10/13/2008


What will be Oi's market share in São Paulo?

 

Oi will start operating in the São Paulo State in October 24th 2008 and it's already started an aggressive launching promotion which is complemented by a strong advertising campaign focusing the Oi brand.

 

By the promotion, the clients who acquire the Oi chip will make calls almost for free (through a bonus of R$ 20.00 per day, for three months) for other Oi cellulars, fixed telephones or long-distance calls using the 31 code. The Oi Chip costs R$ 20.00 and two of them are sold for R$ 31.00.

 

The company arrives in São Paulo as the fourth operator with license to work in all the State and will face harsh competition with Vivo, Claro and Oi. (more details)

 

 

Aug/08 (thousands)
Cellulars
Market Share
Net Adds - 12 months
Vivo
13,154
39.8%
1,733
Claro
11,338
34.3%
1,877
Tim
8,531
25.8%
2,598
CTBC (*)
60
0.2%
(1)
Aeiou (**)
1
0.0%
1
Total
33,083
100.0%
6,199

(*) Coverage only in the region of Franca and some near cities, in a total of 23 cities.

(**) Coverage only in the metropolitan region of SP

 

 

The aeiou's start in operation, in September, with an aggressive price strategy for the service (more details), is another ingredient in this dispute.

 

It's going to be very hard for Oi to repeat the market share growth it had by the time it started operating in Region I, in 2002, as the third operator, or even Brasil Telecom's in Region II, which reached a market share of 7% in its first working year as the fourth operator.

 

 

 

 

Teleco estimates that, in September/09, the State of São Paulo will have more than 40 million cell phones. To conquer a 7% market share, Oi needs to reach about 3 million of cellulars net adds in the State, in a period of 12 months. This quantity represents almost 50% of the net adds in the State in the last 12 months (6.2 million of cellulars). Even recognizing that the entrance of a new operator in the market always accelerate the cellular growth rate, it's unlikely that Oi conquer such a big number of clients.

 

Tim, which started operation in the State of São Paulo in 2004 as the third operator, reached a marketing share of 7.2% in 12 months with net adds of 1.7 million cellulars.

 

 

 

 

Besides the aggressive launching promotion and the unlocking cell phone strategy, Oi looked for for a quickly reduction of it coverage disadvantage in comparison to other operators. According to Anatel, in September/08, Oi already had Cell Sites in 162 cities, attending 83.5% of the population in the State.

 

 

Coverage Sept/08*
Cities
Population
Vivo
645
100.0%
Tim
567
99.5%
Claro
549
99.3%
Oi
162
83.5%
CTBC
23
1.2%

*Source: ucel/Anatel, total of 645 cities.

 

 

You could ask:

  • What will be Oi's market share in São Paulo in one year?
  • Is Oi's launching promotion as aggressive as the previews one, engaged when the company started operating in Region I? What about if it's compared with Brt's?
  • Will Oi's entrance accelerate the cellular growth in São Paulo?

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