5G, Oi, AT&T/Time Warner and other highlights
Eduardo Tude
5G
The adoption of 5G technology is advancing rapidly in the world. In Aug/19, according to the GSA:
- 56 operators had 5G networks in commercial operation in 32 countries;
- 100 models of 5G devices had been announced, including 26 smartphones;
- SKT reached 1 million 5G phones within 5 months of launching the service. For 4G it took 8 months.
This Wednesday I will be giving the opening lecture of the 3rd edition of the 5G online event & digital transformation. Watch presentations by Vivo, Claro, Tim, Hi, SAS, Deloitte, Inatel, Rohde & Schwarz and other companies on the topic. Good opportunity to catch up. Registration is free.
https://telecomwebinar.com/5g-e-transformacao-digital-2019/
Oi
- The announcement of the operator's cash difficulties and the consequent fall in share prices led Oi's main shareholders to defend the immediate replacement of the company's president. The change must be approved by the Judge responsible for the judicial reorganization process;
- Oi's crisis has put pressure on the Senate to move forward to Law Project 79. The Senate CCT has approved a public hearing on the Project;
- The sale of Oi's stake in Unitel to Angolan oil company Sonangol for about US$ 1 billion could be announced in the coming days;
- Oi's ON shares had loss of 26.6% in the week and the PN appreciated 2.4%.
Time Warner purchase by AT&T/SKY
- Counselor Vicente Aquino, voted in favor of approving the purchase of Time Warner by AT&T without conditions. It endorsed AT&T's thesis that the cross-ownership fence set forth in the SeAC Act applies only to programmers headquartered in Brazil, not affecting those headquartered abroad. Councilor Moises Moreira requested more time to analyze the process;
- If this thesis prevails, any pay TV operator may be a foreign-based programmer and may be involved in production and programming;
- Meanwhile, Congress is advancing the debate on Law Project 3.832/2019, which amends SeAC law by eliminating restrictions on cross-ownership between content producing/programming companies and distributors.
Other Highlights
- Anatel approved TIM's TAC, an agreement that exchanges fines for correcting conduct and additional investments. The fines of R$ 627 million are being exchanged for a commitment to bring 4G technology to 366 Brazilian municipalities with less than 30,000 inhabitants;
- Telebrás has been included in the list of companies to be privatized by the federal government;
- E-commerce in Brazil grew 12% in the first half of 2019. (Ebit / Nilsen);
- The US has renewed a special license that allows Huawei to continue doing business with US companies for another 90 days;
- Global 5G smartphone sales will reach 160 million by 2020 if technology takes off in China as expected. Huawei is the best positioned company to capture most sales. (Strategy Analytics).
Coming Weeks
Net profit in 2Q19, Nextel, 5G, Operators and more
Eduardo Tude
Profit in 2Q19
- Microsoft, Apple and Google were among the companies that reported bigger profits in 2Q19, more than twice as many carriers like Verizon and AT&T;
- Among the operators in Brazil, the highlight was América Móvil with net profit of US$ 1.9 billion in 2Q19, followed by Telefônica (US$ 1.0 billion);
- These results contrast with companies like Uber which reported loss of US$ 5.2 billion in the quarter.
2Q19 Results: Nextel
Comparing 2Q19 with 2Q18, Nextel Brasil's total net revenue grew by -0.8%, as follows:
- -0.8% in mobile services revenue;
- -79.7% in handsets sales revenue;
- Mobile ARPU reached R$ 53.
EBITDA Margin hit 6.2%.
NII, controller of Nextel Brasil, warned that it only has resources to keep the company in operation until 2Q20. It is awaiting Anatel's authorization to complete the sale to América Móvil.
5G
- The 5G frequency auction scheduled for March has been postponed. One of the points not yet addressed is the cost of mitigating interference with satellite dishes for open TV reception. Who should have an allowance? According to the IBGE, 6.5 million households depend solely on this satellite dish for access to open TV;
- Brazilian Ministry of Science, Technology, Innovation and Communication released the contributions to the public consultation on the 5G strategic plan. Claro is concerned about the problem of interference with satellite dishes, Vivo suggests a revision of the net neutrality rule, TIM proposes that the mandatory investment in infrastructure established in the auction should be staggered and Oi wants to expand the opportunities for sharing spectrum.
