Is regional competition driving Fiber commoditization in Brazil?

In July 2024, amidst financial restructuring, Brazilian telecom giant Oi faced difficulties offloading its fiber optic unit, ClientCo. Oi had opened a competitive process to sell the unit as part of its current bankruptcy proceedings and reported net debt of USD 4 billion at the end of 2023. The sole bid for its bankrupt ClientCo unit came from Ligga Telecom (USD 188 million) but failed to reach the minimum amount required by creditors (USD 1.3 billion). With future bidding rounds expected, Oi has become a target for large companies like Telefónica and newcomers like Ligga Telecom that entered the Brazilian market first with a regional approach. What are the current regional dynamics shaping the Brazilian Fiber market? To stand out in a competitive ecosystem, companies have expanded their footprint but also adopted distinct offer strategies to attract or retain customers, with several offering aggressive discounts. But to what extent has pricing become a primary differentiator? If price alone is not enough, what strategies are incumbents and new entrants using to grow their customer base, and which companies are leading the way? Incumbents dominate populated urban areas but regional Fibercos are growing  Older players like Claro, Vivo, and Oi dominate the fiber market in most regions, especially in urban areas with higher population density. Indeed, their share of fiber subscriptions surpasses 50% of the market in states like Sao Paulo, Rio de Janeiro or Distrito Federal (Brasilia), and Vivo and Oi both managed to have an extended fiber client base. Oi, with 4.3 million fiber subscribers, was targeted by Ligga Telecom but also allegedly by EB Capital, owner of Giga+. The latest has gained significant market share through acquisitions since 2018, including a 15% share in Rio de Janeiro. Earlier this year, the group filed the request for registration as a publicly-held company, and might be contemplating an IPO in the future. If it were to acquire Oi’s fiber business in the next auctions, the group would largely dominate the state with around 45% of Fiber market shares. Claro, the national broadband leader, struggles to transition to Fiber and compete with other incumbents. Although it has a presence in almost every state, its fiber client base is spread thin, with the strongest presence in São Paulo, where further acquisitions may be on the horizon.  Vivo owns the largest fiber subscriber base in Brazil with almost 6.5 million of clients, thanks to its strong presence in Sao Paulo, as shown on the map below. Meanwhile, smaller operators like Unifique, Vero, and Desktop are gaining traction through acquisitions, particularly in underserved or rural areas where the big players may not be able to provide localized services. New entrants like Brisanet, Unifique, and Desktop...