Barcelona, Vivo, Telefônica, Oi, Smartphones, Twitter, Pay TV and Telefony (Jan/17)
Eduardo Tude
MWC 2017: Barcelona
It’s carnival in Brazil, but in Barcelona the event is the Mobile World Congress (MWC 2017), largest cell phone trade show and congress in the world. Counting more than 100 thousand visitors, the theme for this year is “The next element”, 5G, IoT and LTE Gigabit might be dominant issues. I’m in Barcelona keeping track of event and I’ll bring new to this blog.
Vivo in 2016
- Vivo’s net revenue increased 0.9% in 2016, being 1.6% from mobile and -0.2% from fixed.
- Vivo’s advantage in the mobile segment, with market share of 42.1% in postpaid and data revenue representing 62% of the services revenue, prove that the company is the most advanced operator in the transition from mobile voice to data.
- In the fixed services, the growth of 6.9% in fixed broadband and 11.8% in pay TV revenue, weren’t enough to make up for the loss of 7% in fixed telephony revenue which still represents 51% of the fixed services revenue in 2016.
Telefónica Group in 2016
- Telefónica Group’s revenue decreased 5.2% in 2016 (in €). Revenue raised in Spain (2.5%) and in Brazil (0.3%). On the other hand it fell in Germany (-4.9%) and in Latin America without Brazil (-12.6%).
- Telefónica sold 40% of its participation at Telxius to KKR investment fund for € 1.275 billion. Telxius gathers 16 thousand Telefónica’s towers in five countries and 65 thousand km of submarine cables.
Oi
Oi’s ON stocks had growth of 7.6% in the week and PN increased 4.6%. It shows that the negotiations with creditors were advanced.
Pay TV and Fixed Telephony in January
- Pay TV started 2016 losing 105 thousand subscribers in January, more than in Jan/16 (-59 thousand). The losses occurred in DTH (-74 thousand accesses) and in cable TV (-31 thousand). Claro (-48 thousand), SKY (-28 thousand) and Vivo (-22 thousand) lost subscribers in the month. Oi gained 14 thousand accesses.
- The fall in fixed telephony (-90 thousand accesses) was smaller than in Jan/16 (-248 thousand). The biggest losses were at Oi’s (-49 thousand) and Vivo’s (-42 thousand).
Smartphones in Brazil
13 million smartphones were sold in the Brazilian retail market in 4Q16, with the growth of 1.9% in relation to 4Q15. Samsung kept the leadership in 4Q16, holding 32% of the sales, followed by Lenovo /Motorola (20.5%), LG and Blu (Gartner).
Twiter in Brazil
Fiamma Zarife, Twitter’s managing director in Brazil informed that in the country:
- Twitter’s advertising revenue increased 30% in 2016
- Monthly active users (MAUs), raised 18% in 4Q16, in relation to 4Q15
- 70% of the Brazilian users access Twitter through cell phone
Source: Mobile News
Communication Satellites in Brazil
- Telebras will make an auction of the band Ka capacity of its satellite. The winner will also be responsible for supplying infrastructure (management services and VSAT antennas) for Telebras to provide services with reserved capacity.
- Embratel’s Star One D1 satellite started to operate commercially in the 84° W orbital position and in bands C, Ku and Ka.
Other Highlights
- Gired (group responsible for the transition from analog to digital TV) approved the anticipation of the use of 700 MHz frequencies for 4G by mobile operators in Brasilia.
- Representatives of industry and telecommunications service providers from Brazilian federal government, Anatel, academy and technology development centers launched the project “5G Brasil”, which will aim to foment the construction of mobile telephony 5th generation ecosystem in the country and its participation in international discussions.
- The president of the European FTTH Council declared that the world is going wireless, but the wireless connections must to get connected to a fixed infrastructure as fast as they can. We won’t have 5G if we don’t have available fiber.
Prepaid in January, Algar, Oi, PLC 79 and other highlights
Eduardo Tude
Prepaid in January
Anatel's preliminary data indicate that prepaid kept, in Jan/17, the trend of reduction in its base in Brazil. Net loss in the month (-907 thousand accesses) was indeed bigger than in Jan/16 (-745 thousand). Brazilian prepaid base lost 20 million mobile accesses in the previous 12 months.
Algar
Despite the crisis, Algar presented good results in 2016:
- Fixed broadband accesses increased 11% and fixed telephones raised 12.7%.
- Net revenue grew 5.2%.
- EBITDA margin increased to 27.9%
- Net profit raised 19.5%.
Oi
- Marco Schroeder, Oi's president, affirmed that the company will present, by the end of march, a new proposal to creditors. The expectation is that it will be voted in the second quarter.
- Oi reached the mark of 1 million clients of the Oi Total package, which combines mobile and fixed telephony, broadband and pay TV.
- Oi's ON stocks had growth of 4.8% in the week and PN raised 2.8%.
