26
4/2020

Oi, 1Q20 Results, Covid-19 and more

Eduardo Tude

Oi

  • The inflow of R$ 2,264 million in Jan/20 and R$ 3,070 million in Feb/20, resulting from the sale of Unitel and the issuance of debentures, brought Oi's cash to R$ 5,929 million in Feb/20;
  • Generation of Net Operating Cash was negative by R$ 1,436 million in the first two months of the year;
  • Oi invested R$ 1,433 million in the first two months of the year, 889 million of which in Oi mobile;
  • Oi reached the mark of one million fixed broadband fiber accesses (FTTH). It has 5.7 million homes passed in fiber and 370 thousand km backbone.
  • Oi's ON shares lost 9.1% in the week and PN shares fell 10.9%.

 

"Em Debate" - 5G

  • Teleco starts this week to publish the contributions sent from the main entities of the sector to the public consultation about the frequency announcement for 5G. The first contribution in our section “Em Debate” comes from Fiesp (Federation of Industries of the State of São Paulo).

 

1Q20 Results

When comparing 1Q20 with 1Q19, revenue increased:

  • +27.6% at Netflix
  • +10.8% at SKY (R$)
  • -2.4% at AT&T
  • 1.4% at Huawei
  • -1.6% at Verizon
  • -1.7% at Ericsson (SEK)

The pandemic caused an estimated US$ 605 million drop in AT&T's revenue, mainly due to the drop in advertising, handset and roaming sales;

At Netflix, confinement contributed to net adds of 15.8 million customers worldwide in 1Q20.

 

Covid-19

  • Can't happen: The STF granted an injunction that suspends the obligation for telephone operators to transfer their registration bases to IBGE;
  • Can happen: The judge of the 3rd Public Finance Court of São Paulo denied an injunction proposed by a popular action to not allow monitoring social isolation in the State of São Paulo;
  • European Parliament found out that about half of the countries in the European Union have already adopted or are discussing location tracking measures to combat the Covid-19 pandemic through data from telecommunications networks or applications. (Teletime);
  • SindiTelebrasil informed that the operators decided to give to the state and federal governments, free of charge, tools that allow access to anonymous information from cell phones in cities with more than 500 thousand inhabitants, as a strategy to prevent coronavirus;
  • Smartphone users in all 50 major US cities are spending more time at home on Wi-Fi. (OpenSignal)

 

Other Highlights

  • UOL Diveo sold its Data Centers (UD Tecnologia) to the American investment fund Digital Colony;
  • The STF overturned law No. 17,691/2019 of the state of Santa Catarina which prohibited the sale of value-added services (SVAs) when added to telecommunications services;
  • Cade's General Superintendence approved, without restrictions, RAN sharing between TIM and Vivo. It has yet to be approved by Anatel;
  • Facebook acquired a 9.99% stake in Reliance Jio Platforms for US$ 5.7 billion, making it the largest minority shareholder in the Indian company. Jio Platforms controls Reliance Jio, India's largest mobile operator, with 388 million subscribers;
  • In 2025, 35% of the world's smartphones will have eSIM and not the SIM cards we use today (GSMA).

 

Coming Soon

  • Claro's 1Q20 results (April 29th), TIM (May 5th) and Vivo (May 6th).

 

 

19
4/2020

Fixed Broadband Speed, 5G, Covid-19, Oi and more

Eduardo Tude

Fixed Broadband

  • The growth of fiber accesses is driving the speed of the internet in Brazil;
  • In 2017, only 14.9% of fixed broadband accesses had speeds greater than 34 Mbps. In Feb/20, this share had grown to 44.5%;
  • According to Teleco's projections, Brazil might end the year with more than 50% of accesses with speeds greater than 34 Mbps.

 

5G

  • The public consultation on the 5G frequency auction ended the deadline for contributions.
  • Initial projection point that 2020 will be the starting point for major commercial deployments in the new 5G core should be revised. This may happen later, due to Covid-19. (ABI)

 

Covid-19

Use of operators data:

  • Can happen: the Presidency of the Republic published this week a Provisional Measure forcing operators to hand over the registration data of users of telecommunications services to IBGE, so that the face-to-face survey conducted for PNAD can be carried out by telephone. The government said the data will be kept confidential.
  • Can't Happen: in the previous week, the Presidency of the Republic had recommended to the MCTIC the suspension of the agreement with the operators for sharing information on the displacement of people and agglomerations. In this case, what is shared is anonymous information, without being able to identify to which user it refers.
  • Brazilian Supreme Court denied a request to suspend the monitoring of the displacement of people during the Covid-19 pandemic by the government of the state of São Paulo with information provided by Claro, Oi, Vivo and TIM.

Increased traffic:

  • Traffic grew from 80% to 100% on some routes in A Vogel Telecom's network between March 16th and 31st. The volume of data on its IP outputs (peering, CDNs, PTT and traffic) grew by an average of 30%;
  • The traffic of the submarine cable operator Globenet grew 100% on its network in Brazil and Latin America.

