Why is cellular telephony market growing less in 2009?


In April, Brazil presented again net adds smaller than the ones presented in the same month in 2008.





Net Adds Accumulated in the year (Jan-Apr) were 41.5% smaller than the one gotten in the same period in 2008.





The following factors contributed for the net adds reduction in the first four months of the year:

  • Base cleaning promoted by Tim and by other operators.
  • The deceleration of consumption in Brazil due to the global crisis.
  • Market's reaching a more mature stage with density superior to 80 cell/100 inhab.

Teleco considered those two last factors when made the forecast to 2009 net adds of 25 million cellulars, less than the 30 millions of 2008.


Operators have, however, presented negative net adds due to the cleaning in their cellulars bases what have affected cellular growth indexes in Brazil.



Operators negative net adds


In 1Q09, Tim carried out a cleaning of about 1 million cellulars in its base, presenting negative net adds in the period (-306 thousand cellulars) and very high churn, if compared with other operators. Note that Tim's sales (gross adds) in the period remained in the same level of other operators'.





Despite the monthly review done by operators in their cellulars base, turning off inactive and in debt clients, a more accurate verification might point out to a bigger number of cellulars to be turned off in a certain month. That's what happened to Vivo in 2006, when the company promoted a cleaning of base reaching 2 million cellulars, and to Tim in Feb/09.


On April/09, with a cleaned base, Tim led cellular growth, while other operators seemed to have used the month to make adjustments in their bases.



Net Adds in Apr/09
Region I
Region II
Region III



The negative net adds presented by Claro (Region I) and by Vivo (Regions II and III) are indicators that these operators may have used the month (April) to carry out a cleaning in their bases in these regions.


Oi presented negative net adds in region II (BrT), in April/09 (-202 thousand cellulars) and Mar/09 (-54 thousands cellulars). It's not clear if this reduction in BrT's base is associated to a cleaning in the base or to the company's commercial retraction in this moment of transition. Oi launched its brand in May in region II with aggressive plans which might produce positive results in the next months.


May - month that counts with the "Mother's Day" - will be important to verify if these reductions persist or if cellular presents again a stronger growth pace. Based on this result it will be possible to confirm or not Teleco's forecast for net adds of 25 million cellulars in 2009.





You could ask:

  • What will be the cellular net adds in 2009 in Brazil?
  • What is the main factor that is causing the fall in cellular growth pace in Brazil?
  • Will this trend for fall get stronger during the year?
  • What's the impact of Oi in region III (São Paulo) and Vivo in region I?
  • What should operators do the get better churn?
  • Will the devices subsidy continue to be the best strategy to increase gross adds?


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