Information Technology in Brazil

Brazil:

IT Financing

Overview

Approximately 1.36% of Brazil's GNP in 2000 was invested into Brazil's telecommunications infrastructure. This large investment helped to boost Brazil's need for a solid telecommunications framework for all other computing activities. It is impossible to support good information technology companies without the underlying infrastructure of telephone lines and internet access. (40)

Stock Exchanges

The Brazilian Stock Exchange is called Bovespa. I had the opportunity to visit Bovespa during my stay in Brazil. There are very few stocks actively traded on Bovespa, around 30. (Note 1) And the trading on the exchange tends to be very light. As you can see in the image to the right, the stock exchange tends to be fairly quiet. In total there are hundreds of companies that are currently listed on Bovespa.

NYSE

Brasil Telecom, Embratel, Tele Celular Sul, Tele Centro Oeste Celular, Tele Leste Celular, Tele Nordeste Celular, Tele Norte Celular, Tele Norte Leste, Tele Sudeste Celular, Telebras, Telecomunicacoes De Sao Paulo, Telemig Celular, Telesp Celular
Others

I found no Brazilian companies listed on FTSE, the London Stock Exchange and only one listed on the NASDAQ, NET Servicos de Comunicacao S.A.

Foreign Direct Investment

The Internet Boom was a great time for Foreign Direct Investment. Almost all of the market data available at the time showed an incredible demand for local telecommunications in Brazil. Many of the companies and individuals that invested in Brazil during the boom invested in creating more capacity. "From 1998, when the telecom system was privatized, to 2000, telecom investments reached an average of 1.49 percent of GNP a year, a percentage well above both Brazilian and Latin American historical levels." Like most other FDI exchanges, in 2001 after In 2001, foreign investment in telecommunications declined, but still represented 20 percent of total FDI in Brazil. (40)

The majority of the information I found about Foreign Direct Investment was before the Internet Boom. The only information I found after 2000 was about companies cutting back on investment. This does not mean that there is no FDI in Brazil any more, but it is most likely in very specific areas and far more limited than in the height of the Internet Bubble.

Sources

(40) "E-Commerce Readiness and Diffusion: The Case of Brazil", Federal University of Rio de Janeiro, http://www.crito.uci.edu/publications/pdf/gec/brazil.pdf.

(42) "Listed Companies", NYSE, http://www.nyse.com/listed/p1020656067970.html?displayPage=%2Flisted%2F1020656067970.html. 2003.

(43) "IT Market Growth Expectations Lowered in Latin America for 2001", IDC, http://www.idclatin.com/press_center/005.html. September 19, 2001.

Note 1: This information was gathered during my visit to Bovespa. This is from my understanding of the presentation that was given to my group.

Images: The images of Bovespa are my own. I took them while on my visit to Brazil in May 2003.

Ann Yates
MBA Graduate
Kogod School of Business
American University
annvyates@yahoo.com

Last Update: December 10, 2003