The year 2011 was marked by challenges for Algar Telecom, which was once more able to overcome them once more thanks to the vision of the future that has always been an integral part of our history. Our effort was largely focused on what we call Expansão Minas (Minas Gerais State Expansion), which involves increasing our operating area for retail services. The plan was started in December 2010, when we acquired at an auction the concession for Band H, the last frequency band available in Brazil for 3G telecom services, in places bordering the cities and towns in our operating area.
The whole process was based on a detailed work plan, on our associates’ unwavering dedication and on our extensive 58-year experience in our field of business, mainly in creating new telecom companies from the very beginning (greenfield projects). After fulfilling all the operational structure and staff requirements, we had the great pleasure to enjoy our success in the first stage of the expansion, reaching 19 new cities and towns with top-quality Internet access, fixed-line and mobile phone, and satellite TV service packages.
In keeping with the Company’s sustainable ideals, the expansion is based on international level cutting-edge technology using equipment that consumes 30% less power when compared with those currently used in the market. In addition, the new offices can offer top-quality services and were planned on the basis of a “regional” concept. In other words, this allows us to have the kind of close relationship that is a key component of Algar Telecom’s culture – respecting the peculiarities of the regional culture and habits, and preferably hiring locally – with the clients from these new areas.
The regional office infrastructure, which ensures a close relationship with clients, is also one of our values in the corporate segment of the Company’s authorization area. Voice and data solutions for medium-sized and large companies grew sharply once more, closing the year with 32.9% higher revenues. Even though the Company is allowed to offer these services throughout Brazil, its strategy over the last few years has been concentrating on providing top-quality speedy data services through a modern IP network in the best areas around its backbone from a commercial perspective – covering 51 cities and towns in the States of Goiás, Minas Gerais, Rio de Janeiro, São Paulo and Paraná, in addition to the Federal District.
The execution of the expansion plan in a speedy and innovative manner, the expansion of the services provided for the corporate sector in our authorization area, as well as other targets achieved and/or surpassed during 2011, attest to the efficiency of our own management model, which has been helping consolidate the Company’s growth year after year. Algar Telecom closed 2011 with R$ 1.682 billion net revenues, up 11.3% year-over-year. Net income, in turn, came to R$ 144.4 million, a 10.2% rise in comparison to 2010.
These achievements show how seriously the Company has been pursuing the strategies established for all its segments. In addition to the significant increases in telecom, the results of the Business Process and Technology Outsourcing segment have also had a considerable impact on revenues. The infrastructure investments and the effort to obtain certifications enabled us to understand and fulfill the market demands better, as well as attract new clients. Once again, Engeset’s outstanding performance was essential for us to deliver quick top-quality services. At the same time, the company, which focuses on telecom engineering and operates throughout Brazil, showed once more its ability to grow by increasing its client base.
Algar Mídia, in turn, seized the opportunities in the digital media industry and increased by portfolio with Rede Alooh, which consists of 600 information monitors in areas with large numbers of people. Named out-of-home digital media, this solution has a great growth potential for the next five years.
There is more good news showing that our strategic decisions have been wise: Algar Telecom has once again topped the profitability ranking of the Melhores e Maiores do Brasil 2011 (Best and Biggest in Brazil 2011) magazine in the telecom category. Moreover, prominent ratings agency Standard & Poor’s upgraded the Company for the second straight year. Based on the cash generation, business diversification and adequate debt levels criteria, it upgraded the Company’s rating from “brA+” to “brAA-”.
It is also worth noting that Algar Telecom’s operational and economic growth is based on the best corporate governance practices, including the existence of a Board of directors and three advisory committees, one of which focuses on risk monitoring. As far as staff is concerned, we have a Human Talent policy that values our associates by giving them professional development opportunities and promoting self-fulfillment.
We have a people management model based on merit. We reward dedication and good performance and are truly concerned about our associates’ personal and professional growth; after all, the development of our professionals and their teams contribute significantly to the Company’s performance. Our investments in professional training, health, well-being, the growth opportunities established by the career plan and mainly the Company's good relationship with its professionals have been producing positive results. In 2011, Algar Telecom was once again ranked among the Best Companies to Word in Brazil by the Great Place to Work Institute and Época magazine, and among the Best TI and Telecom Companies by the Great Place to Work Institute jointly with ComputerWorld. Likewise, Algar Tecnologia was ranked among the 70 Best IT and Telecom Companies to Work and Algar Mídia among the Best Small and Medium-Sized Companies to Work in Brazil.
Client satisfaction is another indicator that encourages the Company to consistently practice and disseminate its values and beliefs. In 2011, Algar Telecom stood out in Anatel’s IDA (Service Performance Index) ranking, which indicates Telecom companies’ quality. The Company was often ranked first or second in Long-Distance National (LDN) fixed-line phone services, local phone services and mobile phone services.
Besides these and other achievements, this Annual Report presents in a transparent manner the figures showing that Algar Telecom is a solid company and its business segments have promising prospects for 2012. The Company’s environmental and social projects are also duly highlighted since we proudly consider them just as important as any other aspect of our business in an innovative manner.
We would like to express our gratitude to all those that somehow help build Algar Telecom’s history day by day: our clients, directors, shareholders, regulatory bodies, the Government, suppliers, creditors and associates. We welcome 2012 since we are certain that we can count on the motivation of these professionals, always committed to upholding and expanding the Company’s founder’s humanistic vision.
Divino Sebastião de Souza
Algar Telecom’s CEO
Luiz Alberto Garcia
Chairman of the Board of Directors