Oi challenges on its arrival in São Paulo


The entrance of Oi Celular in operation in São Paulo 2008 promises push up the competition in São Paulo's market.


In 2007, Oi decided to cross the borders of their concession region and acquired frequencies for the provision of cellular service in the state of Sao Paulo. It is expected that it starts operation in June this year.



The State of São Paulo


The state of Sao Paulo is one of the 3 regions in which it was divided over Brazil in the general plan of authorizations of fixed and mobile telephony. The state concentrates 24.1% of the country's cellular and 42.3% of GDP. In feb/08 São Paulo had 29.9 million cell phones being 79.23% pre-paid. Its density was 71.11 cell/100 inhab, occupying the 7th position among the most dense states in the country, despite being the 2nd in GDP per capita, behind only the Federal District.


The market for cell phone in São Paulo is disputed by Vivo (Telesp Celular), Claro (acquired BCP and Tess) and Tim. CTBC is present in some municipalities in the region of Franca (Area Code 16).


Tim started operation in 2002 and in four years has gotten a market share of 24.8% from the cellulars of the state. Vivo was the operator that has lost more market share in this period, from 65% in 2002 to 44% in 2006. Claro maintained its market share in 31% in this period.


Vivo continued losing market share in 2007 and 2008, while Claro and Tim increased their market share.



There is space for Oi in Sao Paulo. This is one of the few states in Brazil where only 3 operators dispute the market. It is, however, different from the conditions that are accustomed to find in its region. To better understand the market of São Paulo is interesting to divide the state into two areas: Metropolitan Region (Area Code 11) and the state (other Area Codes).


Metropolitan Region (Area Code 11)


The area code 11 includes 64 municipalities in the state of São Paulo, including those in the metropolitan area. It has 21.7 million inhabitants (49.6% of the population of the state) and concentrates 57% of cell phones.


This should be the initial stage of the battle for Oi in Sao Paulo. Tim, who owns 65.3% of its cell phones in the state in the area 11, quickly approached Claro and comes locking a dispute with her fierce for the second placing in this local area. They were practically tied in Feb/08 Claro with 5,049 thousand cell phones and Tim with 5,036 thousand.



The area 11 is the 11th most dense of the country with 78.44 cell/100 inhab (Feb/08).


Oi should enter this market with an aggressive promotion, even for the pre-paid segment. Prices per minute for pre-pay charged by operators in São Paulo are the highest in the country. The simple reproduction of the plan "Ligador", where for every R$ 10 the user earns R$ 100 to call another Oi - cell phone or fixed, would not have the same success by the size of the initial base of customers of Oi in the state.


County of São Paulo


The example of what happened with Tim, Oi will have more difficulties to win market in the county of the state. Vivo is leader, but Claro is gaining market share and is approaching from Vivo.



The growth in the county of the state depends on large investments in coverage of cities and roads. Vivo, Claro and Tim attend more than 98% of the population of the state and are present in more than 80% of municipalities Paulistas. Tim expanded its coverage in 2007, surpassing Claro in municipalities attended. Oi will need time to have coverage next to the others in the state.


Municipalities attended in the state of São Paulo





Only in 2007, Claro has conquer leadership in the local areas 19 (Campinas) and 12 (São José dos Campos). It was already leader in the area 16 where Vivo is not present in all municipalities because of CTBC.



According to the text above you could ask:

  • Is there space to Oi in São Paulo?
  • What will be the promotion of Oi's entrance in São Paulo? Will be based on devices sale or just Chips?
  • How will behave Vivo, Claro and Tim to defend market?
  • 3G and number portability could help Oi?
  • what will be Oi's market share in São Paulo after 3 years of operation?
  • Will Oi compete in São Paulo with broadband and fixed telephony?



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(in portuguese)
Cellular Market Update




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