Amos Genish doesn’t let a day go by without checking the fluctuations of GVT shares. The ritual has been repeated since last February, when this fixed telephony, broadband, Internet and multimedia provider became the only telecom in Brazil to be traded on the Novo Mercado del Bovespa, regulated by strict corporate governance rules. The monitoring is bringing only good news for Genish: In the first seven months of operation, GVT’s stock value went up a surprising 116%.
These data are backed up by GVT’s evolution, a company that came online in 1999, when it was granted a mirrorlicense to operate in the country’s Region II fixed telephony market, in competitioin with Brasil Telecom. Today, the operator has 11% of the lines in that region, but for the last three years, is has also been providing service in the rich corporate markets of Sao Paulo, Rio de Janeiro y Belo Horizonte. On the heels of these successes, ex-Israeli army captain Genish is heading into another battle. “The public offering generated an injection of capital of more than R$1 billion, which allows us to accelerate our expansion plan into new areas, new services and the expansion of the network to serve more clients,” says Genish. A good part of the investment will be earmarked for replicating the GVT business model outside the original coverage area.
What are the keys of Genish’s model? “Unlike the incumbents in fixed telephony, GVT has a high potential for growth in the coming years. The strategy of concentrating efforts in high value-added markets has proven successful, and in recent years, the company has grown beyond the average for the sector in all segments where it has operated,” says Jackeline Lyson, analyst for stock trader Banco Fator in Sao Paulo. GVT participates in mature, stable sectors with strong profit generation, such as conventional fixed telephony, and also in rapidly expanding segments such as broadband, multimedia, Internet and VoIP. Thanks to a R$2.2 billion investment in recent years in developing one of the most modern telecommunications networks in Brazil, and a cutting edge IT platform--able to support different protocols for voice, data and Internet--today Amish can polish one of the main advantages of GVT: an offer of diversified product packages in an integrated offer for markets with high margins.
Another advantage is that, unlike the companies that participated in the privatization of Telebras, the authorizations granted by Brazil’s telecommunications regulatory body, Anatel, GVT is not subject to price limits or meeting the goals of globalization of services. “It’s a competitive advantage,” says Genish. “We can focus the company on the regions and market segments that have the greatest return on the investment.” Not only that. If there are no further delays, numeric portability--in fixed and mobile telephony--will be implemented in Brazil at the end of 2008. And companies like GVT will benefit from the transfer of users from the incumbent operators. According to a study by the Yankee Group consulting firm, nearly half of Brazil’s clients would change provider if they could keep the same telephone number.
Educated in Economics and Accounting at the University of Tel Aviv, Genish was part of the founding team of GVT in the late 90s. He’s had to make many decisions since then. The jump in EBITDA, which grew 41.2% in the third quarter of this year compared to the same period in 2006, and the upward pointing arrows that mark the performance of GVT shares are clear indicators that the strategy mounted by Genish to take on the Brazilian telecommunications market was dead on. But, the ex-Israeli captain is already planning the next battle, in which he plans to advance into new areas and market segments.
