05/21/2007


Did Tim slow down?

 

Tim leads net adds growth in 1st quarter 2007 (1Q07), had in April net adds inferior to Claro.

 

 

Tim fell to 17.8% its participation in net adds of April, after responding for 40% of the net adds in the 1Q07. With this result Tim lost market share in the month, which didn't happen since november 2005.

 

It's still early to tell if the low growth presented by Tim in April represent a tendency to the next months, or was just a slow down, where a bigger amount of disconnections compensated the net adds of March.

 

However, things are even more difficult to Tim since April. Vivo was working with GSM in 86% of the cities that attends and had in April net adds of 125 thousand cellulars. In May, Claro and Vivo had promotions for Mother's day more aggressive than Tim pre-pay.

 

Analysing Tim quarter results it indicates a participation decreasing of the pre pay cellulars in the base of the operator.

 

- 1Q06 2Q06 3Q06 4Q06 1Q07
Market Share 23.53% 24.36% 25.14% 25.45% 25.77%
Pre-Pay
79.4% 79.4% 79.5% 78.7% 78.4%
ARPU (R$)* 30.0 30.2 34.4 37.0 34.4
Minutes of Useo (MOU)* 82 81 95 95 89
Churn (monthly) 2.4% 2.6% 2.6% 3.1% 2.9%
SAC R$ **
150 168 146 120 124

* Affected by the end of Bill&Keep partial since 3Q06 **Acquisition Cost of clients

 

Another issue for Tim is the growth of churn in the last two quarters. In 1Q07 Tim presented monthly churn of 2.9%, superior to the one presented by Claro (2.8%) and Vivo (2.6%).

 

With this situation, gets difficult for Tim the dream of reaching cellulars market share leadership in Brazil. The leadership between Tim and Vivo keep still in April (2.7 million cellulars), although the difference between Tim and Claro fell to 1.5 million (1.7 million in March).

 

If the growth rythm keep decreasing like that in the following months, Tim will be obligated to follow Claro's growth.

 

Claro presents net adds superior to Tim in the 2nd and 4th quarter of the year because of the promotions.

 

 

Tim's leadership in net adds has been gotten with a more steady growth during the year. A decreasing of this rythm could be good for Claro to try to get the 2nd place.

 

In Argentina, for example, the strategy focous in pos-pay that took Telecom Personal, controlled by Telecom Italia, to lose the 2nd place to CTI of América Móvil.

 

You could ask :

  • A decrease of Tim's rythm in April is an isolated fact or it represent a trend to the next months?
  • Was there a bigger base cleaning of Tim in April? How will be its performance in May?
  • The sharesholding changes in Telecom Italia are affecting the performance of Tim in Brazil?

 

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