Bad debt:

  • The Federal Regional Court of the 3rd Region (TRF-3) revoked the preliminary injunction that obliged operators not to disconnect fixed and mobile phones from defaulting customers;
  • Algar Telecom will issue R$ 150 million in debentures to reinforce its cash during the crisis caused by Covid-19;
  • The Provisional Measure was published, which established a new deadline for the collection by the operators of the fees for the Telecommunications Inspection Fund (Fistel).

What comes next:

  • Smartphone sales in China are beginning to show signs of recovery. They fell 21.9% in March, when compared to the same month of 2019. The fall in February had been 54.7%. The data are from the Chinese Academy of Information and Communications Technology (CAICT).

 

Oi

  • Law No. 13,988 was published, which guarantees discounts of 50% on accessory obligations and payment within 84 months for companies with tax debts with the Federal Government, such as Oi;
  • Oi's Ordinary and Extraordinary General Meetings will be held on April 30th.
  • Oi: ON shares appreciated 29.4% in the week and PN shares 19.6%.

 

Other Highights

  • Americanet announced the closing of contracts to be the aggregator of the following MVNOs: Veek, Voa Telecom, Use Telecom, Starnet Telecomunicações and TIP Telecom;
  • Anatel will reassess 21 decision-making orders for the sale of real estate from the concessionaires Algar (14), Telefônica (5) and Sercomtel (2) issued between 2018 and 2019. In Brazil, even the past is uncertain;
  • Study on the “Economic Efficiency of the Tax Charge Incident on the Broadband Service in Brazil”, published by Luciano Charlita and Leonardo de Morais (President of Anatel) shows that for every R$ 1.00 of tax charged on the service, there is an economic inefficiency of R$ 0.262 cents.

 

Coming Soon

  • TIM's 1Q20 results (May 5th) and Vivo (May 6th).

 

 

12
4/2020

Revision of cell phones statistics in Feb/20, Covid-19 and more highlights

Eduardo Tude

Mobile Statistics in February were revised

Anatel presented a revision of cell phones statistics in Feb/20 which led the net adds that had previouly been reported as positive (+421) to become negative (-146).

The comparison of the revised numbers with the previous ones shows the following differences:

  • Total of mobile accessess: -567 thousand;
  • Prepaid: -665 thousand;
  • Postpaid: +98 thousand;
  • GSM: -219 thousand;
  • 3G: -347 thousand;
  • 4G: -1 thousand;
  • M2M: + 45 thousand.

The review may have been motivated by the update of TIM's cell phones to Feb/20. The operator had repeated the numbers for Jan/20 in the previous version;

The revised data will be updated in Teleco as soon as Anatel publishes the new detailed values of this review.

 

Covid-19 Effects

  • Defaults, associated with a series of judicial decisions and legislative projects, in order to prohibit the cutting of services, became the main concern of the sector as it can leave companies without cash to continue providing services during the COVID- crisis. 19;
  • Anatel sent a letter to the fixed and mobile telephony operators reinforcing the need for them to comply with the preliminary injunction granted by the Federal Court that prohibits the cutting of cellular and fixed telephony services across the country. The injunction does not include fixed broadband;
  • The Provisional Measure that will give more time for the payment of Fistel should also allow the payment in five installments of the amount to be paid (Telesíntese);
  • Messages on social media, falsely claiming a link between 5G and Covid-19, spurred attacks in the UK on cellular antennas, which were set on fire, and on technicians who were prevented from doing maintenance. British authorities, GSMA and operators have condemned these criminal acts.

 

Other Highlights

  • Oi: the value of ON shares appreciated by 8.5% in the week and PN shares by 4.5 %;
  • Vivo and Oi put their FTTH networks into operation in four more cities. Vivo in Ourinhos, Ribeirão Pires, Itaquaquecetuba and Louveira. Oi in Criciúma, Lages, Tubarão and Maringá;
  • RNP launched the Term of Reference for the internet connection of 16,202 Basic Health Units (UBS). The hiring will be done for 12 months, the first four months being free;
  • TIM started to serve with 4G all the cities in the state of Paraná and Santa Catarina;
  • 38% of Latin American Internet households consume pirated content (Teletime);
  • Samsung Eletronics estimates a 5% growth in its revenue in 1Q20 when compared with 1Q19;
  • Trump plans to revoke licenses to operate in the U.S. from foreign telecommunications companies that the country deems to be a threat to national security. Another measure to close the telecommunications market in the world;
  • Rakuten Mobile activated its 4G network in Japan, after a six-month delay. It is the first operator to have a fully virtualized mobile network;
  • Disney +, a streaming service launched in November, reached 50 million subscribers worldwide.

 

Coming Soon

  • The deadline for contributions to the 5G public consultation ends on 4/17.

 

 

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).

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