Oi/BrT will fight for the cellular leadership in Brazil?
After months of negotiation, was announced on 04/25/08 the acquisition of Brasil Telecom (BrT) by Oi. The effect of this operation still depends on changes in regulation and approval of Anatel (Regulator Agency) and CADE. If the operation is achieved, Oi/BrT will be the largest group of telecommunications in Brazil with R$ 42 billion of gross revenue in 2007, surpassing the group of Telefonica / Vivo ( R$ 41 billion).
One of the first challenges that Oi/BrT will have to face is to enlarge its market share of cell phone.
Revenue from cell phone will be the main source of revenue for telecom operators in Brazil in the coming years.
Note: Data of revenue of communication data of the fixed operators
In 2007 the gross revenue of cell phone represented 45.6% of the revenue of operators fixed and mobile telephony in Brazil. The company consolidated Oi /BrT the participation of the cellular revenue would have been 17.4%.
The operator formed by the Oi/BrT would be the 4th mobile operator in Brazil with 18.5% of market share.
It will not be an easy task to reduce the distance that separates it from the other operators.
Oi/BrT ended the 1st quarter of 2008 (1Q08) with 23.3 million cell phones, 7.9 million lesser than Claro, placed third with 31.2 million cell phones.
Oi/Brt will have to take the next 2 years, while the growth of cellular is still accelerated in Brazil to grow more than other operators. When the market reaches a stage of low growth will be more difficult to gain market share.
Oi seems to be aware of this challenge. It started the year more aggressively as the other operators and led the growth of cellular net adds in the 1Q08 with 1.3 million cellulars.
With the entry into operation in São Paulo, Oi/BrT will also have national coverage and will be able to dispute this market an equal basis with Vivo, Tim and Claro.
The main advantage of Oi/BrT regarding Vivo, Tim and Claro is the fact it has integrated the various services in a same operator (cellular, fixed telephony, broadband). This corporate configuration may facilitate the provision of convergent services and leverage its presence in the cellular market.
As disadvantages can be the fact of it being the 4th operator to enter the market in the region of BrT and in Sao Paulo. Oi, although being leader in the region I, had in 4Q07 an ARPU of $ 22.7, below the average of Brazil (R$ 30.0).
Oi is coming too late for the launch of 3G in Brazil what to put at a disadvantage in winning customers from higher ARPU.
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