09/08/2008


Is Claro going to overcome Tim in market share?

 

Keept the tendencies of the last three months (May-July), Claro might overcome Tim in market share (number of cellphones) still in this quarter period of 2008 (3Q08).

 

 

Claro would be back to the 2nd place in the market share ranking of cellphones in Brazil, four years after been surpassed by Tim.

 

Note: Consudering current operator’s composition

 

In 2004, Tim’s stronger aggressiveness in the implementation of GSM and in the acquisition of national covery were both decisive to overcome Claro.

 

In Jan/08, Teleco pointed out the following factors as importants for Claro to overtake Tim in 2008.

  • Claro’s entrance in operation in the North of Brazil. (Ok in July/08)
  • Net adds of cellular in Brazil in 2008 superior than 20 millions. In this situation, Claro could decrease more quickly its difference to Tim for having a bigger share of net adds. (Net adds in the last 12 month accumulated are already counting 26,8 million of cellphones).
  • A faster implementation of Claro’s 3G net, (Claro is leading the 3G implementation beeing present in 72 cities).

In addition, are the facts that Claro surpassed Tim in number of covered cities and equalized the numbers of attended population (87%). Claro’s getting to improve its brand position. It’s beeing more aggressive in cellphones promotions and may bring the Iphone in Brazil before Tim.

 

In order to reverse this trend Tim would have to increase it’s aggressiveness in promotions to get new clients, what could lead to a raise of the Subscriber Acquisition Cost (SAC) wich was US$ 69,18 in the 2Q08.

 

Other action to be taken would be decrease the churn. If Tim and Claro repeat in the 3Q08 the churn from 2Q08, Tim would have 259 thousands cancellations more than Claro in the quater.

 

 

2Q08
Tim
Claro
Pre-paid
79.8%
80.4%
ARPU (R$)
29.8
26.0
MOU
100
88
Monthly Churn
2.8%
2.6%

 

 

Tim and Claro present very similar indicators. Tim’s advantage in ARPU can be attributed to the fact that the company has Long-Distance revenue (41), while Claro uses Em bratel (21).

 

 

Revenue share x market share

 

Tim may also, in example of what has been affirmed by Telecom Itália in relation to the Italian market, be focusing more on the revenue share than on the market share.

 

Tim’s second colocation in revenue share (27.6%), only behind Vivo (32.8%), might not be threatened by Claro (24.6%) in 2008.

 

In 2Q08, Tim presented an advantage of US$ 269.1 million in net revenue in relation to Claro.

 

 

2Q08 (R$ Million)
Tim
Claro
Net Revenue
3,186
2,849
Net Revenue of Services
2,971
2,507
Net Revenue of cellphone sales
215
342
Ebitda Margin
20.0%
22.8%

 

 

As it was already said, Tim’s advantage is, in part, the result of the Long-Distance revenue wich, in Claro’s case, remains with Em bratel. Tim’s Long-Distance gross revenue in the 2Q08 was US$ 280.81 million.

 

You could ask:

  • Will Claro overcome Tim in share market?
  • How can IPhone, 3G and portability affect this picture?
  • What's more important? Market share or revenue share?

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