08/20/07


Oi's recovery

 

Brazil finished July/07 with 108.5 million cellulars and density of 57.4 cell/100 inhab. July's Net Adds (1.8 millions) exceeded July/06 (1.3 millions).

 

Oi with net adds of 562 thousand cellulars, leads growth in July/07, changing its low growth that has been decreasing since last year.

 

 

Oi has been losing market share since Aug/06, cause since then doesn't subsidizes pre-paid phones sales. This strategy made Oi's market share fall from 13.23% Aug/06 to 12.78% Jun/07, in which Oi lost market share leadership in Region I to Tim.

 

With expressive growth reached in July/07 Oi recovered leadership in Region I and its market share grew 13.08%.

 

Oi's growth is associated to the advertising campaign "Ligador" to pre-paid cell phones. In this promotion, making R$ 10 monthly recharge the client wins a monthly R$ 100 bonus to Oi - Oi calls or Oi - fixed calls. If the client do R$ 25 recharge the bonus is R$ 250. This promotion has a good acceptance in the area 10 (Northeast) responsible for 69% of Oi's net adds in July.

 

The other operators have been doing promotions of bonus and minutes cheaper, specially to pos-paid plans though. Oi offers bonus to pre-paid cell phones so it's in advantage compared to the others.

 

These promotions decreased minute price, which increase low MOU (minutes of use per user) of cell phone in Brazil (more details). It also make the client buy another chip (SIM Card). Certain users alternate the utilization of chips in the same GSM cell phone, to get all the advantages offered by the operator.

 

The growth of cell phones base in Brazil do not depend on new devices sale but also chips sale.

 

Oi, for example, which privileges chips sale started a new advertising campaign of no blocked cell phones. Claro, which grows through the sale of subsidized devices, implanted "hard lock" of cell phones in which was recently forbidden by Anatel (regulator agency).

 

The competition is increasing with Vivo's GMS network in operation and Oi's recovery in July, it's helping cellular growth in Brazil in 2007. Claro and Tim aren't participating of this for now.

 

 

The 8.6 million net adds accumulated in the year exceeded 6.8 million cellulars from Jan-Jul/06. If continues like that Brazil is able to exceed the growth of 13.7 million cell phones of 2006 and finish 2007 with more than 115 million cell phones (60 cell/100 inhab). Teleco first prediction was growth of 12.5 million cell phones in 2007 (more details).

 

 

You could ask :

  • Will cell phones growth in 2007 exceed 2006? Will cell phones density reach 60%?
  • Is Oi going to continue with aggressive advertising campaigns in the following months ? What is going to be the reaction of other operators?
  • Could operators with 3G network implantation increase advertising campaings packs with cheaper minutes?
  • Will Claro and Vivo continue with promotions based on device prices?
  • What is gonna be Oi's churn in the next months?

 

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