The quick pace of change in the telecommunications industry in Brazil, driven by competition dynamics, regulatory changes and fast technological progress, have been clearly reflected in telecoms’ strategic plans in recent years. To materialize the growth projections in our long-term planning, we worked hard in 2014 to achieve three major goals in the Telecom business: (i) to maintain and protect our client base from the retail market; (ii) to increase our share in the corporate market by breaking into new geographies and new market segments, and launching innovative products and services; and (iii) to boost productivity continuously.

Anticipating the future need for connectivity and data capacity, we signed with Google (U.S.), Angola Cable (Angola) and Antel (Uruguay) an agreement to build an undersea fiber-optic cable between the cities of Santos, Brazil, and Boca Raton, U.S., one of our major highlights in 2014. The installation works started in October 2014 and should be completed by late 2016. This investment will allow us to offer services of greater capacity and quality that will meet our clients’ growing data demands.

The results of our sales to the corporate market support our investments in expanding to new horizons. In 2014, we installed 1.0 thousand km of optical fiber cables to serve new clients around cities and towns in the area covered by our backbone; as a result, we grew by 14.4% in this segment in relation to 2013. We made progress in our ICT (Information and Communications Technology) portfolio and created offerings for Micro- and Small Enterprises (MSEs) as well. All these advances ensure we will continue distinguishing ourselves for our services and relationships–as we always have. In the corporate market, we had 87% client satisfaction.

Although it was a very challenging year and new competitors entered the market, we also made progress in the retail market, with a 7% rise in revenue and in the number of ultra-broadband clients. Therefore, we acquired the 700 MHz frequency (4G) to continue serving these clients by adding mobility to our services, which stand out for their quality and efficiency.

Our goals for the Integrated ICT and BPO Solutions segment, represented by subsidiary Algar Tech, were to consolidate our international expansion and portfolio. We expanded the Company’s presence to Argentina and Chile by acquiring Asyst. As a result, we added 170 large and mid-sized companies to our client base. We expect to increase our presence in the Americas even more to meet the growing demand for international service capacity in the IT market since the main clients operate globally. Revenue from this business segment rose by 45% in 2014, led by IT services, which accounted for 53% of the total revenue.

Thus, we exceeded the results expected for the year. Consolidated net revenue totaled R$2,238 million, 18% up on 2013. Operating cash generation as measured by EBITDA came to R$543 million and net income to R$142 million. The Company’s governance and soundness have allowed us to continue investing about R$450 million per year, thus ensuring our longevity and commitment to quality and good reputation.

Concerning efficiency, the results we achieved by optimizing costs and expenses contributed to a 2p.p. increase in the margin in the Telecom business. This shows the Company is better prepared to adapt to market conditions quickly.

The year 2014 was even more special for us because of the visibility the sustainability initiatives developed in our value chain gained. These projects, coupled with our business and management models, became a reference in Brazil’s telecommunications industry, as recognized by the Exame Sustainability Guide. This positive image is also reflected in other major awards we won: Época 360° Magazine’s Best Managed Company in the Telecom industry, Anuário Telecom’s [Telecom Annual] Brazil’s Most Conscious and Época and IT Mídia’s Best Companies to Work for.

In 2015, we remain confident about Brazil’s potential and firmly believe in the growth prospects for all our businesses. We will continue launching operations in new places and consolidating Algar Tech’s international expansion. We also intend to expand our offering of products and services developed by our research and development, innovation and co-creation teams.

The results of our efforts also reflect what we have always believed is our most important asset: our human talents. Algar Telecom’s 2014 climate survey showed an increase of 4p.p. in relation to 2013.

We have been creating value for society through growth, profitability, client satisfaction and our associates. This makes us acutely aware of the important role we play toward over 1.3 million clients, 17.6 thousand associates, shareholders, creditor, communities in which we operate, suppliers, institutions and regulatory bodies. We know that engaging in dialogue and building sustainable relationships are the pillars of our growth and our reason for being. As a result, we reaffirm to all our stakeholders our commitment to creating value in a sustainable manner and as what we have been doing for over 60 years–together.

Divino Sebastião de Souza
Algar Telecom’s Chief Executive Officer

Luiz Alberto Garcia
Chairman of the Board of Directors