12/15/2008


Is the number of wireline telephones in service growing in Brazil?

*by Eduardo Tude and José Luis de Souza

 

 

In the period from 2002 to 2007, the number of Fixed Telephones in service presented a fall of 14% in the United States and remained stable in Europe and in Brazil.

 

 

 

 

In 2008, however, the number of fixed accesses in Brazil were back in the growth path. The loss in concessionaries fixed accesses in service is been compensated by a growth in the companies which have authorization, mainly Embratel and GVT. The authorized already answered for 15.4% of the Brazilian fixed accesses in service in 3Q08 (more details).

 

 

 

 

Embratel, which acquired Vesper in 2003, is the biggest authorized holding 5.1 million fixed accesses in service in the 3rd quarter of 2008 (3Q08). Besides the accesses the company has in the corporative market, Embratel is growing in local telephony with alternative technologies such as "livre" and NetFone.

 

NetFone is a VOIP telephony service offered by Net, in partnership with Embratel, in its tripleplay package (3Play = Pay TV, Broadband and Fixed Telephony). On the other hand, "livre" is a cellular telephone in CDMA technology used for fixed telephony. One of the "livre" advantages is the user restrained mobility.

 

From Embratel's 5.1 million accesses (3Q08), about 2 million were "livre" users and 1.5 million NetFone.

 

 

 

 

GVT had 1.1 million fixed accesses in service in 3Q08, 95 thousand Voip. GVT is slowly expanding its market outside Region II, being present for example in Belo Horizonte and Salvador.

 

It's one of the operators that is getting more benefit from this initial phase of portability implementation in Brazil. GVT is present in 5 areas codes (DDD) with bigger stake of fixed telephones in the total of ported telephones (fixed+cellulars) by 12/8/2008.

 

 

Area Main City
Fixed Ported
% Total of ported
( Fixed + Cellular)
44 (PR) Maringá
1,574
56.4%
62 (GO) Goiânia
9,517
55.5%
71 (BA) Salvador
620
50.1%
67 (MS) Campo Grande
4,230
49.7%
43 (PR) Londrina
5,126
45.2%

 

This climate stimulated Tim to enter in this market with fixed Tim. The operator wants to count 3 million fixed accesses in service in 2011.

 

The return to growth in fixed accesses in service in Brazil is an effect of the growth in the competition in bigger cities, triple play packages offers and use of wireless and Voip technologies. Number portability is another factor which might stimulate the competition in 2009.

 

Cellular remains, however, as the big competition for fixed telephony in Brazil. Pre-paid cellular becomes the best solution for families that have monthly low income because they can't jump on the bandwagon with monthly expenditure in telephony. In 2007, from the total of homes with income inferior to 10 minimum wages, 34.4% had only cellulars and 9.9% only fixed, according to data from PNAD (IBGE).

 

With the promotional minutes plans, pre-paid cellular is being used not only to receive calls, but also to make calls. One indicator of this habit change is the fall in the public telephones (TUP) revenue. In 3Q08, this revenue in OI was 51% smaller than in 3Q07.

 

You could ask:

  • Will the number of fixed accesses increase in Brazil? Until when?
  • Will authorized keep winning market share? As autorizadas vão continuar a ganhar market share?
  • What will be the number portability impact after implemented in all the areas?
  • Will Tim's success lead mobile operators to launch similar services?

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