry - public sector, too – but we also just closed a second contract with Ecopetrol, a private oil company. And in Mexico we're also investing heavily in call centers there; hence, our center of excellence focused on call centers will be in Mexico City.

But going back to the differences in the regional markets.... The second area is the infrastructure we have. I believe that in the context of major operators considered "global," in Latin America BT is the most domestic of these and also the most international of the domestic carriers.

We have 180 network points of presence in the region, three data centers and a service center, located in Hortolândia [in São Paulo state], which is one of our four operational global centers of excellence.

And this plan will accelerate our regional growth.

BNamericas: How will operations work at the Rio de Janeiro center of excellence, which focuses on satellite technology?

Gallindo: The center is the consolidation of expertise we already have in Rio de Janeiro. As part of the Comsat acquisition, we also got Vicom, a firm with satellite expertise. What we're doing is expanding this group in Rio de Janeiro to become the center of excellence for this technology in all of Latin America.

We're also looking at Rio de Janeiro as an opportunity for further investments, which will be announced to the market soon. There are other projects already operational in Rio and São Paulo, such as deployment of a radio backbone, so we can have more agility to reach our customer with the latest technology.

I'd say that all these investments are part of the Prosperity Plan. The macro schedule for the plan is three years, in which we will double business in Latin America.

BNamericas: Can you give more details?

Gallindo: Well, during these three years we will work on three pillars. The first is network capillarity expansion, already under implementation.

The second concerns product launches. Within our product portfolio, we will launch some 30 new products or product features in 18 months. One example is a cloud contact center.

And the third pillar is the expansion of human capital. We will have 250 new professionals, who will all be hired along the three-year schedule.

BNamericas: Not only in Brazil, right?

Gallindo: Right - throughout Latin America. But Brazil always corresponds to about 50-60% of everything we do in the region.

BNamericas: The federal government is analyzing, along with Brazilian aircraft manufacturer Embraer and state-owned telco Telebrás, the creation of a new company designed to develop and launch locally made geostationary satellites. Is there a possibility that BT could take part in this initiative, as the Rio de Janeiro center will focus on satellite technology?

Gallindo: Well, BT isn't an operator of satellite fleets, but satellite services. In this sense, BT has relationships with several companies from the segment that manage satellite fleets.

We're in a fairly constant, fruitful dialogue with Telebrás. I've met with Telebrás president Caio Bonilha at least twice, and spoken to him many other times. So we're in contact with them and are exploring options to work together.

Telebrás is coming strong, building its backbone to offer services.... We intend to work with them in a wholesale relationship, as we do [with other operators] in the UK.

BNamericas: Does BT foresee investment opportunities concerning the World Cup and the Olympics?

Gallindo: Yes, but I think it will depend more on the dynamics of the business.

I think in all these major events, the focus is being directed much toward the event itself than to the ecosystems around it, such as the hotel infrastructure, the ICT.... It's in this environment that BT is working and doing business.

It's worth noting that BT is the official telecommunications provider for the 2012 Olympics in London, a different role from what we have and may have in Brazil. BT's involvement in the Olympics in London is right in the event infrastructure itself. There we deployed the fiber, the Olympic Park structure, we have an operation center.

BNamericas: What are BT's growth prospects for 2011?

Gallindo: BT does not disclose segregated investments by geographical area. With regards to global investments, in the last fiscal year we invested some 2.6bn pounds [currently US$4.15bn]. About 1bn pounds went to our segment called Open Reach, which concerns the build-out of fiber. One of BT's goals in the UK, for instance, is to pass two-thirds of the country with fiber in five years.

The remaining 1.6bn pounds is split among our other three business units - global services, retail and wholesale. From that amount comes BT's investment in Latin America.

Both Latin America and Asia-Pacific are regions that BT identifies as most vital to our business. Proof of that is the Prosperity Plans tailor-made for these regions, so that they can start having more significant weight in BT’s global business.

Our expectation for Latin America is to grow in double digits, above the market average.

BNamericas: Much has been said that Brazil is still lagging behind when compared to other countries regarding cloud implementation. Do you agree?

Gallindo: I see, from our clients, that some CIOs have already entered this world with very particular strategies. Some of them virtualized non-critical data; others opted by taking a more calculated risk and have already put business applications in the cloud....

We also have some customers who are in our own data center and have bought our cloud solution, the VSH.

So if we think in total numbers, then perhaps we're behind other nations. Now, I really don't see any reluctance today by these Brazilian professionals when it comes to the technology. I do see a thoughtful approach, because the problem in our country is the diversity and heterogeneity of the infrastructure.

One thing is how the cloud services will reach the mass market. The cloud to the general public has limitations, internet bandwidth being one of them. This is one face of the problem.

But the corporate market already has some advantages in terms of a better network infrastructure. That outlook, in my opinion, is a little more promising.

The vision that we have is that this is a thriving, growing market, and Brazilian IT is traditionally good, innovative, with constant technological leapfrogging. We're betting on that.

About Sérgio Paulo Gallindo

Sérgio Paulo Gallindo has been BT's managing director for Brazil since July 2009. He joined the company in 2005 and has held such senior positions as business management director and program director for Latin America, before being appointed to his current post.

In his 28-year career, Gallindo has garnered international experience and has held executive positions in the telecommunications and technology sectors - such as Nortel's chief operating officer in Brazil and GVT's executive director for the corporate business unit.

He holds a degree in electronic engineering from the Universidade Federal do Rio de Janeiro and a master's in computer science from the University of Texas.

About the company

BT started operations in Brazil in January 2002. It now has offices in Rio de Janeiro and Hortolândia (about 115km from São Paulo) and employs more than 600 people.

Its clients include major multinational and national companies such as Unilever, Rhodia, Ambev, Caixa Econômica Federal, Correios and Pão de Açúcar.

BT's Brazilian and overall Latin American operations are headquartered in São Paulo.