12/29/2008

Assessment (anticipated) of 2008: A great year for the sector

*by Eduardo Tude and José Luis de Souza

The year is finishing, it's time to evaluate results. In the following, we present an antecipated analysis of the relevant aspects of 2008.

 

2008 was a great year for the telecommunication sector in Brazil. In a survey carried out by Teleco, 73% considered 2008 a very good/good year, against 69% in 2007 and 43% in 2006.

 

The main services presented growth (Net Adds) superior than the ones gotten in the two previews years.

 

 

Note: The data of 2008 is Teleco's projection

 

Cellular had a record growthin 2008, surpassing 2007 in all the months between January and November.

 

 

 

 

The competion got stronger between the four main operators (Vivo, Claro, Tim and Oi) and was responsible for this growth:

• Vivo got back on growth track with GSM and consolidated its leadership in market share by the acquision of Telemig. The company is completing its national coverage by starting to operate in States in the Northeast.
• Claro overcame Tim and reached the second position in the Market Share ranking in Aug/08. Claro also reached national coverage by the beginning of its operation in the Northern region of the country.
• Tim remained in the competition during the year, even though it had lost stake in the second semester of 2008.
• Oi grew strongly in all the year by the minutes promotion with reduced prices from the "caller" campaign. This growth was accelerated in October by the beginning of its operations in São Paulo.

One of the consequencies of this competition was the growth in minutes promotions with reduced prices, or free, which led to a growth in the cellular use in Brazil. The average monthly minute use per client (MOU) jumped from 83 minutes in 3Q07 to 96 minutes in 3Q08.

 

Despite this competitive climate and the strong growth, operators kept their EBITDA Margins in levels higher than 20%.

 

In the fixed telephony, the indicator of "Fixed Accesses in Service" grew again due to actions taken by Embratel and GVT as well as the use of Wirelss and VoIP technologies (more details). Estimulated by this growth and by the number portability, Tim decided to enter in this segment through "Tim Fixo".

 

In broadband, Net continued to grow more than its competitors and overcame Oi and BrT in number of accesses. Telefonica started operations with optical fiber in the region of Jardins in São Paulo and in condominiums of high purchasing power. The fixed broadband providers area already feeling the competition of mobile broadband with 3G.

 

 

Highlights of the year

 

Besides the cellulars growth, also were on the spotlight:

• 3G finally was launched in Brazil and became already an alternative of broadband access. Claro was ahead and associated its brand to 3G. In the last months, Vivo accelerated the implementation of this service and now the company is competing with Claro for the leadership in quantity of covered cities (more details). In the 3G path, it's worth mentioning the lauching of iPhone 3G in brazil.
• BrT's purchase by Oi affected the climate creating a group with conditions to compete with Telefonica and with América Móvil/Telmex (more details). Announced in Apr/08, the trade was approved by Anatel in Dec/08. One consequence of this climate was the entrance of Oi in the cellular market in São Paulo.
• Number Portability started gradually in Sep/08, and in Dec/08 was available for 38% of the population. The first results show that it can be an important advantage for authorized companies of fixed telephony.

If these were the highlights, there were also segments which took pace in 2008, such as Digital TV, the Wimax and the changes in Pay TV that should have been regulated by PL 29.

 

You could ask:

• Was 2008 a good year for telecom in Brazil?
• What can we wait for 2009?
• Will the financial crisis affect telecom sector in Brazil?
• How is the new competitive climate going to be in 2009?
• Will Anatel carry out a new Wimax auction in 2009?
• Which will be the impact of the full Number Portability implementation?

Commentaries

 

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