I read in a few posts that some here believe the MOU with Fortel/Wirelink is a good business opportunity for TV2U. Unfortunately, I am not reading it the same way and would be happy to be enlightened. Read it several times and still not making sense.
Apologies for the long preamble but necessary to get to my point.
Brazil's Telecom infrastructure operates in tiers, there are:
- the major national operators like Telbras and Embratel (Telstra equivalent) and Brazil has its own NBN (Plano Nacional de Banda Larga), most of them are also the major ISPs. These large operators want nothing to do with small ISPs.
- the regional or state (27 states) network providers like Fortel and SOL Telecom in the north east, or Sercomtel, Fortel and Copel in the State of Paraná in the south. In some instances, network providers like SOL Telecom have their own small/subsidiary ISP operation as well (SOL Portal).
- a plethora of local small ISPs within each state. They depend on the regional and state providers. These could be as small as a family operated business serving a few homes and shops in a specific suburb.
- there are also the major mobile operators like Vivo, TIM, Claro and Oi (Vodafone like). These four cover basically the totality of the Brazilian mobile market.
Fortel Fortaleza Telecomunicacoes (aka Wirelink) is a company founded in 1975 and based in Fortaleza, State of Ceará, northern Brazil (
http://www.wirelink.com.br/). Its network extends the north eastern states of Ceará, Piauí, Rio Grande do Norte, Paraíba, Maranhão, Pernambuco, and Pará (a total poulation of 43.6 million, mostly rural, fishing, cattle and farming, some industrial, and a focus on tourism development). Some of those states are among the poorest in Brazil.
Fortel's main line of business is the provision of access to telecom networks. It has a total bandwidth capacity between 100 and 200 Gbps for a total of 1,024 IP addresses (For comparison, TPG has 1.7 million IP addresses and Internode/iiNet has 2 million). It links upstream (obtains access and bandwidth) through 5 major networks in Brazil, Spain and the USA and distributes downstream (provides access and bandwidth) to 50+ local ISPs. Most of the local ISPs are not dependent exclusively on Fortel; some also acquire and distribute services from other network providers such as Via Cast (
http://viacast.com.br) and Tecnet (
http://www.tecnetce.com.br/), both bigger than Fortel and both also based in Fortaleza, as well as many others providers.
The info above and more can be obtained from here:
https://bgpview.io/asn/61832#info
In that sense, Fortel/Wirelink is a regional/state player and basically is in a similar line of business as SOL Telecom (which by the way is also based in the same street in Fortaleza and its network extends the same geographical area or states as Fortel/Wirelink). Both companies' primary business is serving the local corporate market and telecom service providers/ISPs with data networks, security, network services and telephony infrastructure.
Having outlined all that, I get to my point. What is the value of Fortel/Wirelink to TV2U?
Here's the scenario. I am a mobile customer in Brazil and getting my service from Vivo or Oi (a Telstra or Vodafone like). I connect to a store (Apple or Google) to download my TV2U app. I get my media streams from the TV2U infrastructure hosted and operated by SOL Telecom. Done! Right?
Apparently not so since we need another MOU!
If I am using the mobile provider's 3G, 4G or xG network, what is Fortel doing in this picture? Absolutely nothing! I am not looking for another hosting company since I already have SOL Telecom and I have no need to replicate my infrastructure (at least not in the same region). I am not distributing to the homes' smart TVs or set top boxes over fixed lines or WiFi (not yet anyway) so the ISPs are meaningless. I don't need any of them to run my advertising campaigns, I need a decent advertising company.
One plausible role is that, although I am using a mobile phone or tablet, I am mostly connecting to a local WiFi service (home, business or hot spot) to access the TV2U stream, and not necessarily using the 4G or xG network provided by Vivo or Oi. Can be cheaper and faster than say a 3G network and overcome usage limits. But even then, the network routing will take me automatically to the TV2U service hosted by SOL Telecom.
An example to explain that, in Australia, I can use my mobile phone or tablet at home and connect to my WiFi (through say TPG) and watch a video on the Netflix app, regardless of where that video is hosted or streamed from. The provider of my mobile network (say Vodafone) and their network type are irrelevant in this picture. If I went to visit a friend's home who uses another ISP (Optus or Belong), I am still able to connect via WiFi and watch the Netflix video. Same for Brazil, if I am at a home in north eastern Brazil and using some network (through my WiFi router and ISP) to get the TV2U stream, then went to visit a friend a few streets away who is connected through their ISP to Fortel/Wirelink or Tecnet through their router, I should still able to use their WiFi to access the TV2U stream.
So the question is still what is Fortel/Wirelink role in this picture. Are there limitations with the SOL implementation? Are the limitations technical, geographical, contractual, legal, or what else? If so, would that imply that TV2U would then have to sign deals with every network provider in that geographical area like Via Cast, Tecnet, Sobralnet, and all the others (or even in the whole of Brazil?) to provide a seamless nationwide access to its service? That would be a crazy thing to imagine. It gets crazier. Imagine I travel from Fortaleza to Rio and that while I am in Rio I cannot access the TV2U stream!! That makes absolutely no sense to me.
As hard as I try, I cannot see any value in the Fortel/Wirelink deal. More cooks in the kitchen but nothing is cooking. Just another meaningless MOU. Every sentence in it is either ambiguous and confusing (1st six bullets in Schedule 1 of the announcement) or superfluous (the remaining bullets are general T&Cs in a final contract).
The first bullet is the most ambiguous and confusing of all.
- WIRELINK agrees to grant TV2U the contractual right to provide the technology platform for the delivery of the OTT (live and on-demand) content to consumers as per terms to be agreed in the Definitive Agreements;
How does it differ from SOL technology platform? What rights can Wirelink grant that TV2U doesn't have already? Can Wirelink block access to TV2U through its network (this is as crazy as Optus blocking access to Netflix if Netflix doesn't sign an agreement with them)? What Definitive Agreements (plural), why many or is that a typo.
Again, I am not inside the TV2U business and have no idea what they are really cooking (or smoking) there. But when you give me that sort of info as an investor, you better be sure that it makes some sense to me and I can understand your actions, how you are adding value to the company, and to the business. I don't share the feeling but I can understand people dumping their shares yesterday. If that's what we have to get used to from Nick then better lose 30% on the shares and get whatever is left invested in something that makes sense. I haven't reached that stage yet, but not that far from it to be honest.
If you are making so many blunders in Brazil, what are we to expect from Indonesia?
Get your act together TV2U, and Nick in particular.