Updating of the regulatory model (PLC 79)
The president of the Brazilian Federal Senate declared that he will wait for the Supreme Court decision about the matter. Senate Table decided that, after this decision, opposition resources must to be considered by the Plenary. The rapporteur of the appeal, minister Luis Roberto Barroso, required that the Public Ministry and the General Law of the Union to manifest about the process.
Other Highlights
- Brazilian people watched Pay TV for an average of 6 hours and 17 minutes by day, more than in 2015 (6 hours and 1 minute) according to Kantar IBOPE Media.
- Uber was condemned, in a work process in the state of Minas Gerais, to pay work rights for one of its former drivers (early warning, 13th salary, proportional vacations, FGTS with 40% fine, extra nightly, double remuneration on public holidays and others. That's another example that shows how law doesn't follows the transformations society goes through.
- The values charged for calls from fixed to mobile telephones will have reduction between 16.49% and 19.25% since February 25th, due to the fall in mobile operators interconnection values (VU-M).
- Sky launched the new satellite Sky-B1, which will be in the orbital position 43.1W, operating with until 60 transponders of 36 MHz in Ku band. R$ 1.3 billion was invested in the satellite and in the new transmission center in the city of Jaguariúna.
- IPV4 addresses are ending and will be granted only to new entrants. About 14% of the Brazilian addresses use IPv6.
- Padtec's gross revenue in 2016 (R$ 321 million) was 4.7% smaller than the value registered in 2015, but the company left behind loss of R$ 32 million in 2015 to profit of R$ 3 million in 2016.
- More than 65% of the small broadband providers are classified as "Simples" in the Brazilian tax regime, according to the study carried out by IBPT for Abrint.
- Cisco's net revenue presented fall of 2.1% in 2016, affected by the revenue drop in its traditional business lines (routers and switches).
- € 156 million are necessary to drive FTTH to 100% of the European domiciles, according to the European Council FTTH study.
MWC 2017
Another edition of the Mobile World Congress will occur in Barcelona and, once more, Teleco will be there to follow the transformations which Telecom sector goes through.
Regulatory Surrealism, Oi, results 2016 and other highlights
Eduardo Tude
Regulatory Surrealism: Companies are punished for offering free internet to public schools
This week, Anatel Council endorsed the decision to punish fixed telephony concessionaries for offering free internet to public schools. Although this decision was made based on solid technical arguments, it shows how Brazilian regulatory processes are far from the reality and their goals.
There is a step by step of this surrealist story:
- In 2008, the Decree N. 6.424 exchanged the fixed telephony concessionaries obligations to implement urban Telecommunication Services Stations for the construction of backhaul (data connection infrastructure) to 3,439 cities.
- As part of the agreement, concessionaries would also be committed with offering free broadband access to 56,865 public schools of the country (PBLE).
- In 2014, Anatel checked the result of this exchange considering not only the costs for the implementation and operation of backhaul, but also the revenues gotten by the concessionaries with it. As expected, Oi got the biggest part (about R$ 1 billion).
- The point of divergence is that most of the part considered as revenue by Anatel was actually about backhaul use to offer free broadband access for public schools, in other words, this revenue didn’t exist.
- Anatel’s technical area argues that: “an infrastructure linked to the exploitation of the service provided in public regime can’t be charged to the offer of services provided in private regime, even if the second occurs for free. Therefore, it would be necessary that the use of fixed telephony concessionaries backhaul to fulfil the commitment was properly remunerated by the SCM authorized companies, regardless revenue generation for the last ones.”
- In 2017, Anatel Council endorsed again the technical argument even though the consequences hurt the common sense.
Oi’s Judicial Recovery
- Virgo investment fund, managed by Safra bank, purchased 11.42% of Oi’s Preferred stocks (OIBR4).
- Oi informed that it won’t appeal the decision made by the District Court of Amsterdam which dismissed the bankruptcy request made by the subsidiaries Oi Brasil Holdings and PTIF. A group of creditors presented, however, an appeal in relation to the decisions.
- Oi’s ON stocks had growth of 3.0% in the week and PN decreased 3.3%.
Results 2016
Total net revenue increased in 2016:
- -3.5% at Telecom Italia (+0.1% in Italy and -12.7% in Brazil)
- +14% at Twitter
- -8.3% at Millicom
Other highlights
- The total spent by Anatel in 2016 reached R$ 473.4 million. R$ 360.7 million with employees, R$ 14.2 million with benefits; R$ 92.7 million with other current expenses and R$ 5.8 million with investments.
- Anatel decided to postpone until 2042 the deadline to digitize the spectrum band from 148 to 174 MHz, occupied for public services and utilities.
- The Brazilian Supreme Court determined that music streaming services operating in Brazil must to pay Ecad for music reproduction, responsible for collecting and distributing the values related to copyrights of artists in the country.
- Telefónica is in the final stages of negotiations with Telxius, which gathers its Telecom infrastructure assets (Reuters).
