Cellulars: Tim is the best in the 2Q06. What will be Tim's growth in 2006?
Brazil finished the 1st semester of 2006 with 91,760 thousand cellulars and density of 49.24 Cell/100 inhab. The semester net income is 5,550 thousand cellulars that was harmed by the break up with 1,823 thousand inactive cellulars done by Vivo in June/2006. ( Consult: Lost year for Vivo?)
Vivo showed a negative growth, 1,251 thousand cellulars in the semester and lost 2,5 percentile points of market share.
Tim, Claro, Oi and BrT GSM are the leaders, in cellular growth of the 1st semester of 2006. Together these operators present net income of 6,711 thousand cellulars in the period.
| Thousands | Market Share |
Cellulars |
Net income |
|
jun/06 |
jun/06 |
jun/06 |
Jan-Jun/06 |
|
| Vivo | 31.09% | 28,526 |
(1,949,2) |
(1,251) |
| TIM | 24.36% | 22,354 |
562,6 |
2,164 |
| Claro | 22.83% | 20,949 |
404,5 |
2,293 |
| Oi | 13.12% | 12,034 |
228,3 |
1,698 |
| Telemig/Amaz | 5.07% | 4,655 |
26.4 |
85 |
| BrT GSM | 3.02% | 2,772 |
129,8 |
556 |
| CTBC | 0.42% | 385 |
(21.8) |
(3) |
| Sercomtel Cell. | 0.09% | 85 |
2.2 |
8 |
| Total Cellulars | 100% |
91,760 |
(617,2) |
5,550 |
Source: Anatel
Claro presented the biggest growth in the semester with 2,293 thousand net income. The distance that separates it from Tim still is, however, 1,405 thousand cellulars.
Tim presented net income of 2,164 thousand cellulars in the semester and led the cellular growth in June/2006 with 562 thousand cellulars net income.
Oi was the only operator that presented net income in the 1st semester of 2006 ( 1,697 thousand cellulars) bigger than in the same period of 2005 ( 1,253 thousand cellulars).
The biggest Grorths (%) in the period Jan-Jun 2006 were BrT GSM (25.1%) and Oi (16.4%), against 12.3% Claro, 10.7% Tim and 4.2% Vivo's negative.
Tim presents the best performance in the 2Q06
Tim is the operator with the best performance on the 2nd quarter of 2006. It has It has the less percentage of pre-paid cellulars in it base, the biggest revenue average per clients (ARPU) and more minutes of use (MOU).
| 2Q06 | Vivo |
TIM |
Claro |
Oi |
| ARPU (R$) | 24.1 |
30.2 |
24.0 |
17.8 |
| MOU | 66 |
81 |
66 |
N.D. |
| Pre-paid | 81.5% |
79.4% |
83.4% |
80.0% |
| Churn | 4.6% |
2.57% |
2.40% |
2.14% |
This superiority on Tim's clients base made it net income in the 2Q06 just 15% less than Vivo, even though, having 22% less cellulars. Tim also presented the best Margin EBITDA between the four biggest operators in the 2Q06.
| 2Q06 (R$ Million) | Vivo |
TIM |
Claro |
Oi |
| Net Revenue | 2,598 |
2,321 |
1,822 |
807 |
| EBITDA | 306 |
500 |
231 |
154 |
| Margin EBITDA | 11.8% |
21.5% |
12.7% |
19.0% |
Net (lost) Profits |
(493) |
(249) |
N.D. |
0.4 |
The high churn (2,57%) and the net profits of R$ 249 million are Tim's negative points. Oi was distinguished by R$ 0.40 million revenue in the period.
What will be the cellulars projection until the end of 2006?
Teleco had projected in the beggining of 2006 the net income to this year between 18 and 22 million cellulars, which would make Brazil end 2006 with 104 to 108 million cellulars. (More details in portuguese)
The negative growth of 1.95 million cellulars presented by Vivo in June/06 and its GSM option must affect the market and the cellular growth in 2006. Even though, Teleco's projections point that Brazil could finish 2006 with more than 100 million cellulars.
The attainment of this result will be affected mainly by Christmas competition with the entrance in operation, or not, of Vivo's GSM network. December is the month of cellular growth in the year and presented net income of 3,8 million cellulars in 2005.
Another factor to affect the strategy of the operators, is the change in the criterion of interconnection remuneration (VU-M) between mobile operators. Anatel reestablished the “Full Billing”, finishing with billing based in traffic unbalancing (45% - 55%) that it stimulated offers of plans with high use of minutes, as the corporative ones.The payment of the VU-M for all calls become pre-paid cellulars the most income-producing for the operators. It is considered despite the tax of exchange and the cheaper cost of products (low end) can stimulate the entrance of new pre-paid cellulars in the base of the operators, without the necessity of subsidize.
Although the difficulties, Vivo must keep in 2006 the leadership in cellulars market share. The difference of 6.2 million cellulars that separates it from Tim is big to be surpassed in a semester. It's possible, however, that Tim surpass Vivo in revenue ( revenue share) in one of the next quarters( months).
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