Tim loses space in 2008 and focuses in profitability in 2009
Tim lost space in Brazil in 2008. Its market share fell from 25.85% in Dec/07 to 24.17% in Dec/08, losing the second position, in the Brazilian market share ranking, to Claro. The difference between both operators fell from 1.5 million in favor of Tim in Dec/07 to 2.3 million in favor of Claro in Dec/08.
Tim presented inferior net adds in comparison with Claro, Vivo and Oi in 2008, this tendency was repeated in Jan/09.
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Luca Luciani, new president of Tim in Brazil, declared that the operator is carrying out a cleaning on its cellular base, mainly among the prepaid cellulars, which might last all the first quarter of 2009. In fact, prepaid cellular stake in Tim is higher than the market average and is also bigger than its main competitor's.
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Another signal of this cleaning in the cellular base is the increasing churn presented by the company.
Tim also reduced its minutes promotions, what resulted in a fall in the company's monthly minutes of use (MOU) per cellulars in the 4th quarter of 2008 (4Q08).
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With this base cleaning, Tim is keeping its ARPU and reducing expendures with the annual tax of Telecommunication inspection, which goes to FISTEL, to be paid over each active cellular in March 31st 2009.
Tim intends to focus on profitability and presented in 4Q08 net profit of R$ 300 million and EBITDA Margin of 26.2%
This strategy might be, however, damaged if Tim starts to lose clients of bigger ARPU. Tim's prepaid cellular base decreased in 200 thousand lines in 2008, impacting operator's revenue growth.
In order to face this climate, Tim announced a relaunching plan with actions to recover its competitive position. Among these actions there are: a brand repositioning, a new mix of convergent service plans and 3G net expansion.
This plan is focused in the operator revenue growth, mainly since the second semester of 2009, and in the profitability rise. After all, that's what Telecom Italia aspects from Tim Brasil (more details).
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