- Agora Telecom, Hostfiber and Huawei will build optical backbone inside the state of São Paulo, connecting 100 cities.
- The consortium Oi/Claro sold the Banco do Brasil’s fixed telephony bidding. The contract established the payment of R$ 503.9 million in five years.
- Antonio Carlos Valente is the new Chairman of Everis, Brazilian business consultancy.
- The launch of Telebras’ satellite will take place on March 21st, in Kourou base, in French Guiana.
- Ofcom, UK regulator agency, defined the band of 700 MHz, 3.4-3.8 GHz and 26 GHz as preferred to be used by 5G in the country.
- Cisco published a new edition of its Visual Network Index Mobile study, which predicts that global mobile traffic will become seven times bigger between 2016 and 2021.
Results 2016: Claro, TIM and others, PL 3453, analog TV, Oi and other highlights
Eduardo Tude
Results 2016: Claro
- Claro's total net revenue presented drop of 1.1% in 2016. The operator increased 3.5% in fixed services but registered fall of 9.3% in mobile revenue. The carrier made an adjustment in its prepaid base (- 4.4 million) in 4Q16.
- Claro's EBITDA margin fell from 26.8% in 2015 to 26.6% in 2016. It was slightly bigger than América Móvil Group's (26.3%) in the year.
- América Móvil Group had loss of US$ 288 million in 4Q16, due to the fall in its operation profitability in Mexico.
Results 2016: TIM
- TIM presented fall of 8.9% in total net revenue but got to stabilize the losses in its prepaid base and resumed growth in postpaid.
- Mobile data net revenue didn't overtake voice yet, however, it represented 44.7% of the services revenue in 2016. A cost cut program contributed to keep EBITDA margin in 33.4% in the year.
- The operator announced partnership with SKY in order to sell triple and quad play plans.
- TIM invested R$ 4.5 billion in 2016 and plans to invest about R$ 4 billion in 2017.
Fixed telephony concession (PL 3453)
- Luís Roberto Barroso, minister of the Brazilian Supreme Court, determined (in an injunction) that Senate must take the PLC 79 (PL 3453) for consideration by the plenary.
- Brazilian president, Michel Temer, defended the Law Project in his message sent to the National Congress this week.
Analog TV Switch off
- March 29th was confirmed to be the date when analog TV will the turned off in the city of São Paulo capital and in other 38 cities nearby. According to IBOPE's survey, 86% of the domiciles in São Paulo and in cities nearby are already able to receive the digital signal.
- Operators (Algar, Claro, TIM and Vivo) confirmed the deposit of R$ 2.6 billion for analog TV switch off, as determined by Anatel.
Oi's judicial recovery
- The Management Council authorized Oi's directors board to continue to negotiate with creditors, deepening items such as the possibility to convert part of the debt into equity.
- According to information published by press, Oi is negotiating to reduce to R$ 10 billion the debt the company has with international creditors, what would represent almost 70% discount over the value of the securities. The proposal would exchange this debt for Oi's stocks.
- The Egyptian businessman Naguib Sawiris, owner of Orascom, extended to February 28th the recovery proposal presented to Oi's directors board last December.
- District Court of Amsterdam, in the Netherlands, dismissed the bankruptcy request made by Oi's subsidiaries Oi Brasil Holdings and Portugal Telecom International Finance.
- Société Mondiale fund appealed to Anatel against the decision about replacing two members of the council, Pedro Grossi Junior and Nelson de Sequeiros Tanure, by independent counselors.
- Oi's ON stocks dropped 1.4% in the week and PN stocks increased 6.1%.
Results 2016
Net revenue growth in the year:
+54.2% at Facebook
+9.1 at América Móvil (Mexican pesos)
+27.5% at Amazon
+1.5% at Sprint
-4,2% at Vodafone
-7.2% at Apple
Other highlights
- Telebras invested R$ 317.8 million in 2016.
- Samsung kept the smartphone sales leadership in 2016 (21%), followed by Apple (14.7%) and Huawei (9.4%). Apple, however, which counted 78.3 million sold smartphones overtook, Samsung (77.5 million) in 4Q16.
- Hispasat successfully launched H36W-1 satellite, which has 20 transponders in Ku band and three transponders in Ka band.
- Huawei will be the supplier of virtualization solution to the LTE network core of Vivo (in Brazil) and Movistar's in other Latin American countries.
Eduardo Tude
President and partner at Teleco (consultancy company), works since 2002 as analyst of Telecom market, coordinating consulting projects, publishing weekly articles, preparing sector reports and presenting workshops.
Telecom Engineer (IME 1978) and MSc. in Telecom Engineering (INPE 81), Tude is member in the Mobile World Congress’s judging commission for the Global Mobile Awards, in Barcelona, and was also a visiting specialist professor at Unicamp.
Tude had many positions in the management of Telecommunication companies in areas like Mobile Systems (Ericsson), Optical Networks (Pegasus Telecom) and Satellites (INPE).
