The future of Net and Embratel
When Embratel was privatized in 1998 the long distance represented more than 70% of its total gross revenue, this situation remained until 2003.
Since 2004, local services started to have significant participation in Embratel's revenue. Contributed for this result, the acquisition of Vésper and, from which Embratel got "Livre" (wireless fixed telephony solution), and the partnership with Net (VoIP solution).
In 2009 (accumulated the first nine months), local services represented already 20% of Embratel's total gross revenue and long distance represented less than 50% of this total (47%).
Note: Embratel's total gross revenue includes also other services (4.2% in 2009)
In 2005, Embratel acquired equity at Net what brought benefits for both companies.
NetFone via Embratel allowed the consolidation of Net's triple play offer (Pay TV, broadband and fixed telephony in the same package).
We can observe in the graph above that the growth in Embratel's revenue happens due to, mainly, local service.
In the end of 3Q09, 78% of Net's pay TV subscribers had broadband and 69% had fixed telephone. We observe that at Oi only 19% of its fixed telephony subscribers had also Oi's broadband. This percentage at Telefonica reached 23%.
In 2010, with the approval of PL 29 and the liberalization of Pay TV services, a possible merger between Net and Embratel can consolidate a company to the status of competing with Oi and Telefonica as an equal in the broadband, fixed telephony and pay TV market.
Net had 51% of pat TV subscribers in 3Q09 and was the 2nd company in broadband, losing only for Oi. Embratel had the biggest optical backbone in the country and optical networks in the main capitals. The network formed by the union of these two companies can serve as base to the construction of a modern broadband network able to offer triple play packages in the whole country.
The competition may fierce in 2010. Besides Oi and Telefonica, Embratel and Net will have to face GVT. Vivendi, new GVT's controller, has strong presence in media and controls the main French pay TV company (Canal +).
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