Tech Roundup: Brazil advances privatization of data controllers

. Jan 22, 2021
data privatization

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Bolsonaro expected to cave on Huawei ban; the privatization of state-owned data-controlling companies moves forward; and energy producers turn to fintechs.

Privatization of state-owned IT companies moves forward

After the government’s privatization agenda stalled in 2020, the Economy Ministry is keen not to waste any time this year,

initiating studies to <a href="">privatize a number of IT firms</a>, including the Federal Data Processing Service (Serpro), Dataprev — which manages social security databases — and telecoms company Telebras.</p> <p><strong>Why it matters.</strong> Serpro and Dataprev are the two largest state-owned IT companies in Brazil. Combined, they store the personal data of <em>every single Brazilian alive</em>. And data has become one of the <a href="">world’s most valuable resources</a>.</p> <p><strong>Slow processes.</strong> Economy Ministry teams are <a href="">tasked</a> with drafting a three-phased plan for selling the three companies, which must include international benchmarks on how to modernize the ICT sector. Meanwhile, the National Development Bank (BNDES) hired private consultants to help shape the plan.&nbsp;</p> <ul><li>Organizations focused on data privacy are increasingly <a href="">concerned</a> about how the privatization will take place, as Dataprev and Serpro hold extremely sensitive data.</li><li>True to form, the government has not set no timetable for any deals to take place. In the case of Telebras, privatization will almost certainly not happen this year.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Trump exit and vaccine shortages force Bolsonaro U-turn on Huawei</h2> <p>As we broke in our <a href="">January 22 Daily Briefing</a>, the Brazilian government is correcting its course on Huawei, and the Chinese telecom behemoth is no longer expected to be excluded from the auction of 5G frequencies in Brazil.&nbsp;</p> <p><strong>Reasons for change.</strong> The pivot would represent a display of good faith towards China, with whom Brazil has had rocky relations as of late. The government has struggled to get its hands on vaccine inputs from the Asian country, and reestablishing dialogue would be a good way to speed up customs processes. <a href=""><strong><em>Go deeper</em></strong></a><strong><em>.</em></strong></p> <ul><li>Local telecom operators have voiced their concerns that a Huawei ban would be highly disruptive for the industry, given that the Chinese company <a href="">controls over 80 percent of Brazil&#8217;s 86,000 antennas</a>. Replacing this infrastructure would set the country back years in 5G implementation, not to mention the <a href=",bolsonaro-nao-deve-mais-barrar-a-huawei-no-leilao-do-5g-no-brasil,70003583138.amp">costs</a> it would generate.</li><li>Moreover, as Joe Biden replaces Donald Trump in the White House, President Jair Bolsonaro has lost his guide on how to deal with China. Mr. Trump&#8217;s Clean Network initiative —&nbsp;a <a href="">blatantly anti-China governance program</a> for international cyberspace — has been removed from U.S. government websites. “We do not believe [Mr.] Biden will pressure us against Huawei in the same way the Trump administration did,” one senior government official told <strong>The Brazilian Report</strong>.</li></ul> <p><strong>Noteworthy.</strong> Vaccine negotiations with Chinese officials included Communications Minister Fábio Faria — but not Vice President Hamilton Mourão, who has established a good relationship with Beijing. <a href="">He and Mr. Bolsonaro are currently at odds with one another</a>.</p> <p><strong>Bulking up. </strong>Meanwhile, Huawei is working to secure its position with heavyweight lobbyists, such as former President Michel Temer —&nbsp;who perhaps knows the ins and outs of Brazilian Congress better than anyone.</p> <p><em>— with Débora Álvares</em></p> <hr class="wp-block-separator"/> <h2>Brazil’s energy sector becomes “fintech-savvy”</h2> <p>Brazilian energy distributors are joining the fintech bandwagon, as companies such as Neoenergia, CPFL, and Enel will allow customers to pay for their electricity bills using the Central Bank’s instant transfer system PIX in 11 states. Meanwhile, distributor Energisa will launch its own fintech, Voltz.&nbsp;</p> <p><strong>One step forward.</strong> One of the country’s biggest energy companies, Energisa built upon existing technology and will offer PIX as one of the payment methods on its very own fintech. Customers will be able to create digital accounts, acquire debit and credit cards, and pay bills using PIX through the Voltz app.&nbsp;</p> <ul><li>Meanwhile, the app will also allow for suppliers to withhold their receivables and advance employees&#8217; wages. Energisa hopes that one-quarter of its 20 million customers will join Voltz by 2025, which would reduce the company’s financial expenses and bank fees by 50 percent, per BTG Pactual calculations.</li><li>CEO Ricardo Botelho said Energisa aims higher than just energy sales. “Our fintech wants to be more than a digital accounts provider. It is attached to the group’s ecosystem and will help to develop it.”</li></ul> <p><strong>Efficiency.</strong> As PIX allows for immediate transactions, this could prevent customers having their electricity supply interrupted due to delays in payments, while companies may save money by ditching paper invoices and the logistics to send them, said Wagner Ferreira, a legal director at sectoral association Abradee, <a href="">speaking to</a> Agência Estado.</p> <hr class="wp-block-separator"/> <h2>Take note</h2> <ul><li><strong>Breach. </strong>Cybersecurity company Psafe <a href="">found</a> a security breach in a government datacenter which exposed sensitive information belonging to 220 million people in Brazil — including authorities —, 140 million vehicles, and 40 million companies. PSafe told <strong>The Brazilian Report </strong>that it cannot confirm if all of the individuals who had their data leaked are Brazilians, and said many of the people exposed may already be deceased. Psafe did not specify which datacenter had suffered the breach.</li><li><strong>Love at first payment. </strong>Brazilians have found a new and creative use for PIX, the Central Bank&#8217;s instant payments platform. Some lovelorn citizens have begun using the system as a <a href="">dating app</a> of sorts. Users send multiple one-cent transfers to their conquests in order to grab their attention, leaving flirtatious messages on the payment&#8217;s description field. The Central Bank does not approve, promptly issuing a statement saying PIX is by no means a social network. Moreover, unlike social media, individuals cannot block PIX payments from other users, in cases of harassment.</li><li><strong>IPO. </strong>Bemobi may be the next tech firm to join the São Paulo stock exchange. The company, which aims to be a “Netflix of apps” and has 34 million subscriptions in 37 countries, is <a href="">filing for an initial public offering</a>. If stock prices hover around the middle of the pricing range, the offering may be worth BRL 1 billion.&nbsp;</li><li><strong>5G.</strong> Chile <a href="">inaugurated</a> Latin America’s first “5G area” in Santiago. Some 100,000 people circulate in the 5.5-square-kilometer space where 5G-connected phones will be able to connect to the new network. The initiative is a test before the technology is made available nationwide, which will occur after spectrums go to auction later this year.</li><li><strong>Video calls. </strong>A recent <a href="">report</a> by OpenSignal shows Latin America is posting poor performance in video-call quality. Only Uruguay and Argentina had above average group call performances, while Mexico and Brazil were decidedly below the mean. The report also found that, in most countries, when all participants were able to connect on 5G, the group video calling score was between 7.3 points and 20.2 points higher than connections using 4G.

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Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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