Streets of gold: Brazil's largest highway concessionaire looks to hit the road--in other countries.

Companhia de Concessoes Rodoviarias (CCR), a Brazilian highway concessionaire, has reason to celebrate all that it has done in Brazil. And also for its plans to invest abroad. Last year, Latin America's largest highway operator reported profits of US$256 million, managing 1,452 kilometers of highway, roughly 15% of Brazil's roads. The company operates seven concessions, among them the Anhanguera-Bandeirantes system, which has 316 kilometers across busy, industrial Silo Paulo state.

CCR was created in 1998 during an initial highway privatization program in Brazil "Since the concessions program began, CCR has invested $3.94 billion upgrading highways and plans to invest another $393.6 million in 2007 on concessions it already owns," says Leonardo Vianna, CCR's director of new business. The company is controlled by three Brazilian construction groups--Andrade Gutierrez, Camargo Correa y Serveng-Civilsan--as well as by Brisa, Portugal's largest highway concessionaire. Another 29% is owned by 3,000 investors in Brazil's Novo Mercado, a subdivision of the Silo Paulo Stock Exchange that demands tough disclosure requirements on listed companies.

Private companies operate 10,000 kilometers of Brazilian highways. "In a general sense, the highways were very deteriorated, and what made highway freight transportation in Brazil viable was the transfer into private hands of key segments, mainly the ones with port access," says Moacyr Servilha Duarte, president of Brazil's association of highway concessionaires, an industry group.

One example of CCR's success in refurbishing highways is the Dutra Highway, the country's largest, connecting Sao Paulo and Rio de Janeiro, the country's two biggest metropolitan regions. "It was an abandoned highway. It had holes. It was missing traffic signals, had a litter problem and its lanes were in poor shape," Duarte says. "It's a highway with 2,000 access points, a complete operation, and surely in the hands of the government it would be completely destroyed."

With improvements to pavement and an increase in exports, highways managed by CCR reported a 5.4% increase in traffic in 2006, compared with 2005. "Privatization meant huge improvements. The highways now have lower maintenance costs, and they have improved the sector's productivity," says Flavio Benatti, president of the cargo transport federation of Silo Paulo state. Although he praises the privatization model, Benatti does criticize the price of tolls. "Privatization is inevitable, but it's necessary to discuss the tolls. The first privatizations occurred without the broad consent of society, and now we have to look for ways to adjust tolls in Silo Paulo state," Benatti says.

Tolls. CCR finds complaints among users to be natural but company executives point out the results of the company's investments tend to be overriding. "If you look at the results of some of the studies, the conclusion is 'We don't like the tolls, but we prefer them to the previous situation'," says Arthur Piotto Filho, CCR's head of finance and investor relations. "Safety is fundamental to our business and, in Brazil, concessionaires are required to offer mechanical and medical services throughout the length of the highways," Piotto says. Unlike in other countries, such services are free in Brazil.

With success assured at home, the company's next goal is to drum up business abroad. In 2005, CCR drew up a strategy to repeat the Brazilian model in other countries. A first, recent phase was to open an office in Mexico, which-could be a strong growth market. "In Mexico, there are opportunities that are superior to what Brazil offers today," Piotto says.

To take part in highway bids in the United States and Canada, CCR created an alliance with one of its controllers, Brisa, to spread the risk of investing abroad. "These are markets of a much larger dimension, and we needed more access to credit. And, once out of Brazil, the idea is to go step-by-step; nobody is going to jump off into space," Piotto says. Chile, Costa Rica and other Latin American countries are on the company's list of investment plans.

"Why would a government stop investing in healthcare and in education to build a highway? It doesn't make much sense," Piotto says.

CARLOS ADESE * SAO PAULO