América Móvil rose more than others in Brazil
The following table presents the main telecommunication groups of Brazil - gross revenue in 2006.
- |
R$ Billions | Gross Revenue |
Market Value |
1 |
Telefonica/Vivo | 36.6 |
42.3 |
2 |
Telemar (Oi) | 24.2 |
15.4 |
3 |
América Móvil/Telmex* | 24.2 |
- |
4 |
BrT | 15.1 |
8.9 |
5 |
Tim | 13.9 |
21.4 |
*Nowadays América Móvil is the controller of Telmex and cellular operators of the Group. In Brazil the group controls Claro and Embratel. It also has participation at Net that acquired Vivax.
These groups, except América Móvil, occupy this position since privatization process in 1998.
The presence of América Móvil has been getting stronger since 2003 in Brazil, when the operator finished the acquisition of Bell South operators (BCP and BSE) and consolidated its operations on the brand Claro. In 2004 the group (Telmex) started to control Embratel. In 2005 was acquired a participation at Net that in 2006 bought Vivax.
In the ranking of operators, the group of América Móvil finished 2006 in the 2nd place with Telemar (Oi).
The strategy of growth through acquisitions practised in Brasil, has also been done in other Latin America countries. The cellular operator of América Móvil (CTI) was the one that most rose in the last 3 years in Argentina. Check on: Why is Cellular growing more in Argentina than Brazil?
In the end of 2006 América Móvil presented a proposal to buy Tim in Brazil. In Apr/07 América Móvil and AT&T announced negociations with Pirelli to acquire a participation in the control of Telecom Italia. The acquisition of Tim in Brazil would take América Móvil to be the biggest telecommunication group in Brazil. Consult: How it would be cellular in Brazil if Claro bought Tim?
This aggressive growth cost significantly. América Móvil presents lesser EBITDA margin compared to other groups in Brazil. In América Móvil the growth is more important than net profit.
While América Móvil grows in Brazil, other operators seem to keep the same rhythm.
Telefonica, Telemar and BrT have local telephony as it main business. This market has been suffering a big competition of cellular and VOIP. The revenue of local service of these operators decreased 1.5% in 2006. The loss isn't so bad though because of the growth of broad band revenue.
Telefonica, without many growth possibilities in fixed telephony, and with Vivo losing market, tries to expand its Pay TV with the acquisition of TVA and the entrance in DTH market.
Telemar (Oi) needs a joint venture restructure to give to the company some conditions of investments and expand its area. The proposal presented in 2006 failed because of the shareholders of preferential shares. Telemar wants to change the situation through a public offer to acquire preferential shares in the market.
Brasil Telecom also doesn't present conditions to expand before joint venture resolution, with the sale of Telecom Italia's participation in the operator. Orascom, operator from Egypt, and Citi/fundos of pension are the main candidates to buy this participation.
The changes in Telecom Italia couldn't have big impact in the situation presented consolidating even more the ascension of América Móvil.
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