NEC Launches Plan To Regain Brazilian Telecom Market

After losing ground to other suppliers following the privatization of Brazil's Telebras telecommunications monopoly in 1998, NEC do Brasil, the Brazilian arm of the Japanese telecom equipment giant, has mounted a comeback strategy. With $50 million in investments and contracts signed with several large telecoms, NEC do Brasil expects billing in 2001 to reach $1 billion.

"If you don't innovate in this business, you'll drop dead on the road," says Renato Ishikawa, president of NEC do Brasil.

The company is involved in an intense process of adaptation and expansion in Brazil, which warranted the first visit to the country by NEC Corp. President Koji Nishigaki this week. Nishigaki outlined the company's plans to introduce its "Progressive Unity" system in Brazil, aimed at maximizing the existing infrastructure in developing new telecom strategies. He stressed the importance of this initiative for incumbent operators, saddled with outdated networks that need to be adapted to carry Internet and data.

The privatization of Brazil's telecom monopoly put an end to a three-year spell for NEC as the No. 1 telecom equipment supplier in Brazil. NEC was squeezed out as companies entering the market for the first time relied upon existing partnerships in different countries. None of the concessions was acquired by Japanese firms.

Turnover fell from a peak of US$1.6 billion in 1997 to $1.1 billion in 1998, and by 1999 had fallen to $600 million. Nishigaki says the financial results in 1999 were heavily impacted by the devaluation of the Brazilian real, which increased the cost of servicing dollarized debt. However, the company expects this year's turnover to reach $770 million, and is aiming to bill $1 billion again in 2001.

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