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24
9/2017

Oi, Painel Telebrasil, TIM, IoT and other highlights

Eduardo Tude

Oi's Judicial Recovery

• Two weeks before Oi's creditors assembly (9/10), the recovery plan must to be approved by Oi's council next wednesday (27/09);
• Oi keeps negotiations with potencial investors, including TPG and China Telecom;
• On Sep 28th, Anatel will evaluate the process to extinguish Oi's concession;
• With the injunction granted by The Court of the State of Rio de Janeiro, the assembly can become. It determines the necessity of making separated lists of each of the seven companies, owned by oi Group, that are under judicial recovery. It also requires complete and updated information about assets and liabilities of each company;
• The judge that is conducting Oi’s judicial recovery in RJ didn’t accept Brazilian Attorney General argument pointing out that the credits related to fines can’t be negotiated because they are public and gave five days to Oi and Anatel to present, in details, the exact value of this debt;
• Oi's ON stocks had growth of 7.1% on the week. PN raised 0.3%.

Painel Telebrasil

• The 61st edition of the Painel Telebrasil took place in Brasília and gathered the main business men and authorities of the Telecommunication market to discuss strategies, policies, regulation, IoT and the sectoral situation;
• During the event, the Brasília Letter 2017 and the study “Ranking Cidades Amigas da Internet” were released. The study, made by Teleco, lists the cities that encourage the offer of Telecom services in Brazil.

TIM

• TIM started to operate VoLTE technology in São Paulo and Rio de Janeiro;
• Worried about amplifying the spectrum available for mobile broadband, TIM has plans to performe tests in the band of 3.5 GHz, in order to evaluate the interference with antennas with satellite reception.

IoT

• IoT Plan, elaborated by BNDES, is almost ready. It selected four pillars (Health, rural, smart cities and industry) that will count with 106 initiatives to be developed along five years;
• WND Brasil officially launched its Sigfox network in Brazil covering 100 cities and 80 million people.

Others highlights

• 4G is already available in 54.6% of the Brazilian cities and to 87.5% of the population. TIM is the coverage leader, followed by Vivo;
• The mandate of Igor de Freitas as Anatel’s counselor ends November 5th and, according to the minister Gilberto Kassab, Freitas won’t remain in the regulator;
• AT&T showed its defense to CADE about acquiring Time Warner;
• Brazilian Institute of Geography and Statistics published the Annual Survey on Services of 2015. Telecom companies remained in the first position in generation of net operational revenue;
• The “ISS” (Tax on Services of Any Nature) on streaming services will have a rate of 1,09% in the city of São Paulo, according to the Law Project sent to the City Council;
• Senate Comission approved a Law Project that forces operators to ensure mobile coverage in the Brazilian roads. The costs would be supplied by “FUST” (Telecommunications Universal Fund);
• The Federal Court of Accounts ordered the Government to recompose the budget of R$ 205 million requested by Anatel to 2018;
• The hurricane Maria left 95% of Puerto Rican ERBs out of service and affected Brazilian international internet links that have cables on Caribbean islands;
• Google launched data centers in São Paulo to supply Brazil, Chile and Argentina. The target is to reduce company’s services latency in South America.

Next weeks

• Teleco invites readers to celebrate its 15 years of existence on October 3rd at 17h, in the company’s stand inside Futurecom;
• We’re still waiting Anatel to report pay TV statistics for June.

17
9/2017

4G, mobile accesses in July, Oi and other highlights

Eduardo Tude

4G

• 4G reached 84.1 million mobile accesses in July and may surpass 3G (101 million accesses) until the end of the year.
• With net adds of 3.6 million mobile accesses in the month, 4G accesses decreased to 17 million the difference to 3G technology (-2.8 million in July).
• Algar Telecom started to make tests with 4.5G technology that use aggregation of carriers to increase the data speed.

Mobile Telephony in Jul/17

• Vivo was the mobile growth leader in July with net adds of 181 thousand new accesses, followed by Claro (68 thousand) and MVNOs (59 thousand). Oi (-91 thousand) and TIM (-326 thousand) presented negative net adds.
• TIM's advantage over Claro dropped to 165 thousand accesses.
• TIM continued to present the biggest loss in prepaid (-543 thousand), followed by Vivo (-186 thousand), Claro (-127 thousand) and Oi (-104 thousand).
• Vivo led postpaid net adds by registering 367 thousand new accesses, followed by TIM (217 thousand) and Claro (195 thousand).

Oi's Judicial Recovery

• Three weeks before Oi's creditors assembly (9/10), negotiations are still going on. An agreement is expected to be reached only on the eve of the meeting;
• Rio de Janeiro Court, granted injunction requested by the Brazilian Attorney General suspending the clauses of the agreement that kept the credits under the active debt (about R$ 6 billion from the R$ 11 billion required by Anatel) in the Judicial Recovery. Oi and Anatel will appeal;
• Oi has already closed more than 1,400 agreements with creditors who will receive up to R$ 50 thousand;
• Rio de Janeiro Court answered the request made by Dutch judicial administrators asking Oi to present lists of creditors and debtors od each company controlled by the group;
• Oi's ON stocks had growth of 6.0% in the week and PN had loss of 0.3%.

