Participation in Telecom Revenue
- Vivo, Claro and TIM presented positive growth in net revenue and increased their share in the total revenue of Telecom services in Brazil when we compare the first semester of 2018 (1S18) with 1S18. OI, which fell 6.3% in revenue, lost its share.
Oi
- The investment funds that have become the main shareholders of Oi intend to invest in the company to increase their value and sell their shares later. (Reuters)
- Os fundos de investimento que se tornaram os principais acionistas da Oi pretendem investir na empresa para aumentar seu valor e só vender suas participações mais tarde. (Reuters)
- Oi's ON stocks dropped by 4.2% in the week and PN fell by 4.6%.
Events
- The 2nd online seminar on 5G & Digital Transformation, during which I will be giving the opening lecture, will occur this Wednesday. Do not lose, registration is free!
- I participated this week in a panel, promoted by Fiesp, about the challenges for expanding infrastructure and telecommunications services. The expectation is that the new Law of the Antennas of São Paulo will be approved briefly by the City Council.
- This week in Brasilia, the 28th Brazilian Radio Congress discussed the process of transformation of radio and TV stations and the impact on the business model of companies and how to consume information.
Other highlights
- Claro Brasil is investing R$ 8.8 billion in 2018, 10% more than in 2016, according to statements of its president the press.
- Cielo continues to lead the volume of transactions with credit and debit cards in the country in 2Q18, with 44% of the market, followed by the Network (30%) and Getnet (13.2%). Cielo counts 1.5 million physical terminals (POS), Rede 1,1 million and Getnet (900 thousand). (Source: Valor)
- Anatel denied an appeal against A. Telecom SA (Telefónica) and maintained a fine of R$ 30 million to the company for providing the fixed-line service without grant. Anatel also confirmed a fine to Oi of R$ 18 million due to non-compliance with fixed telephony universalization targets in the state of Pará. The fines are still high.
- Cade approved the entry of Simba, Sky, Warner and NeoTV as third parties interested in the concentration of Fox's purchase by Disney. (Tele.síntese)
- Nokia intends to charge € 3 for each 5G smartphone as a license to use its patents for 5G New Radio.
Coming week
- 2nd online seminar on 5G & Digital Transformation. Do not lose, registration is free!
- The Brazilian Institute of Geography and Statistics - IBGE will report GDP for 2Q18.
Oi in 2Q18
Oi's net revenue kept falling in 2Q18. When we compare 2Q18 with 2Q17, the company presented growth of:
- -5.2% in total revenue in Brazil;
- -5.1% in residential revenue;
- -4.2% in personal mobility revenue;
- -6.3% in business/corporative.
To stop the loss of revenue, Oi needs to increase investments in fixed and mobile broadband, which will be possible by the capital increase that should happen at the end of the judicial recovery process;
Oi invested R$ 2.5 billion in the first half of 2018. The states that received the more investments were Rio de Janeiro (R$ 569.2 million), Minas Gerais (R$ 191.2 million) and Bahia (R$ 155.9 million);
Oi plans to invest in fiber, ending the year with available FTTH for 1 million homes in 19 cities and 4G. It would have mapped 4,000 priority locations to invest in fixed broadband and 1,160 priority cities for investments in mobile broadband;
The EBITDA margin reached 28.3% and the loss hit R$ 1.2 billion. Net debt increased again to R$ 10.0 billion.
Standard & Poor's and Fitch upgraded Oi's rating:
- Standard & Poor's upgraded the issuer's rating from 'CCC+' to 'B' on a global scale and from 'brBB+' to 'brA' on a national scale;
- Fitch upgrading Long-Term Foreign Currency and Long-Term Local Currency Issuer Default Ratings (IDRs) to 'B-' from 'D' and the National Ratings to 'BB-(bra)' from 'D';
Oi postponed, to September 17th, the General Meeting for the election of the new Board of Directors, which will be formed by 11 regular members, without alternates, included in the consensual plaque, with a term of two years;
Oi's ON shares increased 2.0% in the week and PN 2.2%.
Algar 2Q18
- Algar Telecom repeated the good performance of the previous quarters having growth in gross revenue in comparison with 2Q17 of 3.5%, being 8.8% in B2B and -3.4% in B2C. B2C revenue was affected by the drop of 36.5% in mobile voice revenue;
- Algar Group's EBITDA margin reached 36.2% and net profit of R$ 80 million.
