13/03/2007


Tim surpassed Vivo in revenue?

 

 

Vivo and Tim both operators finished 2006 in the 1st place in quarter revenue in Brazil. Vivo's gross revenue in the 4th quarter of 2006 (4Q06) was R$ 4,111 thousands and Tim R$ 4,094 thousands.

 

Tim surpassed Vivo in revenue of services in the 4Q06, while Vivo kept the leadership in revenue of cellular devices.

 

 

These results seem to be inverted and you could ask?

  • How come Tim, that finished the 4Q06 with 3.6 million cellulars lesser than Vivo, have reached the leadership in services gross revenue?
  • How come Vivo, that presented net adds of 327 thousand cellulars in 4Q06, had presented the sales gross revenue of devices superior to Tim, that had net adds of 1.3 million celllulars in the quarter?

Following below an analyze each one of these questions:

 

Services Gross Revenue in 4Q06

 

R$ Thousands
Vivo
Tim
Signature and Use
1,903
1,745
Network Use
1,274
1,115
Data and other services
293
250
Long Distance
-
433
Gross Revenue and Services
3,471
3,542

 

The revenue of long distance was responsible for Tim's leadership in services gross revenue.

 

Tim provides long distance service (41) and Vivo not. As isn't allowed double authorizations between companies of the same group, the service of long distance of Telefonica/Vivo group is provided by Telefonica (15) that enters these accounts.

 

The table above help us to understand why Tim had in 4Q06 ARPU of R$ 37.0, superior to Vivo that was R$ 30.6. Without long distance, the difference between ARPU of both operators would be lesser.

 

Revenue of Devices Sales

 

R$ Thousands
1Q06
2Q06
3Q06
4Q06
Total
Vivo
600
809
693
641
2,743
Tim
423
547
535
551
2,057

 

Vivo had in 2006 gross revenue sales of cellular devices bigger than Tim, even though had presented net adds and gross inferiors to this operator.

 

Cellulars Gross Adds

 

Thousands
1Q06
2Q06
3Q06
4Q06
Total
Vivo*
1,942
2,546
2,426
2,481
9,396
Tim
2,327
2,960
3,501
3,549
12,338

* esteem by Teleco.

 

Unless Vivo's clients change their devices with very bigger frequency than Tim's clients, what it doesn't seem a reasonable hypothesis, can be concluded that the advantage in net sales of devices is related to the average price of devices sold by Vivo to be superior to the ones sold by Tim. Other explanation to the average price of TIM to be lesser in the sales of Sim Card, that's entered in sales of devices and gross revenue. With the commercialization of GSM devices in 2007 the trend is a decrease in the average price of Vivo's devices, which can imply in revenue decrease of devices sales of this operator.

 

Keeping the actual situation Tim must lead revenue in 2007 between cellular operators in Brazil since the 1Q07.

 

You could ask:

  • Will Tim leads net sales in Brazil?
  • Does Vivo has conditions to recover itself and lead again?
  • Will Tim surpass Vivo in cellulars market share?
  • What's the advantage of being leader in revenue?

 

 

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