Oi's judicial administrator presented the report of the activities performed in July with the following information:

• Net Operating Cash Generation: - R$ 175 million
• Receipts: R$ 2,755 million
• Payments: R$ 2,450 million
• Investments: R$ 480 million
• Final Balance of the Financial Cashier: R$ 7,179 million

Other highlights

• AT&T may be considering the possibility of selling SKY Brasil and other Pay TV operations in Latin America, except in Mexico (Reuters).
• The ministry Gilberto Kassab, the president of Anatel and representatives of the operators had a meeting with the ministry of Brazilian Supreme Court, Alexandre Moraes, in order to try to speed up the analysis of the Law Project N. 79.
• Telebrás postponed, to October 17th, the auction of its satellite capacity.
• The Brazilian National Council of Cinema created a group to elaborate a proposal for Law Project to rule tax over services of On Demand Video.
• Anatel fined Algar telecom in R$ 1,33 million for noncompliance with obligations related to reversible assets from the fixed telephony concession.
• Italian regulator Consob (Commissione Nazionale per le Societa e la Borsa) decided that Vivendi has, in fact, control over Telecom Italia.
• Hispasat launched its satellite Amazonas 5 with 24 transponders in band Ku and 34 spots in band Ka.
• Contax changed its name to Liq.
• The MWC Américas took place in São Francisco and had as main themes 5G, IoT, spectrum and license of web sites.
• Apple launched a new smartphone, Apple X, that has facial recognition as the main technology.
• China Mobile launched office in Brazil. It'll focus in negotiating roaming agreements with local operators and in offering services for corporative sector.

Next week

• The Painel Telebrasil will take place in Brasília. The president of Teleco, Eduardo Tude, will attend the event presenting the results of the Ranking with the Internet Friendly Cities (2017).
• We're still waiting for Anatel to report the statistics for Pay TV in Brazil.

10
9/2017

Internet, fixed telephony, Oi, MVNO and other highlights

Eduardo Tude

Telecom in Brazilian Domiciles

The survey "TIC Domicílios 2016", carried out between Nov/16 e Jun/17, elaborated annually by cetic.br indicates that:

• 61% of the Brazilian people older than 10 years old were intertnet users;
• 36.7 million Brazilian domiciles (54% of the total) have internet access, 23.4 million of them through fixed broadband and 9.3 million through 3G or 4G mobile broadband;
• The main reasons for not having internet acceses are: price (26%), lack of interest or necessity (26%), don't know how to use (14%) and nor available in the region (7%).

Fixed Telephony Jul/17

• The inclusion of 160 thousand fixed telephones operated by Intelig, that weren't counted before, caused an artificial growth of 70 thousabd fixes telephones accesses in July;
• Incumbents lost 101 fixed telephones and CLECs gained 179 new accesses, figure that would totalize 19 thousand without Intelig's accesses.

Oi's Judicial Recovery

• Goldman Sachs announced that it has 10.55% of Oi's preffered stocks now;
• Oi's ON stocks presented growth of 3.2% in the week and PN raised 1.4%.

MVNO

• In August 2017, Vecto Mobile received Anatel's authorization to operate as MVNO (authorized);
• Vecto's focus is IoT providing M2M connection using, besides mobile networks like Sigfox, LoRa and satellite.

Other highlights

• WhatsApp will launch two versions for business. On focus on small companies and other to big companies environment;
• TIM launçched fixed broadband service through its 4G network;
• Anatel's Resolução 680 became effective. It allows companies that have less than 5 thousand accesses in service and don't use frequencies to be operate without the autorization for Multimedia Communication Service (Serviço de Comunicação Multimídia - SCM);
• 1.24 million PCs were sold in 2Q17, growth of 5% over 2T16. From this total 847 thousand were notebooks. (IDC)

Next week

• Market expects Anatel's report over Pay TV statistics for June;
• Mobile World Congress Americas in San Francisco (US).

3
9/2017

Oi, Smartphones, Fiber, CADE, GDP, IoT and more highlights

Eduardo Tude

Oi’s Judicial Recovery

Oi and Anatel

• With one month left until the General Meeting of Creditors, Anatel decided to put more pressure on Oi;
• Anatel’s counselor, Igor de Freitas, proposed to open proceedings in order to extinguish the concessions granted to Oi and the authorizations hold by the Group Oi. Anatel isn’t satisfied with the investment plan presented by the operator;
• Leonardo de Morais, Anatel’s counselor chosen to analyze the request, declared that he will present his report during the board meeting on September 28th;
• Brazilian Justice determined that the debts owed to Anatel must be treated in equal conditions of the other debts instead of separated. The collection of non-tax credits through justice, requested by Anatel, is suspended.

