Increase in broadband is the biggest challenge for Telefonica in 2011


In 2010, Telefonica got to improve its performance over 2009, reversing the trend to fall in its base of fixed telephones presenting growth of 20.5% in its broadband accesses.





Telefonicas's pay TV accesses stayed, however, stagnant and its gross revenue of R$ 21.4 billion in 2010, was 1.0% smaller than in 2009.



Gross Revenue (R$ million) 2010 Growth
Fixed Telephony * 15,536 -3.1%
Broadband/Data 4,272 8.6%
TV 512 3.9%
Others** 1,044 -7.1%
Total 21,364 -1.0%

* includes local, long distance and network usage. ** include the resale of products and value added services among other.



Fixed telephony revenue dropped 3.1%, while broadband revenue increased 8.6%.


Increasing broadband revenue is the biggest challenge for Telefonica. Fixed telephony still represents 73% of the operator's gross revenue.





In 2011, Telefonica will face stronger competition in São Paulo, with GVT breaking into the state in a more aggressive way.


Telefonica will have to increase the offer of high speed broadband accesses, based in fiber, in order to face GVT and Net in the competition and avoid losing clients in areas of greater purchasing power.


The approval of PLC 116 (former PL 29) will allow Telefonica to increase its pay TV revenue and make possible the construction of FTTH/N networks, on the other hand it will also introduce bigger competition inside the market.


Likewise, the merger with Vivo will permit Telefonica to offer integrated packages quadruple play, improve its investments and reduce operational costs, but can also affect its performance during the transition period. Vivo is bigger than Telefonica in revenue and accesses and has national coverage.



You could ask:

  • Should Telefonica focus its strength in the state of São Paulo or should it seek national operation in fixed telephony, broadband and pay TV?
  • Should Telefonica accelerate its investments in high speed broadband networks?
  • Can the merger with Vivo affect Telefonica's performance?
  • How can the entrance of GVT in the state of São Paulo change this current scenario?


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Note: The opinions expressed in the published articles in this section are their authors' responsibility.



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