SeAC Law
- The Government's economic team would be preparing an interim measure to change SeAC law by allowing verticalization of this segment. This would be one of the requirements of the US government handed over to Brazil as part of the strategic partnership aimed at preventing AT&T from having to sell SKY;
- Producers and programmers could control pay-TV companies and vice versa. The issue is more complex due to the obligations imposed by SeaC law. It would be necessary to revise the model to ensure an isonomic competition between players.
Operators
- Claro is launching the first connected car in the Brazilian market. Chevrolet Cruze Premier will be a Wi-Fi hotspot connected to the Internet through Claro's 4.5G (LTE-Advanced Pro) network;
- TIM plans to have 37 data centers by the end of 2020, 21 for Edge Computing;
- Vivo activated its fiber network (FTTH) in the city of Pirassununga, in the interior of São Paulo;
- Oi's ON shares lost 0.65% in the week and PNs 2.3%.
E-comerce
Key insights of the reserch on shopping experience through e-commerce carried out by digitalks/Opnion box:
- 53% make more purchases on mobile than on computer;
- 28% do research on more than 5 different channels before closing their purchase;
- 76% give up on a purchase when shipping cost is too high.
Other highlights
- Anatel has placed in public consultation the resolution to remove barriers to IoT expansion. These include changes to the MVNO regulation so that "The Accredited may hold a Representation Agreement with more than one Originating Provider in a given Registration Area.";
- This week was held the Agrotic 2019, event held by Momento Editorial in partnership with EsalqTech. Connectivity in rural areas was among the prominent themes. Vivo and Claro see the 700 MHz band as the growth vector of connectivity in the rural segment;
- Samsung introduced its new Galaxy Note 10 model with a larger screen, more cameras and twice the standard storage of its predecessor.
Coming weeks
Operators in the 1S19, 2Q19 Results reported by TIM and others, other highlights
Eduardo Tude
Operators in 1S19
- Claro was the postpaid growth leader (without M2M) with net adds of 1.2 million, followed by Oi (792 thousand accesses), Vivo (395 thousand), Nextel (102 thousand) and TIM (8 thousand);
- TIM presented the largest prepaid losses (-2.1 million), followed by Claro (-1.8 million), Oi (-1.1 million) and Vivo (-724 thousand);
- Competitive operators led the fixed broadband growth (+716 thousand) followed by Claro (170 thousand). Vivo (-194 thousand) and Oi (-239 thousand) presented negative net adds. Competitive operators net additions would be higher than 1.1 million if all the companies that reported access to Anatel in May had also done so in June;
- Claro reported the biggest losses on pay-TV (-373 thousand), followed by SKY (-282 thousand), Vivo (-107 thousand) and Oi (-18 thousand).
2Q19 Results: TIM
When we compare 2Q19 with 2Q18, TIM's total net revenue increased 2.4%, being:
- + 1.9% in mobile services revenue;
- + 2.4% in handsets sales revenue;
- + 11.3% in fixed broadband;
- Mobile ARPU reached R$ 23.20, being R$ 42.80 from postpaid and R$ 11.60 from prepaid.
Normalized EBITDA margin hit 46.0% (IFRS 16) and net profit reached R$ 2.0 billion in the quarter.
2Q19 Results:
Comparing 2Q19 with 2Q18, revenue increased:
- -4.0% at Samsung;
- +1.0% at Apple, iPhones sales revenue dropped 11.8%;
- +0.2% at Sprint;
- -0.4% at Verizon;
- -1.4% at Sony;
- -1.8% at Telecom Itália;
- +3.7% at LG;
Huawei's revenue increased 23.2% when we compare 1S19 wirth 1S18.
Smartphones in the world (2Q19)
- 333.2 million smartphones were sold worldwide in 2Q19, 2.3% less in comparison with 2Q18;
- Samsung led sales with 75.5 million (+ 5.5%), followed by Huawei with 58.7 million (+ 8.3%), Apple with 33.8 million (-18.2%), Xiaomi with 32.3 million and OPPO with 29.5 million. (IDC)
Anatel
- The court didn't agree with Anatel's arguments and kept the decision allowing the offer of Fox+'s linear channels on the internet;
- Anatel extended to September 16th the deadline for the survey on the distribution of linear channels direct to the consumer via the Internet;
- Anatel's technical area concluded the report with suggestions to mitigate interference from 5G technology on satellite dishes that receive open TV;
- Anatel approved the Algar Telecom's TAC, which has a value of R$ 86.7 million. The TAC will now be analyzed by the TCU.
Other highlights
- Oi's ON stocks raised 3.3% in the week and PN increased 1.2%.
Coming weeks
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).
