03/06/2008


Would Oi/BrT be a "Supertele" ?

 

No news about the purchase of Brasil Telecom (BrT) by Oi, the new company resulting (Oi / BrT) has been named to Supertele. If achieved this acquisition, Oi/BrT would be really a Supertele?

 

The adjective is justified if "Tele" is understood as synonymous of fixed telephony concessionaire. The Oi/BrT will be the only concession to local fixed telephony in all units of the federation, except São Paulo and municipalities attended by the CTBC and Sercomtel.

 

If "Supertele" is understood as Superoperator telecommunications the "super" could be questioned.

 

The Oi / BrT would be the largest telecom provider in Brazil with revenue of R$ 42 billion in 2007. Contrary to what happens with other telecom groups in Brazil, it integrate its operations of fixed and mobile telephony in a single company.

 

The advantage of Oi/BrT decreases, however, when considering as groups the operators who have the same controller and adds its earnings.

 

Note: Revenues of 2005, 2006 and 2007 considering the actual composition of the group with Vivo joining Telemig, Oi the Amazônia and Net the Vivax.

 

The advantage of Oi/BrT to the Group of Telefonica/Vivo is 2% ($ 898 million). The two groups had submitted the same Earning in 2007 if Oi had not purchased the Amazonia Celular.

 

In 2007, Oi was surpassed by the Group of Claro/Embrate/Net and BrT by Tim. Revenue of Oi and BrT grew less because of the low participation of cellular in its total revenue (17.6% and 12.7% respectively). Keeping these trends the Group of Telefonica can surpass Oi/BrT in 2008.

 

The following table presents the participation of Oi/BrT in the amount of fixed accesses in service, cellulars, broadband and Pay TV in 2007.

 

-
Fixed
Cellular
Bband **
Pay TV
Telefonica/Vivo 30.4% 30.9% 28.9% 4.3%*
Claro/Embratel/Net 5.1% 25.0% 18.7% 48.3%
Oi (Telemar)Way 36.2% 14.4% 20.8% 1.0%
Tim
-
25.9% 0.0% -
BrT 20.5% 3.5% 21.9% -
Outros 7.8% 0.4% 9.7% 46.4%
Total 100% 100% 100% 100%
Oi/BrT 56.7% 17.9% 42.7% 1.0%

* DTH and MMDS acquired from TVA; ** Bband 3Q07

 

Oi/BrT leader in broadband would continue but with low participation in cellular and Pay TV.

 

Position in Latin America

 

Com a aquisição da BrT a Oi/BrT passaria a ser o 3º grupo em receita líquida em Telecom na América Latina, ultrapassando a Telecom Italia.

 

With the acquisition of BrT, Oi/BrT would be the 3rd group in net income of Telecom in Latin America, surpassing Telecom Italia.

 

* Source Telefonica, consolidated just 50% of the net revenue of Vivo and don't include Telemig.

Note: Net Revenues publisehd by operators exchange to USD of Dec/07

 

Net revenues of $ 16.2 billion would be far, however, the world's largest groups, such as AT&T (US$ 119 milhões), Verizon (US$ 93.5 billion) or Telefonica (US$ 83 billion).

 

The competition in Brazil

 

Regardless of the semantics issue, the formation of Oi/BrT would be in line with the world trends of consolidation among operators. Earnings of scale, mobile services and the supply of packages with different services (voice, broadband and TV) has encouraged this trend.

 

The consolidation of operators could benefit the user if they fail to focus on regions where are local telephony operators and move to compete nationally.

 

This already happens in the cell. Oi/BrT would be the 4th cellular operator with national coverage and with better conditions to dispute the market with Vivo, Tim and Claro.

 

In fixed telephony and broadband only Embratel/Net compete nationally, although with a limited coverage. The competition in these segments should increase with the arrival of broadband mobile (3G) and the cellular operators, such as Tim, by entering the market of fixed telephony.

 

 

 

According to text above you could ask:

  • Will Oi/BrT be a Supertele?
  • A company establisehd by Oi/BrT would be able to grow internationally? Or would end having to associate with other operators as Portugal Telecom?
  • The acquisition of BrT by will increase the competition in Brazil?
  • The PGO must be changed to finish with the restriction to the consolidation of fixed telephony concessionaires?
  • BNDES ( bank of investments) should finance the acquisition of BrT by Oi?
  • Is there space to new operators in Brazil?

Commentaries

 

 

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