Telebrás 2Q18
- Telebras's net revenue increasced 77.3% in comparison with 2Q17 reaching R$ 29.1 million. Loss also increased in this period, from R$ 23.0 million in 2Q17 to R$ 61.3 million 2Q18;
- Telebras's revenue had growth due to activation of circuits to provide srvice to new government clients, such as Dataprev, Ministério do Trabalho and ICMBIOS.
Other highlights
- Brazil's satellite capacity will increase by 360% between 2015 and 2021, according to Anatel's president, Juarez Quadros, reported in the Latin American Congress of Satellites;
- Algar Telecom reported that the current partners exercised the right to participate in 97.3% of the issue of shares related to the capital increase of R$ 379.3 million of the company;
- Anatel does not intend to allocate the 2.3GHz band to 5G, but rather to SLP, SMP and TV (Telesyntese) retransmitters;
- Record has launched its streaming service (PlayPlus), which will have a free entry plan that gives access to the live programming of TV Record channels. The Play Plus plan with access to other content costs R$ 12.90;
- President Temer sanctioned the Personal Data Protection Law, but vetoed the creation of the regulatory agency;
- TÜV Rheinland Brasil invested R$ 3 million in a new laboratory to teste electromagnetic compatibility for IoT devices;
- MVNOs reached 2.1% of Market share of the mobile market in Mexico. In Brazil, the market share of MVNOs is 0.4%.
Nextel in 2Q18
- In its first quarter without iDEN accesses, Nextel reported revenues of R$ 560 million, 4.6% higher than the previous quarter and 22.5% lower than in 2Q17;
- Nextel intends to refarm its frequencies by shifting part of the spectrum used in 3G to 4G;
- Nextel's controller (NII) reported losses of US$ 20 million in the quarter and plans to launch convertible bonds, worth US$ 75 million, to finance Nextel's operations in Brazil.
Oi
After the corporate restructuring, Oi's main shareholders become (Value):
- Bratel (Pharol) 7.85%
- Solus Alternative Asset Management (9.71%)
- Golden Tree Asset management (8.55%)
- York Global Finance Fund (7.40%)
Pharol sent notificação to Oi defending the thesis that its advisers should return to the operator's board, from which they were dismissed by a judicial decision in March this year.
Oi announces its results for 2Q18 on August 13th (Tuesday).
Oi's ON shares showed devaluation of 7.7% in the week and the PN of 4.5%.
Cemig Telecom
- American Tower bought Lot 1 (in the states of Minas Gerais, Rio de janeiro and São Paulo) during the Cemig's asset auction, with a proposal of R$ 571 million, 70% higher than the minimum value stipulated for the lot. The company was the only proponent;
- Algar was left with Lot 2, fiber networks in the metropolitan area of Fortaleza, Recife, Salvador and Goiânia for R$ 77.89 million, 140% higher than the minimum value.
Other Highlights
- Claro and TIM announced signing a roaming agreement so that their customers in 700 municipalities, served by only one of these two operators, could use the network of the other operator. Excellent initiative!
- Anatel reported that the use of the 700 MHz band has already been released to Vivo, TIM and Claro in all the country's capitals;
- TIM started to operate its FTTH network in the cities of São Gonçalo and Nilópolis (state of Rio de Janeiro) and Vivo in Bauru (state of São Paulo);
- The Senate Commission on Science, Technology replaced Fistel with the National Penitentiary Fund as a source of funds in the Law Project about installation of cell phone blockers in Brazilian prisons;
- Anatel seized almost 28,000 unapproved products, with an estimated value of R$ 750,000, during an inspection action in Mauá (state of São Paulo);
- Anatel's Board of Directors approved a public consultation on a proposal to regulate the use of the radio frequency band from 2.300 MHz to 2.400 MHz (2.3 GHz) to 5G;
- São Paulo Court of Appeals has accepted an appeal by Telcomp against the State Department of Roadways (DER-SP), which charges for the use of pipelines on the highways administered by the agency;
- The Minister of the Federal Audit Court, Ana Arraes, denied a request for a precautionary measure requested by Sinditelebrasil against the contracts between Telebrás and the Ministries of Defense and Labor, ANTT, Ibama and Dataprev;
- Carlos Pingarilho is the new CEO of Promon;
- Yahsat has acquired Thuraya, a company specialized in mobile satellite services.
