What to monitor in 2012
By José Luis De Souza
After two good years for the Telecommunication sector in Brazil (2010 and 2011), there is an optimist climate on 2011. According to the public opinion poll carried out by Teleco, 73% expect 2012 to be better or much better than 2011. However, there is the possibility of slowdown in consumer market due to European crises.
The competitive scenario in 2012 is likely to be marked by actions of the following groups:
- Telefônica adopting Vivo brand for mobile and fixed operations and offering broadband and fixed telephony outside the state of São Paulo through wireless network.
- América Móvil integrating Claro, Embratel and Net's operations.
- Restructured Oi resumes market share gain in the main services.
- TIM has bigger focus on mobile broadband and offers fixed broadband in Rio de Janeiro and São Paulo.
- GVT, SKY and Nextel seeks to amplify its market share.
The following shows the 10 main trends to be monitored along 2012:
- Cellular Growth: Cellular market is likely to continue to be heated with the four main operators (Vivo, TIM, Claro and Oi) competing fiercely inside this market. Besides, there are Nextel, that will start to operate 3G, and the first Brazilian MVNOs.
- The evolution of mobile broadband (3G, HSPA+, LTE): Mobile broadband will probably be the service holding the biggest growth in 2012. Operators are increasing the speed of their networks through HSPA+ and connecting their cell sites using fiber. LTE operations may begin in 2013, despite of the auction for the 2.5 GHz frequencies be planned to happen in 2012.
- Cable TV may grow more than DTH: By the new pay TV regulation and liberation of authorizations, cable TV is likely to have bigger growth in comparison with DTH in the second semester of 2012.
- Expansion of fiber network: The liberation of cable TV will enable investments in high speed broadband based on fiber (FTTH, FTTN, ....). These networks will be used also to connect cell sites that make part of cellular operators' 3G coverage.
- Packages growth: By the integration of fixed and mobile operations provided by the big telecom groups in Brazil, the offers of packages ("combos") will be increased with fixed telephony, cellular, pay TV, fixed and mobile broadband in 2012.
- Drop of cellular minute price: In Brazil, the average cellular minute price fell 41% in the last 2 years. This trend will remain in 2012 by the growth of cellular Minutes of Use (MOU) and the promotions for unlimited use in postpaid segment. The drop of prices happen for one net calls leading to the formation of communities (tribes) that make cheaper calls among them, including long distance calls that started to cost the same as local calls. The calls made to different carriers will continue to be expansive, even after the reduction in interconnection prices (VUM) planed by Anatel.
- Growth of operators' data revenue: The participation of data revenue in the cellular operators' services gross revenue increased from 16.1% in 3Q10 to 19.5% in 3Q11. The growth will continue in 2011, being Vivo the operator that is leading this process with its data revenue representing 25.9% of the services gross revenue in 3Q11.
- Growth of Smartphones and Tablets: The growth of 3G networks encourages the sales of smartphones that make possible a better use of value added services such as email and internet access through cell phone. Smartphones represented 29.7% of the handsets sold around the world in 3Q11. The competition between manufacturers may become stronger in 2012, since Nokia will launch its Smarphones with Windows and Google take control over Motorola. The same can be applied to tablets market, which has Apple, Samsung, RIM, Amazon and others as competitors.
For 2011, we don't expect great changes in the Brazilian competitive board. Movements may occur from TIM due to shareholder changes at Telecom Italia. However, there will probably be the formation of partnerships, involving TIM, GVT, Nextel or Sky.
You could ask:
- Will cellular market increase more than in 2011? Which carrier will lead this growth?
- Will operators start to operate LTE in 2012?
- Will there be growth in the implementation of optical fiber networks, including in FTTH offer?
- How will packages affect the market in 2012?
- What will change in the market by the beginning of Nextel's 3G operation? What about MVNOs?
- How will new cable TV authorizations impact the market?
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