04/06/2009


Biggest part of the cellular gross adds is composed of clients who exchanged operator

 

Cellular operators are engaged in a daily battle to conquer new clients.

 

However, while a operator gains new costumers (cellular gross adds), clients also leave the company (cancellation of cellulars).

 

In order to calculate the net adds, which represent how much operator's base effectively grew in a certain period, it's necessary to deduct the number of cancellations from the gross adds.

 

 

 

In 2008, gross adds of cellular operators in Brazil counted 72.9 million cellulars and 43.4 cancellations. Net adds, which represent new cellulars added to the Brazilian cellular base, reached 29.5 million cellulars.

 

In other words, the biggest part of the cellular gross adds gotten by operators was a result of clients who came from other operators. It happens since 2006 when net adds started to represent less than 50% of the gross adds.

 

 

Note: Percentage relation between Nei Adds and Gross Adds.

 

The high percentage of prepaid cellulars (>80%) and GSM "chips" contribute to the high churn (cancellation rate) presented by cellular operators in Brazil. In the United States, for example, cellular operators' monthly churn is smaller than 2%.

 

 

 

Operators
Cellulars
2008
2007
2008
Gross Adds (millions)
Annual Churn
Net Adds (millions)
Vivo
37,385
44,945
19,225
31.2%
7,561
Claro
30,228
38,731
18,297
32.4%
8,503
Tim
31,268
36,416
17,400
39.2%
5,148
Oi
17,401
24,388
13,532
37.6%
6,989
BrT
4,263
5,605
4,471
73.4%
1,342
Brazil*
120,980
150,641
72,925
35.9%
29,661

*includes CTBC and Sercomtel

 

In this climate increases the importance of number portability, even though it is still not widely used by clients who exchange cellular operator. Teleco estimates that only 3.7% of the cellulars, which had switched operator in March/09, ported their numbers. It might indicate that the majority is composed by prepaid cellulars with low use and for them changing number isn't a big deal.

 

You could ask:

  • Why is churn so high in Brazil?
  • Will operators in Brazil reduce churn in 2009?
  • How can churn be reduced in Brazil?

 

To send us a commentary, click on: teleco@teleco.com.br

 

Please let us know if you authorize the publication of your commentary.

 

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