09/18/07

Why do Brazilians frequently change operators ?

 

The frequency in which brazilians change operators has increasing in the last 12 months. The following graphic presents the churn evolution, cancelled cell phones in Brazil.

 

 

Monthly churn of 2.7% Brazil in the 2nd quarter of 2007 (Q207) is superior to data of cell phone operators from United States (Verizon 1.3%; AT&T 1.6%) and Europe (France Telecom 1.7%). Is very similar, taking a look to other Latin America countries where is big the percentage of pre-paid cell phones. Telcel in Mexico, for example, had 92.6% of pre-paid cell phones in the Q207 had monthly churn of 3.3%.

 

The consequence of high churn is that part of the clients gotten is just to compensate lost clients.

 

The following table is an example of the situation of cell phone operators in Brazil - July/07.

 

Thousands	Jun/07	Jul/07
	Cell Phones	Churn*	Cancelled	Net Adds	Gross Adds
Vivo	30,240	2.3%	696	268	964
Tim	27,478	3.2%	888	413	1,301
Claro	26,252	2.4%	630	522	1,152
Oi	13,634	2.6%	350	562	912
Telemig	3,545	3.3%	118	14	132
Amazônia	1,291	3.6%	46	8	54
BrT	3,769	4.4%	167	72	239
Brazil**	106,210	2.7%	2,898	1,859	4,757

* July/07 monthly churn Q207. ** Except CTBC and Sercomtel

Note: churn is calculated dividing total cell phones cancelled by the number of cell phones.

 

Vivo, for example, had 30.2 million cell phones in June/07. Kept in July/07 the same monthly churn of 2.3% Q207, so it lost 696 thousand cell phones in the month. The operator needed to get 964 thousand new clients (gross adds) to present net adds of 268 thousand cell phones in July/07.

 

Tim had the higher churn between 4 biggest cell phone operators of Brazil in 2007.

 

 

The base cleaning promoted by Vivo in the Q206 helped the high quantity of cancellations in 2006. The 16.4 million cancellations of the 1st sem/07 indicate that the situation isn't getting better in 2007.

 

 

You could ask:

• Why brazilians frequently change operators?
• The fact that 80% of Brazil's cell phones are pre-paid explains the high churn of cell phone in Brazil?
• Which's the main advertizing target of the operators? Clients whom already have cell phone or clients of other operators?
• Should the operators invest more to keep its clients?
• How will 3G change this situation?
• And what about the implantation of number portability, predicted to 2009, How'll it affect churn?

 

 

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