27
8/2017

Fixed Broadband Jul/17, Brazilian Law Project N. 79, Oi’s Assembly, AT&T and Cade, Sercomtel and more

Eduardo Tude

Fixed broadband in July

• Claro led fixed broadband growth in July counting net adds of 42 thousand accesses, almost the double of the growth registered in 2Q17 (24 thousand). Vivo’s net adds reached 12 thousand accesses and Oi’s hit 6 thousand.
• Other operators, that registered net adds of 97 thousand accesses, continued to be responsible for most of the net adds (62.2% of the total).

 

Law Project N. 79

• The minister of Science, Technology, Innovation and Communication, Gilberto Kassab and the presidents of the main operators and suppliers had a meeting with the president of the Brazilian Senate, Eunicio de Oliveira, in order to discuss the Law Project N. 79.
• The Law Project N. 79 authorizes fixed telephony concessionaries to migrate to the CLEC’s regime. The concession obligations would be converted into investments commitments to broadband.
• Unfortunately, Eunicio chose to put the matter on the Senate voting list after the decision of the Supreme Court. Luís Roberto Barroso, minister of the Supreme Court, granted injunction so the Law Project can be voted by Brazilian Senate. However, there’s still no final decision over the subject.
• Meanwhile, the number of fixed telephones continues to decrease. In July 59 thousand of Oi’s fixed tel. subscribers cancelled their lines.

 

Assembly with Oi’s creditors

• The assembly, that may set Oi’s future, was scheduled to October. Creditors will decide if they accept the proposal about judicial recovery presented by Oi.  If they reject it, Justice Department will declare Oi’s bankruptcy.
• The first creditors General Assembly will be carried out in Rio de Janeiro on next October 10th and the second on Oct/23rd.
• A Group formed by the majority of the creditors (Moelis, G5 Evercore and FTI Consulting) presented proposal to convert R$ 26.1 billion in debt securities into 88% of capital of Oi (already restructured. Oi’s initial plan projected that creditors could have until 32% of Oi.
• The Group assures capitalization of R$ 3 billion by creditors and establishes that the payment of the debt with Anatel must be equally made to creditors as a condition to the proposal.
• The proposal presented by Oi to Anatel projects the injection of R$ 5 billion as new capital and other R$ 3 billion from the conversion of at least 25% of the company’s debt.
• Oi’s ON stocks had growth of 7.9% in the week and PN increased 4.5%.

 

Oi’s judicial recovery

• The debit of R$ 3.2 billion with DNIT, related to the rights-of-way in national roads, was registered in the Federation’s active debt list.
• Oi’s president affirmed that the Provisional Measures N. 780, of the Refis (debt refinancing program), isn’t interesting for the company if it doesn’t include the possibility to convert debt into TACs (Conduct adjustment Term).
• Portuguese Justice approved Oi’s judicial recovery, indicating that it’s likely to apply the decisions made by the Brazilian Justice about the matter.
• The Public Ministry of Rio de Janeiro approved Oi’s plan to negotiate with small creditors separately.

 

AT&T and Time Warner

• The direction of CADE (Administrative Council for Economic Defense) recommended the complete veto to the purchase of Time Warner by AT&T, which controls SKY in Brazil.
• If CADE agrees with this decision, AT&T will have to sell SKY or Time Warner will have to quit operations in Brazil.  Anatel will analyze the operation after CADE reports its decision.
• The acquisition of Time Warner by AT&T was approved for 16 countries. Only Chile, Brazil and Unites States didn’t decide about this matter yet.

 

Sercomtel

• Anatel decided to initiate legal proceeding to verify Sercomtel’s financial economic capacity to fulfill obligations as a fixed telephony incumbent and as a mobile telephony and broadband CLEC. The continuity or extinction of these grants will be decided in the end of the process.
• Copel, which owns 45% of the company, has conditioned a new financial contribution to the restructuring of the company which has suffered successive losses. Sercomtel intends to contract an external consultancy to assist in this process.

