Google expects revenue from its Brazilian operations to surge 80 per cent this year as the government pours huge amounts of investment into the sector, making the country one of the company’s most promising growth markets.
Giving Brazil’s poor more access to the internet and improving connection speeds is a priority of the country’s new president, Dilma Rousseff, who sees the web as the best way to accelerate social and economic development.
“Brazil is a beautiful opportunity for the digital world,” said the head of Google’s Brazilian subsidiary, Fábio Coelho, in an interview with the Financial Times. “Last year we grew 80 per cent in Brazil in terms of revenue and we expect to grow at the same pace this year.”
Latin America accounted for 2-3 per cent of Google’s $29.3bn revenue last year, with analysts estimating that Brazil brought in as much as $500m.
As more Brazilians move into the middle classes and buy their first computer, internet usage has soared.
But even as the economy slows this year, private and public investment under the country’s National Broadband Plan should keep up the momentum of growth in the sector.
“Brazil has a very low broadband penetration and out of 200m or more mobile phones, only about 12m to 14m are smart phones. Most are pre-paid,” Mr Coelho said. “There is a big eco-system to be developed here.”
This week, Paulo Bernardo, the communications minister, said Brazil’s government could spend up to R$1bn (US$640m) a year until 2014 to improve internet services, making the country an attractive destination for Google at a time when it is struggling with censorship issues in other emerging markets such as China and Russia.
Google Brazil plans to increase its workforce by 50 per cent this year from the current 350, said Mr Coelho, who joined the company last month after almost a decade at AT&T and stints at Citi and Gillette.
As well as growth in advertising via YouTube and the rising popularity of the Android mobile phone platform, Mr Coelho is optimistic about Orkut, Google’s social networking site and one of Facebook’s big competitors. Facebook overtook Orkut in India last year and has fast been gaining popularity among young Brazilians, but Orkut still has about four times as many users in Brazil.
Additional reporting by Richard Waters in San Francisco