Mobile Telephony in the 1S18
- Vivo was the growth lead of the first semester (322 thousand accesses), followed by Nextel (288 thousand) and MVNOs (171 thousand). TIM (-2 million), Oi (-81 thousand) and Claro (-18 thousand) had negative net additions;
- In prepaid, TIM saw its advantage over Claro decline to 277 thousand accesses after losing 3.4 million prepaid in the first semester, more than double of Claro (1.5 million) and Vivo (1.3 million);
- Vivo led postpaid growth in the first semester (1.7 million), followed by Claro (1.5 million), TIM (1.3 million) and Oi (392 thousand);
- Brazil lost 1.4 million cell phones in the first semester of 2018 (1S18). Postpaid gains (5.2 million) were not enough to offset prepaid losses (6.6 million). This result contributed to the growth of 1.7 million M2M terminals in the semester;
- The 4G cell phones (118 million) surpassed the sum of 3G and 2G (97 million) cell phones.
Fixed Telephony and Pay TV in the 1S18
- Brazil lost 129 thousand pay TV subscribers and 539 thousand fixed telephones accesses in the first half;
- In pay TV, SKY (-159 thousand) and Claro (-126 thousand) had losses. Oi (48 thousand), Vivo (32 thousand) and other operators (+78 thousand) registered gains;
- In fixed telephony, Oi (-460 thousand), Claro (-173 thousand) and Vivo (-42 thousand) had losses. Competitive operators (+139 thousand) showed gains.
Oi
- Oi informed the market that it had concluded the restructuring of its financial debt with the implementation of the terms and conditions stablished in the Judicial Recovery Plan and called an extraordinary general meeting to be held on September 3rd to, among other matters, ratify the election of the members of the new board of directors;
- The group indicated to compose the new Oi's board of directors is formed by six members of the current group and five new members: Rodrigo Modesto de Abreu (former president of TIM), Maria Helena de Santana (former president of the CVM), Wallim Cruz de Vasconcellos Junior (ex BNDES), Paulino do Rego Barros Jr (former president of Equifax) and Henrique Luz (former partner of PricewaterhouseCooper);
- The capitalization of R$ 4 billion, bondholders' commitment in the judicial recovery plan, should occur until February 2019;
- BNDES, which in 2010 had more than 30% stake in Oi until selling part of its shares to Portugal Telecom, decided not to exercise the preemptive right to subscribe for the common shares to be issued in the capital increase of Oi and will have less than 5% of the company's capital;
- The request for recognition of the homologation of Oi's judicial recovery plan was rejected by the Portuguese Court, which considered that the decision had not become final;
- Oi intends to activate FTTH networks in 19 cities by the end of 2018;
- Oi's ON shares decreased by 5.5% in the week and the PN by 4.0%.
Smartphones in the World
- With the sales of 54.2 million smartphones in 2Q18, Huawei surpassed Apple (41.3 million) and became second in smartphone sales, behind only Samsung (71.5 million), which dropped 10,4% in sales compared to 2Q17 (IDC);
- Apple's revenue grew 17.3% in 2Q18/2Q17 despite smartphone sales growing only 0.7% in this period;
- Smartphones sales contributed to the growth of 15% in Huawei's revenue in the first semester of 2018 (US$ 47.8 billion). Infrastructure vendors such as Ericsson and Nokia reported revenue declines in this period and sales of about US$ 10 billion.
Other Highlights
- We are very sorry for the death of Luiz Tito Cerasoli, former director of Anatel;
- Netflix counted about 8.5 million users in Brazil by the end of 2017, about 4.3 million accounts, according to Ampere Analysis estimation at the PAYTV Forum 2018;
- Vivo activated its FTTH network in two other cities (Bragança Paulista and Itapetininga) and started to serve 10 cities with VOLTE;
- The Brazilian Supreme Court decided that the Law implemented by the state of Piauí, which forces telecommunications concessionaires to install cell phone blockers in prisons, is unconstitutional;
- Nokia has signed a US$ 3.5 Billion deal with T-Mobile from the United States to deploy the carrier's 5G network.
Coming Week
- The auction to sell Cemig Telecom will take place on August 8th.
