If you asked AI to generate an ideal country for an AI ecosystem, it might land somewhere very much like Brazil.
With the fifth-largest population in the world, Brazil hosts two of Latin America’s business capitals, giving it the weight of numbers and the economic development to support a broad and advanced connectivity market.
Add an enviable power network – 90% renewable and woven together by a single national grid – plus fibre and subsea routes offering connectivity nationally, regionally and trans-Atlantically, and Brazil starts to look like an ideal market for AI to thrive.
Any upcoming AI growth will layer onto an already effective digital ecosystem. Here is the Capacity review of Brazilian connectivity – starting with the data centre market.
Data centres: tax breaks, clean power, and AI ‘mega-campuses’
With around 200 facilities live at the time of writing, Brazil has more data centres than the rest of South America put together. Data centre builders already like Brazil for its clean, easily transmittable power and large internal market – and an upcoming tax change will also help matters.
The Special Tax Regime for Data Centre Services, aka ReData, eases the tax burden for companies building and operating data centres in the country, specifically related to purchase and import charges on data centre technology.
These taxes can be painful – up to 300% depending on the equipment – and they account for a hefty slice of the cash needed to build a Brazilian data centre. So it’s no surprise companies in the market are pleased about it. “ReData, if passed, reduces taxes and makes investment in Brazil more attractive. Without it, development will continue, but at a slower pace,” Elea Data Centers’ Elena Winters told Capacity.
After a ten-month voyage through the Brazilian legislative system, ReData , was approved by the country’s lower house in late February 2026 – but was not brought to a final vote in the Senate. The bill is currently in limbo as a result. However, local reports suggest this is the result of a political dispute unrelated to the actual bill, raising hopes the setback is not terminal to ReData.
“ReData would ease entry and unlock billions of dollars in investment,” Winters said, and if ReData can get through the Senate, these billions would join already existing billions in the market. Amazon has committed $1.8 billion between 2024 and 2032 to develop its Brazilian offering, while Microsoft is also investing around $2.8 billion over 5 years in data centres and general cloud infrastructure. As a market, Brazil has the fundamentals to make AI work at scale, and this has brought several mega-campuses on stream in the country. One is Elea Data Centers’ Rio AI City, delivering an initial 1.5 GW of clean power capacity.
Geography also works in Brazil’s favour. While business capital São Paulo and nearby Campinas are responsible for around 40% of all data centres in Brazil, space constraints there have nudged growth outwards. More operators are choosing Rio de Janeiro (there are currently around 30 data centres in the city), and the subsea hub of Fortaleza is also adding data centres to its existing slew of subsea cables.
The southern city of Porto Alegre, awaiting connection to the V.tal Malbec Brazil-Argentina cable, is also making the most of its position as a gateway to the south of the continent, with 13 data centres and counting based in the region (among them Tecto Data Centers’ TPOA1, recently named as Capacity’s Data Centre of the Month for February).
State of the Sector: Fibre
Capacity’s guide to what is happening in the global fibre market.
Brazil’s superpower: power
Demographic and economic factors explain a lot of Brazil’s digital attraction, but it is power that tips the scales.
Brazil’s electricity generation setup is the envy of many countries. Not only is there abundantly available clean power, with 90% renewable generation, it is also efficiently transported. The Brazilian national grid is a single, interconnected system with 180,000km of high voltage transmission lines (for comparison, the figure for Germany is around 40,000km). This avoids some of the distribution issues seen in countries with more fragmented systems, such as the United States, which operates three separate grids that makes nationwide distribution much harder.
Nature puts a brake on things, though. Brazilian power generation is mainly hydropower-based, which means the dry season can see renewable supply drop substantially. To smooth this out year-round, data centre developers are looking at wind power. One example is Ascenty, which signed an agreement to take 110MW of primarily wind power from renewables provider Casa dos Ventos in February 2026.
Fibre and subsea
As a country with a long coastline, fibre, both terrestrial and submarine, forms a vital part of Brazil’s connectivity mix. Fortaleza in particular is emerging as a subsea landing point thanks to its relative proximity to Africa and Europe (it is only slightly further from Africa than it is from São Paulo), with at least 10 cables either operational or planned there. Data centre, internet exchange and terrestrial fibre development is following suit.
On the terrestrial side, Brazil’s fibre availability is around 85%, helping the country reach an average fixed download speed of 260 Mbps in March 2026 – the sixth-fastest speeds in the world. As well as subsea and trunk fibre buildout, this has been helped by extensive government investment programmes, for example the Norte Conectado programme to improve connectivity in the rural northern areas of the country. This programme delivered a sub-Amazon fibre trunk cable connecting northern Brazil and Colombia, which entered service in July 2024.
Keeping traffic close to home
One factor driving Brazilian and South American digital infrastructure development is digital self-sufficiency. Other regions can be reliant on European hubs to exchange their traffic – for example, traffic between two nearby African countries might take a lengthy detour to Frankfurt and back.
This is not the case in Brazil, where a healthy local digital infrastructure means traffic can stay in the country. The result is not just smoother performance, but also an incentive for companies in the market to make more Brazilian investments.
ISPs: fragmented but effective
Brazil’s data centre market clusters in a handful of cities, but the ISP market does the opposite. The level of fragmentation is enormous, with 20,000 providers delivering 63% of FTTH connections.
This will likely lead to consolidation – for example, a merger between operators AmericaNet and Vero, two years in the making, finally concluded in early 2025 – but this diverse market also brings advantages.
Local ISPs are better placed than nationwide operators to deliver the connectivity improvements required to bring underserved communities into the network, and these companies have played an important role in government connectivity and digital inclusion projects.
Go deeper into Brazil at Capacity Latam
Capacity Latam is the hub for Brazil’s connectivity community – where deals are made, forecasts discussed, and development roadmaps drawn out. The event returns to São Paulo on 17 and 18 March 2026.
