After merger, a network solutions provider is bullish on Argentina, Colombia

Thursday, April 13, 2017

Oakland, California-based Dasan Zhone Solutions was created last year when Zhone Technologies acquired Dasan Network Solutions. It now has plans to expand across Latin America and the Caribbean, offering solutions around broadband access, Ethernet switching, mobile backhaul, passive optical local area network and software-defined networks.

Antonio Jonusas, area vice president for the Caribbean and Latin America, talks to BNamericas about how the merger has emboldened him to expand the business, and why Argentina and Colombia are his priority this year, and Cuba is not.

BNamericas: How did the merger come about?

Jonusas: The merger was driven by the necessity, or the wish of Dasan Network Solutions to sell more of its products into the United States and Latin America. Its presence in the region was small, although it had a significant presence in Japan, South Korea, Taiwan, Vietnam and India. For its part, Zhone Technologies wanted to sell its products in Asia, where it had practically no presence, but it had a strong presence in the US, Latin America and Europe. It also needed a partner to provide capital for the development of new technologies. Its products have always been of great quality and, of course, more expensive than those manufactured in Asia. It had no secondary product line that would appeal to the countries in Central America and some South American countries, like Paraguay and Bolivia, where the price is a fundamental factor.

BNamericas: What are the company's long-term ambitions?

Jonusas: We want to retain our position among the tier two and tier three companies not only in Latin America but worldwide. We should reach sales of US$240mn for the entire company this year. The Caribbean and Latin America should account for about 10% of overall sales, or about US$25mn.

BNamericas: What areas will you be focusing on?

Jonusas: The areas we will focus on within broadband access include fiber-to-the-home, Ethernet switching, mobile backhaul, passive optical local area networks and software-defined networks. We already have a presence in the largest markets in Latin America - Mexico City, São Paul and Buenos Aires. We also have remote offices in Puerto Rico and Bogotá.

BNamericas: What countries will you focus on?

Jonusas: We have sold our products into practically every country in the region, but this year we want to invest and increase our presence in two countries, Argentina and Colombia.

In Argentina, the demand has been continuously rising. The new policies of the government is stimulating investment in technology. We do not want subsidies, but such support from the government merits having a larger presence in Buenos Aires. Actually, we used to have an office there that we closed a few years ago. We will reopen this office, starting with adding staff and technical resources.

In Colombia, the economy has also been recovering. We have been making small investments in the country for the past 16 years but now we want to step up our efforts amid increased growth of the fibernet market. Colombia has an enormous potential, and there are interesting projects where we can collaborate with some of our partners, like IBM, in the segment of passive optical lines.

BNamericas: What challenges are you facing?

Jonusas: We are small and have to go step by step. Our analysis shows that Argentina and Colombia offer the best potential for growth over the coming one or two years. In Colombia we're not trying to do anything innovative but simply to sell products that are technologically advanced, with local support and at competitive prices. It is a strategy that is always successful. In Argentina we want to build upon what we already have. The obvious risk is that the economic recovery will not continue; this is essentially the same risk we face elsewhere in Latin America, together with fluctuations of the exchange rate to the dollar and other challenges.  

BNamericas: Which other countries have caught your imagination?

Jonusas: Obviously, we would like to invest more in Brazil. In fact, a couple of years ago we had advanced pretty far into this direction. So I would like to explore the possibility again to manufacture some of our products in Brazil, but this depends on the economic situation in the country. We already have a couple of partners there. Brazil has always been a long-term objective and when the economic and political situation improves, then we could pursue this in the next 18 months or so.

BNamericas: What else is part of your long-term strategy?

Jonusas: There are other countries where we have no presence although, at some moment, we would like to increase our sales. We have been successful in both Mexico and Panama. Since the merger, we have products that are more appropriate for the state of development of the networks in Central American countries.

BNamericas: How do you feel about Cuba, the latest market in the region to open up to foreign companies?

Jonusas: The challenge there is that there are already Chinese companies that have started to work in Cuba with regards to infrastructure development, beating even the US to it; so they have a considerable advantage.

We have a market capitalization of US$120mn and sales of US$240mn, so we cannot enter a country like Cuba and compete with Chinese companies. It is a market that offers a great potential but still has economic problems. It is, like Venezuela, a risky investment in terms of returns and cash flow. It requires long-term investment. We believe that, as a smaller company, we should accept the fact that we need to invest in countries where the returns are larger and quicker.

About the company

Dasan Zhone Solutions, Inc. offers broad-based network access solutions. The company provides solutions in five major product areas including broadband access, Ethernet switching, mobile backhaul, passive optical LAN (POL) and software defined networks (SDN). The company is headquartered in Oakland, California.