Vivo sets up to come back growing
Vivo finished the 3rd quarter of 2006 (3Q06) with 28.7 million cellulars and 29.96% Market Share. The difference that separates Vivo from Tim decreased 4.6 million cellulars.
In the 1Q06 Vivo reached 30.1 million cellulars, but presented a decrease in the ARPU from R$ 29 in the 4Q05 to R$ 25.5 in the 1Q06. According to this situation (Consult: Lost year for Vivo?) , Vivo announced in the end of the 2Q06 somethings to revert the difficult situations:
- Implantation of GSM network in 850 MHz.
- Clean the base of clients breaking up with 1.8 million inactive cellulars in Jun/06.
The cleaning in the base of clients continued in the 3Q06 when Vivo presented Net Income of just 201 thousand cellulars. According to Vivo, this cleaning possible because of the implantation of a new platform of systems, which were inserted more than 90% of the clients (except BA/SE)
With a lesser Average of cellulars in the 3Q06, Vivo's ARPU increased R$ 28.7 the same in 2005. Also helped ARPU the end of Kill & Keep partial (More details).
* Vivo broke up in 1,823 thousand inactive cellulars **month
Vivo also promoted a revision of its service plans, offering flexible plans and reducing the prices of the services. It recognized that its prices were up the other companies. In the SMS, for example, the reduction of price was 40%. Vivo hopes that the growth of traffic compensates the lost in Revenue decurrent of these reductions of price.
The Company informed that in Oct/06 could already perceive the increasing in the recharge of pre-paid cellulars. The Revenue of pre-paid represented 45% of net income of Vivo services in the 3Q06.
Beyond that, Vivo reduced in the 3Q06 the cases of fraud and cloning in 84% in relation to Aug/06. It also concluded in 10/31/2006 the restructure with the joint venture of 14 Operational Service Providers in the Vivo S.A.
GSM Network in 850 MHz
The recovering strategy depends on the implantation of GSM network. This network will start to work until the end of 2006. Although Vivo doesn't say the size of the area initially covered. The objective is to reach the same covering of CDMA network in the 1Q07.
To guarantee National Roaming the Vivo's GSM cell phones must operate in 850 MHz and in 1800 MHz, frequency used by other GSM operators. The best is tri-band cellular, operating also in 900 MHz, or quadri-band, Vivo intends to reach National Covering implanting 1900 MHz network in MG and in the Northeast.
To make possible the implantation of GSM network in 850 MHz, the same band used nowadays by its CDMA, AMPS and TDMA networks, Vivo adopted:
- It's disconnecting its AMPS network, which can be a problem with Anatel, according to the regulation, Band A Operators must keep National Roaming.
- It sped up the changing of cellulars TDMA to CDMA. The quantity of Vivo's TDMA cellulars decreased from 5.3 million (1Q06) to 3.5 million (3Q06).
Looking at the text above you could ask:
- Is these enough to hinder that Tim exceeds Vivo in cellular's market share? ( Consult: Will Tim exceed Vivo?)
- What will be Tim's growth at Christmas?
- Will Tim surpass Vivo in Revenue this year?
- Will the acquisition of Telemig Celular by Vivo change this situation?
- What will be the reaction of the other companies with the decreasing of Vivo's price?
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