NTT, World’s 31st Largest Company, Announces Major Investments in Brazil. Interview with Michael Wheeler, Vice President NTT America

NTT America and NTT do Brasil, both wholly owned subsidiaries of NTT Communications Corporation, announced two weeks ago that the two companies have jointly expanded the reach of NTT Communications’ Tier 1 Global IP Network into South America with a new Point of Presence (PoP) location in Sao Paulo, Brazil. The new global IP network PoP enables NTT America and NTT do Brasil to better enable Latin American service providers and content networks to gain access to its high-capacity, reliable and efficient network.

Michael Wheeler Vice President, NTT Communications Global IP Network, “São Paulo is the epicenter of Latin America’s emerging marketplace with many opportunities for companies looking to increase their global footprint and drive the market forward.”

NTT (Nippon Telegraph and Telephone) is the 31st largest company in the world, according to Fortune Global 500. Communications and Telecommunications are the core of NTT business, which employs about 220,000 people and has over $120,135.00 in annual revenues.

I  interviewed Michael Wheeler, vice president of NTT Communication Global IP Network (GIN) Business Unit.  In this role, Mr. Wheeler is responsible for all financial, engineering, operational and customer relationship activities for the business unit.

Michael Wheeler commented on how this major investment came to light,

“The decision was very well thought out. About six years ago NTT changed its business model in the US. We started focusing on large customers, carriers, and anybody focusing on internet for their business. As part of that strategy we started looking to Latin America as a whole.Our goal [ with the expansion of Global IP Network with New Point of Presence Location in Sao Paulo] is to increase our presence and infrastructure in the region and make customers in the US become customers in Latin America. New York, Miami, Los Angeles and Dallas based clients generate a lot of South America traffic. These customers started asking very often “When we would  be available in the region?” Therefore, about a year ago, the executive management teams from Brazil, US, and Tokyo started to put a plan together to find out the best way to be present in the region as a whole and Sao Paulo was chosen.”

Why Sao Paulo?

    “Sao Paulo is the ideal location to establish our first global IP network PoP in South America – it’s the epicenter of Latin America’s emerging marketplace with many opportunities for companies looking to increase their global footprint and drive the market forward.”

Michael elaborated on NTT’s plan for the near future in Latin America:

    “Now is the time for businesses to make the adjustments needed for success in the future. Ultimately, our goal is to have aditional locations in Latin America in places like: Rio de Janeiro, Bueanos Aires, and Santiago. The way we will do that is based upon the success of our new operations in Sao Paulo. Financially we are very strong. However, any major further investments like this will not be made in Latin America before 2012”

In Brazil, market consolidation has been the norm, considering that Telefonica  took full control of Vivo, Oi and Brasil Telecom merged and that América Móvil merged different assets in the country. The recent merger of Level 3 and Global Crossing, seems to indicate that NTT is the second largest IP connectivity provider in Latin America. However, Mr. Wheeler expressed his concerns regardingto competition:

    “Having such a big competitor as Level 3 and Global Crossing combined together is concerning. However, that doesn’t mean we won’t have a strong presence in Sao Paulo from the beginning. The market is so dinamic and Sao Paulo is such a focal point to growing in the region. We are very excited from the positive feedback we have been receiving so far. We have high growth expectations in the short term but I would like to emphazize that this move is part of our overall long-term global strategy.”

Asked about NTT’s main weakeness and main challenge in Brazil, Michael mentioned that NTT is in the early stages of the learning curve process and that the balance between offering the best service and not hurting the bottom line must be closed watched:

    “It is the first time [NTT] will do business in the region and there are things we will have to learn along the way and that some other players who have done business there already known. We will try to maximize positive lessons and minimize negative lessons. Our main challenge is to make sure we have more than enough ressources available to our customers but ressources are not free as you know. And so we need to balance that with the overall cost that we have with operating the PoP and making sure that we have healthy financial balance in the end of the day.”

Internet use and e-commerce are booming in Brazil. (See: Even Without Amazon, Brazil’s E-Commerce Is Booming: Record-Breaking Figures In 2011). Latin America continues to rise in prominence as the next big emerging market and  many industry researchers are suggesting that streaming content from Netflix could overtake cable in terms of adoption. However, to reap all the benefits from economic boom, it is a consensus that Brazil and Latin America must further develop its infrastructure in virtually all areas. Then, it is a matter of personal taste and/or political views to welcome private, state and/or mixed investment.  (See:Infrastructure Problems in Brazil: Equipment Imported by Petrobras From Italy Has Been Stuck in a Port For Over a Month).