Oi: Other facts

• The Brazilian Justice authorized Oi to start its program according to creditors and will permit to pay debts until R$ 50 thousand in advance;
• Goldman Sachs informed having 9.2% of Oi’s preferred stocks;
• The appreciation of Oi’s stocks made its biggest stockholder (Pharol) presented net profit of € 61.8 million in the first semester of 2017. Oi’s market cap increased from R$ 2.1 billion by the end of 2016 to R$ 3.2 billion in June 2017;
• Oi’s ON stocks dropped 3.1% in the week and PN had growth of 1.4%.

Smartphones and 4.5G

• 12.8 million cell phones were sold in Brazil in 2Q17. 12.1 million were smartphones and 700 thousand were feature phones. The average value by device reached R$1.044 (Source: IDC);
• Claro’s CEO, Paulo Cesar Teixeira, affirmed that the its 4.5G operations will be available in 9 thousand cell sites all over Brazil by the end of the year (source: Telesíntese).

Buried aerial cables and fiber networks

• The program “Cidade Linda Redes Aéreas” (Beautiful City – Aerial Networks), launched by São Paulo city hall, plans burying aerial cables and remoting street poles. Besides burying 52 Km of network in the center of São Paulo until 2019, the program also includes more than 13.2 Km in Vila Olímpia village and around the Municipal Market;
• Vivo’s FTTH network operates in 105 cities, 49 of the in the state of São Paulo. This week, the company started to operate in other three cities: Itabuna (state of Bahia), Guarapari (Espírito Santo) and Botucatu (SP).

CADE 1

• CADE (Administrative Council for Economic Defense) decided to establish administrative process against Claro, Oi Mobile and Telefônica Brasil in order to investigate the possibility of crimes in public bids;
• The lawsuit, filed by BT Brasil Serviços de Telecomunicações, accuses the three operators of acting in associated way in bids like the one promoted by the Brazilian post office in 2015.

CADE 2

• CADE concluded that there’s no evidence that the zero-rating creates an obstacle to the launch or permanence of other Apps and ended the investigation required by the Federal Public Ministry.

IBGE

• Information services (Telecom, IT and others) GDP presented reduction of 1.8% in comparison with the figures registered in the last four previous quarters. Brazilian GDP dropped 1.4% in this period;
• IBGE (Brazilian Institute of Geography and Statistics) estimates that the country had 207.7 million inhabitants in July 1st 2017, with growth of 0.77% over 2016.

IOT Connections: United States and Brazil

IoT connections of the main operators in the US (2Q17):

• AT&T: 33.7 million
• Verizon: 18.2 million
• Sprint: 13.2 million
• T-Mobile: 4.6 million

In 2Q17, Brazil registered 13.7 million connections, 5.6 million of them operated by Vivo and 4.7 million by Claro.

Analog TV Switch off in Rio de Janeiro

• IBOPE survey showed that 63% of the domiciles in the city of Rio de Janeiro and 70% if the homes in Vitória (State of Espírito Santo) already have TVs able to receive digital signal, according to the population;
• The minimum percentage to reach the conditions to promote the switch off, in October 25th, is 90%.

TV

• The Brazilian TV channels SBT, Record and RedeTV! Reached an agreement with SKY to return to pay TV bundles in the region of São Paulo. As the occurred to Vivo, the group of TV channels will receive R$ 1.00 by subscriber;
• The TV channel OFF launched an App to offer video streaming in which videos can the watched for free.

Does data package of 1 MB includes 1,000 KB or 1,024 KB?

• Federal Public Ministry filed a public lawsuit against Oi Mobile and Anatel because the operator is considering 1,000 KB instead of 1,024 KB to calculate data consumption. If there’s any doubt, this matter should be regulated by Anatel instead of becoming subject of judicial lawsuit.

Other highlights

• The market cap of the three Telecom operators negotiated in Bovespa increased 19.6% in 2017 (Dec/06 to Aug/17). Oi’s mkt cap raised 69.6%, TIM’s had growth of 44.1% and Telefônica’s 11.5%;
• The use of portability continues to grow. In August 433 thousand cell phone numbers and 138 thousand fixed telephone numbers were ported. The growth in relation to Aug/16 reached 36.7% and 16.3% respectively;
• The World Trade Organization (WTO) condemned the subsidy policies of seven Brazilian programs, in particular the “Information Technology Law”. Brazil has 20 to 60 days to appeal;
• The deadline to contribute to the public consultation about the strategy for Brazilian digital transformation was postponed to September 20th;
• Embratel announced that it will launch the satellite Start One D2 with Ka band in 2019.

Next Week

• Anatel may report pay TV statistics in Brazil.

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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