Chile’s Sonda looking at new fiber PPPs with Brazilian states

Chilean systems integrator Sonda is prospecting new public-private partnership (PPP) contracts with Brazilian states to deploy fiber optic rings similar to the one the company is implementing in Mato Grosso do Sul state.

“I can't give any details now, but I can confirm that Sonda is going to move forward on the subject of other PPPs. Our goal is to strengthen our presence through PPPs in other states,” Sonda Brasil CEO Ricardo Scheffer (pictured) told BNamericas.

As reported by BNamericas last year, Sonda won a PPP contract to deploy a 7,000km digital fiber network and deliver related services in Mato Grosso do Sul state, serving mostly public entities.

Worth 887mn reais (US$168mn) over a 30-year term, the contract, which is the biggest ever won by Sonda in Brazil and one of the group’s largest in Latin America, sets out gradual deliveries over time. The fiber network itself must be ready for use by 2024.

“The project is advancing at full throttle. We're on schedule and our expectation is that we will even be able to deliver some portions of it in advance,” said Scheffer.

Deploying the fiber itself is the simplest part of the project. This is because most of the 7,000km route is aerial cabling, to be deployed over existing light poles and the transmission grids of two local power utilities, Elektro and Energisa. 

Only a small part will run underground, which requires more complex engineering.

However, there are various procedures related to licenses that must be completed before deploying the structure, Scheffer argues.

“The implementation challenge is immense. The project is huge. It involves securing environmental licenses, agreements with power concessionaires, among other approvals. But the environmental approvals are well underway and the state has been very supportive of this process."

Sonda has already acquired the fiber, as well as all the optical components and other structures needed for the project, although the costs have not been disclosed. The fiber is being provided by Furukawa. 

Sonda will deploy more fiber than is actually required for the project to provide it with additional capacity, said Scheffer.

The contract outlines the deployment of six fiber pairs for the total length of the project. However, some sections are expected to consume more data as the network will not only serve public institutions in the state. Because of that, Sonda will install 24 pairs of fiber on certain routes, according to the CEO.

This, said Scheffer, helps reduce the cost of having to add capacity with new fiber pairs later.

“The base value of the contract at 887mn reais corresponds to the services required in the notice, for the government. But the contract provides for so-called extra revenues. So if a company settles in the state and wants to implement a 4.0 factory, it will need connectivity. The same with agribusiness, to enable 5G or 4G in the countryside. The network will serve them,” he said.

ARAUCO

One of the companies on Sonda's radar to use the fiber backbone is Chilean firm Arauco.

In June last year, the pulp and paper giant signed an agreement with the Mato Grosso do Sul state government to formalize a US$3bn investment to build a plant in the state.

Located in the municipality of Inocência, the Sucuriú plant is projected to have production capacity of 2.5Mt/y of eucalyptus pulp.

It is scheduled to start operating in the first quarter of 2028, but if conditions allow, the construction phase could begin in 2025, according to Arauco.

Arauco, which is already a Sonda customer in Chile, intends to transform the Mato Grosso do Sul plant into a 4.0 factory, with sensors, robots and dedicated connectivity aimed at reducing costs and improving efficiency. Having a fiber network to tap into is key to that ambition.

Both Sonda and Arauco have already started talks in this regard, Scheffer said.

DATACENTERS

As part of the Mato Grosso do Sul PPP, Sonda will also deploy a connectivity datacenter in the state.

The deadline for the delivery of the site is December this year, but Scheffer believes it is possible to hand it over before then.

Construction has not yet begun, but the datacenter will not be large because it is not aimed at colocation or hosting. It was designed to have 40 racks, with total installed power of 224kW.

With respect to Sonda's plans to seek investors for its own datacenters, including those in Brazil, the Brazil CEO said that the process is “evolving well.” The initiative is being carried out by the firm's headquarters in Chile.

“Sonda's objective with this move is to strengthen its presence in the datacenter market. It's a very important and strategic segment for the group. As integrators, having datacenters brings a lot of value to our business,” he said.

INVESTMENTS

Overall, Sonda plans to invest US$340mn through 2024, a large part of which will go to Brazil, a country that currently accounts for the largest portion of the group's investments. This will not necessarily be for acquisitions, according to the executive, since the focus will be on projects such as the Mato Grosso do Sul PPP.

Other contracts Sonda has in Brazil that require heavy capex include deals with state-controlled banks Caixa Econômica Federal and Banco do Brasil for the acquisition and availability of hardware for the offices and branches of these institutions. These two contracts together represent around 450mn reais. 

In 2022, Sonda broke its sales record in Brazil, with reported revenues of 2.4bn reais. Revenues in the firm's government area grew 56% year-on-year, said Scheffer. The company is involved in new government tenders and new deals are expected to be sealed in the coming weeks.

"2023 will undoubtedly be better for us," said Scheffer.

Sonda group’s total revenues grew 19% to US$ 1.24bn in 2022, the highest ever reported.