DESK3 Desktop

Desktop S.A. is a Brazilian telecommunications company that operates mainly in the provision of fixed broadband services via fiber optics. The group’s history dates back to 1997, with the founding of Desktop Online Informática by Denio Alves Lindo, who remains a shareholder and CEO. The company’s current corporate structure was established in July 2006, accompanying the evolution of the internet access market in the country. Starting in 2013, Desktop began to direct its investments toward fiber-optic networks, at a time when legacy technologies such as radio, copper and coaxial cable still predominated. At the end of 2024, the company had approximately 1.131 million active subscribers, serving 194 cities in the countryside of the State of São Paulo, with practically its entire base connected via fiber.

Desktop’s recent trajectory has been marked by a cycle of consolidation and accelerated growth. In 2019, the company merged SigmaBBS Comércio e Informações por Teleprocessamento Ltda., initiating a process of streamlining the structure and capturing synergies among group companies. In 2020, the entry of FIP Makalu Brasil Partners IJ, with the acquisition of 60% of the capital, strengthened its financial capacity for organic and inorganic expansion. During this period, it acquired regional providers such as ISSO Internet e Telecomunicações Ltda.-ME and Netell Internet Ltda., in addition to the merger of DIS Provedor de Serviços de Conexão Internet Ltda., which helped expand the customer base and network footprint. In 2021, after an IPO on B3 with a primary share offering to the market, Desktop intensified the consolidation of regional ISPs in the interior of São Paulo state, combining corporate reorganizations, a change of corporate name to Desktop S.A., and the merger of several acquired companies.

The company’s common shares are traded on B3 under the ticker DESK3, resulting from the public offering carried out in July 2021. Access to the capital markets enabled Desktop to finance a robust plan for infrastructure expansion and acquisitions. Between 2021 and 2023, the company completed significant transactions such as the acquisition of Netion Soluções em Internet via Rádio S.A., C-Lig Telecomunicações S.A., Starnet Telecomunicações Ltda., Net Barretos Participações S.A., LPNet Telecomunicações Ltda. and other regional internet companies. In 2022, Infolog TI Tecnologia Ltda. and IDC Telecom were added, both later merged, and in 2023 the acquisition of Cilnet Comunicação e Informática Ltda. (Fasternet) was completed. In parallel, the company also carried out a private capital increase in March 2023, strengthening its capital structure to support its growth strategy and the expansion of its fiber-optic network, which reached about 55,000 kilometers in December 2024.

Desktop’s business model is based on the provision of telecommunications services in a single operating segment, classified as net service revenue. Strategic, investment, procurement and resource allocation decisions are made on a consolidated basis, and the central focus is to provide high-speed connectivity via fiber optics. Approximately 100% of active customers contract internet products, with fixed broadband plans to which additional services can be added. The portfolio includes bundles that combine internet with streaming services, antivirus, content apps, telemedicine, high-definition digital TV for part of the base and, more recently, mobile telephony through an MVNO model, which positions the company as a provider of convergent fixed and mobile connectivity solutions in its operating area.

Commercial activity is concentrated on individuals, with a residential focus, in the interior of the State of São Paulo. In December 2024, Desktop operated in 194 cities, taking advantage of a context of expanding demand for fiber optics in Brazil. The national fiber broadband market has shown strong growth over the last decade, replacing legacy technologies such as radio and copper cable, driven by the digitalization of the economy, increased consumption of streaming, online gaming and intensive data use in households. Within this context, Desktop has consolidated itself as one of the largest internet service provider (ISP) platforms in the country and the largest ISP platform in the interior of São Paulo state, according to Anatel data. The subscriber base has grown consistently, with entry into 169 new cities between the end of 2020 and the end of 2024, supporting a compound annual growth rate of net service revenue of about 60% between 2018 and 2024.

The company does not have significant revenue concentration in large corporate customers, as no individual customer accounted for more than 10% of net revenue in the last fiscal year. This diversification is aligned with its focus on the residential segment and small localities, which reduces dependence on large contracts. Commercial operations combine own and outsourced channels, including online sales, virtual store, social networks, telesales, door-to-door teams and more than 100 proprietary physical stores spread across its coverage area. These points of sale and service act as a support base for customers as well as acquisition channels for new subscribers, with digital media strategies, local events and regional campaigns targeted to the socioeconomic profile of each municipality served.

On the operational front, Desktop has developed an expansion model based on quantitative analyses and historical data from network projects. The selection of new cities goes through market screening, demand assessment, capex investment estimates and approval by internal committees, seeking to optimize the rate of return on invested capital. In-house teams are primarily responsible for the planning and design of fiber-optic networks, while the physical build-out is carried out by a mix of local suppliers and large specialized companies, coordinated by the company’s management team. The goal is to maximize penetration of installed fiber ports – the ratio between connected subscribers and available capacity – tracking indicators such as the internal rate of return (IRR) of projects by city, which, in a large portion of the cases launched since 2020, shows high annual projections according to the company’s internal models.

Desktop is subject to regulation by the National Telecommunications Agency (Anatel), as it operates in the provision of telecommunications services of collective interest, including fixed broadband, fixed telephony, pay TV (SeAC) and, via MVNO contracts, mobile services. The company must comply with concession, quality and continuity requirements, as well as sector obligations such as contributions to FUST and FUNTTEL and fees related to FISTEL (TFI and TFF), as well as payments related to Condecine-Teles and the Contribution for the Promotion of Public Broadcasting, due to the provision of audiovisual services. Its operations also depend on Anatel’s approval of interconnection contracts, infrastructure-sharing agreements with power utilities and MVNO agreements. Non-compliance with regulations may result in penalties ranging from warnings and fines to more severe sanctions, which underscores the importance of regulatory monitoring in business management.

In the environmental, social and governance field, Desktop has structured an ESG agenda formalized with the publication, in July 2024, of its first sustainability report, referring to 2023 initiatives, prepared based on the Global Reporting Initiative (GRI) methodology. The document describes waste management practices, greenhouse gas emissions inventory, use of water resources, energy consumption and recycling and circular economy actions. On the social pillar, it reports information on the workforce, labor practices, people development programs, health, safety and diversity, equity and inclusion. In governance, the company highlights initiatives on ethics in relationships, whistleblower channels, the profile of the board of directors, corporate policies, and information management and security. These practices complement Desktop’s growth strategy, which combines network expansion, regional consolidation and a focus on high-speed connectivity for its subscriber base, through the DESK3 shares traded on B3.