Will Tim exceed Vivo?
Brazil cellular numbers increased in July/06, after reduction in June/06, which happened beacuse of Vivo's break up of 1.8 million inactive cellulars.(Consult: Lost Year for Vivo?).
Brazil has gotten in July/06 a total of 93,047 thousand cellulars ( 49.87 cell/100 inhab) with net income of 1,286 thousand cellulars, over July/05 that was 1,061 thousand.
The July result shows that, although increased in the previous month, the cellular in Brazil will continue growing. Teleco's projections indicated that Brazil should finish 2006 with more than 100 million cellulars.
Vivo already saw its advantages on Tim, that was 8.4 million cellulars in May/06, fell to 5.8 million in July/06. It became real the possiblity of Vivo to lose its cellulars market share leadership in Brazil. Keeping the current trends, Tim must exceed Vivo in July/07.
Tim is on the top of cellulars growth in 2006 with net income of 2,671 thousand cellulars, followed by Claro with ( 2,624 thousand), and keeps speeding up its rythm in the last two months. In July/06 it presented net income of 509 thousand cellulars, against 331 thousand of Claro and 102 thousand of Vivo (More details).
It won´t be easy for Vivo to revert this trend. To don´t be exceeded, Vivo will have to present a growth tax of its cellular base next to the other operators.
This only must occur at the end of the year when Vivo will start its GSM network. In the next months Vivo will continue having roaming and price dificulties with CDMA cell phones. Moreover, it will have to convince clients that, even having decided to implant a GSM network, to have a CDMA cellular continue being a good option.
The entrance of a GSM network in operation won't solve all the problems. With all this network starting to operate, Vivo will need several months to reach a regular covering. The option to implant the GSM in 800MHz, sharing this band with CDMA, AMPS and in some places TDMA, could have some quality problems to the current and future clients in the cities of big urban concentration as São paulo and Porto Alegre.
These factors can contribute to maintain Vivo's high churn that keeps losing its better clients to other operators.
Finally in this period of one year ( until July/07) Vivo still should be out of Minas Gerais and Northeastern Markets that have grown in 2006 up to Brazil's average that was 7.9% (mais detalhes). From 509 thousand cellulars that Tim grew in July/06, 52 thousand had been in Minas Gerais and 104 thousand in the northeastern ( 30.5% of the total)
In relation to "Revenue Share" in the 2Q06 (mais detalhes), the advantage of Vivo (31.8%) in relation to Tim (28.4%) is still lesser, consequence of the biggest ARPU presented by Tim R$ 30.2 against R$ 24.1 Vivo.
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