Building a fiber optic internet network is an expensive and slow process, and is simply out of reach for most players. Therefore, a new model is gaining strength in Brazil: premade infrastructure rental, known in the sector as “neutral network”.

It is precisely this logic that Algar chose to adopt.

The Minas Gerais carrier has sealed a deal with V.tal, the largest fiber optic neutral network in the country, to utilize their infrastructure in all Brazilian states.

In practice, Algar will be able to sell residential internet in cities where it lacks its own network – offering plans of up to 2Gbps based on V.tal’s coverage, which already reaches over 22 million homes.

The decision marks a relevant strategic change for the company.

Traditionally focused on a corporate audience, Algar saw its profits from residential consumers grow by 8.2% in 2024, totaling 948 million reais.

With this, wholesale has become a new growth vector that would demand high investments in network systems.

The partnership enables this advancement to occur without the need to rebuild the entire infrastructure from scratch.

“We are very excited about this partnership, which will allow us to bring high-speed internet to even more cities across Brazil. This collaboration with V.tal reinforces our sustainable growth strategy and our commitment to good quality delivery to our customers”, affirms Márcio de Jesus, Algar’s business director.

With the deal, Algar can come to test new markets with lower risk, enjoying V.tal’s national coverage - today with 491,000 kilometers of fiber optics – to compete for clients in regions where it previously didn’t operate.

“Algar has been showing growth in their fiber optics internet services and expanding their presence in new cities, and we are happy to be a part of it”, affirms Lucas Aliberti, Vtal’s CCO.

How the neutral network functions

In the traditional model, each carrier must invest in the construction of its own networks, including cracking open streets, installing cables, hiring maintenance crews, and financing it all with its own resources.

With neutral networks, this logic changes.

The infrastructure is already installed – and it is shared among different carriers, which pay a monthly fee to use the mesh and sell packages to their end customers.

Vital, which inherited the old fiber base from Oi and is currently controlled by funds from BTG Pactual Bank (from the same group that controls EXAME), leads this movement in Brazil.

In 2024, the company generated 7.7 billion reais in revenue, with a net profit of 864 million reais and an EBITDA margin of 55%.

Oi alone answered for 65% of gross revenue, but V.tal’s strategy is precisely to attract new partners to dilute its dependency and make better use of its network.

The reason behind Algar’s strategy

Present in 16 states, Algar has always been a medium-sized carrier, focused on the B2B market, which accounted for 1,87 billion reais of the total revenue of 2,82 billion in 2024.

Wholesale was previously complementary, but now presents a new avenue for growth.

By adopting V.tal’s neutral network, the carrier reduces entry time and cost in new cities. Instead of waiting for months or years to install its own network, it can launch offers in places where V.tal already covers.

The strategy is also a way to increase in size with more agility and operational efficiency.