What will be Claro's strategy for the second semester?


Claro presented only regular performance in the 1st semester of 2010. The company grew less than Vivo and Tim and its market share fell from 25.52% in Dec/09 to 25.33% in Jun/10.





With this performance Claro increased the distance to the market share leadership (Vivo is the current leader) and reduced the advantage over Tim (3rd in the ranking).





Claro's low growth presented in São Paulo and monthly churn, which increased again in 2Q10, contributed for this result.







Claro's slower growth pace in 1Q10 had been compensated by the improvement in the EBITDA margin (31.7%), what wasn't repeated in 2Q10.



Note: In the end of 2009, Claro adopted a shorter period for the depreciation of its assets what affected operator's EBIT margin.


The growth of prepaid in Claro's cellular base and the fall in the ARPU showed that the operator is failing to attract those clients who have higher expenses. The fact that Claro has stopped expanding its 3G coverage in 2010 may have contributed to this result.





In front of this scenario, Claro's participation inside América Móvil's cellular base and revenue has been stable. In 2Q10, Claro's 46.9 million mobile accesses in Brazil represented 22.2% of América Móvel's accesses and generated 20,1% of its net revenue.


Claro's performance may be being affected by the merger process with Embratel, which is likely to be concluded in the beginning of the second semester, after that, it's possible that the operator will introduce a more aggressive strategy to conquer clients. There is room for this strategy, since Claro's MOU is lower than Vivo, Tim and Oi's, what indicates that Claro can increase its promotions.


You could ask:

  • What will be Claro's strategy for the second semester?
  • What will be the impact caused by the Claro-Embratel's merger in Claro's performance?
  • Will Claro become more aggressive in the 2nd semester in order to conquer clients?
  • If we keep the current trends, is Claro running of the risk of being overtaken by Tim?
  • When will Claro expand its 3G coverage again?



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