 

Other highlights 

• E-commerce billing reached R$ 21 billion in the first semester of 2017, having growth of 7.5% over the same period of 2016. The number of orders (48.5 million) increased 3.9% and the average ticket raised to R$418. (Source: Ebit‘s Webshoppers 36).
• Anatel have plans to assign to an independent entity the task of managing numbering resources. This proposal will be discussed during public consultation.
• The Ministry of Science, Technology, Innovation and Communication, publishes the Decree N. 9.138, which changes the Regulation over broadcasting services (Dec. 52.795/63) simplifying many procedures.
• China Telecom’s main executives went to Brasília this week in order to meet authorities from Anatel and ministries.
• HP’s net revenue increased 9.8% in the comparison between 2Q17 and 2Q16.

 

Next week

• The online seminar “5G & Digital Transformation”, promoted by Teleco and Telesemana, will take place on Wednesday.
• Anatel might report Pay TV statistics for June.

20
8/2017

Groups, Oi and other highlights

Eduardo Tude

Groups in 2Q17

• Vivo continues to be the biggest Brazilian Telecom group with R$ 10.7 billion in net revenue (2Q17), followed by Claro (R$ 8.8 billion), Oi (R$ 5.8 billion) and TIM (R$ 3.9 billion). Vivo, TIM and SKY increased their participation in the total revenue in 2Q17.

 

Oi's judicial recovery

• The proposal to have R$ 8 billion capital increase made by Oi during a meeting with Anatel would include R$ 5 billion in new resources and R$ 3 billion represented by swap from debt to equity capital. The exchange would provide creditors with a participation of 25% in the company. Oi’s executives might have met representatives of eight creditor funds in New York to negotiate this proposal.
• As determined by Brazilian justice, Anatel and Oi participated of mediation meeting regarding R$ 11 billion in fines that were listed by Oi in its judicial recovery. The Federal Court of Accounts of Brazil decided to continue to follow the negotiation.
• Oi’s ON stocks presented growth of 1.5% in the week and PN had growth of 5.0%.

 

Results 2Q17: Cisco, Contax and Atento

Comparing 2Q17 with 2Q16, net revenue increased:

• +19.1% at Atento
• -4.0% at Cisco
• -14.4% at Contax

 

Other highlights in Brazil

• IT Brazilian market decreased from R$ 141 billion in 2015 to R$ 132 billion in 2016 (ABES).
• 52 km of aerial cables in 117 streets of the city of São Paulo will be buried until July 2018. The agreement was made by the city hall, Eletropaulo and Telecom operators.
• All TIM’s 4G sites in the city of São Paulo are already operating in two frequencies (1.8 GHz and 2.6 GHz).
• Anatel Ombudsman presented its annual report with the Agency’s evaluation. The report includes companies’ economic data that would be kept under secrecy by Anatel.
• Telebrás decided to postpone to September 27th the auction regarding the capacity of its SGDC satellite.
• Federal government spent R$ 182 million advertising on internet along 2016. 25.5% were destined to Facebook (R$ 46 million). (Source: Bites Economia Digital).
• In 2016, Airbnb had more than 1 million guests in Brazil and had 143 thousand available places in the country. Rio de Janeiro is the fourth destiny in number of announcements on Airbnb in the world, behind Paris, London and New York only. (Telesintese).

 

International Highlights

• Facebook, Amazon, eBay, Apple and Snap are the five most loved brands of the world, according to Netbase’s ranking.
• North American pay TV providers might have lost 976 thousand subscribers in 2Q17, due to the competition with video streaming providers.
• American Justice Department is about to approve the purchase of Time Warner by AT&T.
• British Telecom plans to disable half of the pay phones in UK in the next five years. The company has 47.9 thousand pay phones while Brazil has 837 thousand, being 641 thousand of them operated by Oi.
• Mexican Supreme Court decided that the regulation that establishes as mandatory to terminate calls from other operators at zero cost is unconstitutional.
• Ericsson would have plans to fire 25 thousand employees (23% of the total it workforce) according to the Sweden newspaper Svenska Dagbladet.

 

Coming Weeks

• Anatel might report Brazilian pay TV statistics for June.
• On August 30th, “5G & Digital Transformation” online seminar will take place. It’s promoted by Teleco and Telesemana. Registration is free.

 

 

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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