01/04/2011
What to monitor in 2011
There is an optimist climate in the telecom sector over 2011. According to the public opinion poll carried out by Teleco, 72% expect 2011 to be better or much better than 2010.
2010 was already better than 2009. Another public opinion poll showed that 71% considered 2010 to be a great/good year, it was more than the 50% registered about 2009. Almost the same percentage was reached about 2008 (73%) and 2007 (69%).
The growth presented by the segment in 2010, the new competitive scenario by the merger of Vivo and Telefonica's fixed and mobile operations, besides América Móvil group's merger (Claro, Embratel and Net), the entrance of Portugal Telecom into Oi and the beginning of Nextel's operations in the cellular market, reinforce this scenario.
The following shows the 10 main trends to be monitored along 2011:
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- Accesses will continue to grow. Cellular, Pay TV, broadband (fixed and mobile) will continue to increase in 2011. On the other hand, fixed telephony is likely to remain stable, with incumbents' accesses being replaced by CLECs' (Embratel/Net and GVT), those are based in VoIP and Wireless technologies.
- Cable TV Liberation. By the end of the restrictions to obtain license to provide Cable TV will enable the current fixed telephony operators to amplify their Pay TV offer with triple play packages. Anatel made progress in process in 2010, but the Brazilian Senate still have to approve the PLC 116 (former PL 29) to end restrictions on foreign ownership in cable TV.
- Expansion of optical fiber network. Cable TV liberation will enable investments in high speed broadband networks based in optical fiber (FTTH, FTTN, ....). These networks may also be used by to connect cell sites that are part of the mobile operators' 3G coverage.
- Merger of fixed and mobile operators. The merger of Vivo with Telefonica and América Móvil group's (Claro, Embratel and Net) is likely to happen in 2011. The new integrated operators may search, in the beginning, the reduction of operational costs and improvement of investments, and after that focus on the offer of integrated services.
- National Broadband Plan. By the beginning of a new Brazilian Government, may bring some progress to the discussions about the National Broadband Plan setting targets, investments and the operators' role in this process as well as Telebrás'.
- Drop in the minute price in mobile telephony. The competition between mobile operators have been followed by more aggressive promotions launched by carriers. The average net revenue by user (ARPU) fell from R$ 24.1 in 3Q09 to R$ 22.8 in 3Q10. Meanwhile the minutes used monthly by cellular user increased from 88 minutes to 113 minutes. The average minute price (with taxes) fell from R$0.34 in 3Q09 to R$0.24 in 3Q10. This trend may be kept in 2011, leaving to operators only the option to invest in data services to avoid ARPU drop. Currently the fall in the price per minute happens mainly for calls inside the operator's network. The trend points out, however, that this drop will be extended to calls to other carriers, with fall in interconnection taxes.
- Growth in operators' data revenue. The participation of data revenue in mobile operators' gross service revenue increased from 12.8% in 3Q09 to 16.2% in 3Q10. The growth is likely to continue in 2011, being driven by Vivo which is leading this process with its data revenue representing 21.7% of the gross service revenue in 3Q10.
- Expansion of 3G/mobile broadband. Mobile broadband may continue to show strong growth in 2011. Vivo wants to expand its coverage to 51% of the Brazilian cities in 2011 and Nextel will start to operate its 3G network. In 2011, Anatel will carry out the auction of frequencies of 2.5 GHz that will be used by LTE introduction in Brazil.
- Smartphones growth. The growth of 3G networks promotes smartphones sales which make possible a better use of the value-added services such as email and internet access through cell phone. Smartphones represent 24% of the cell phones sold in the world in 3Q10. The launch of new models may continue in 2011 including other devices such as tablets (iPad) and e-readers (Kindle).
- Mobile Virtual Network Operators (MVNO). After having its regulation approved by Anatel, the first MVNOs in Brazil are likely to appear in 2011. Big brands, such as Carrefour, are the main candidates. GVT may also launch its MVNO.
For 2011, we don't expect great changes in the Brazilian competitive board. Movements may occur from TIM due to shareholder changes at Telecom Italia.
You could ask:
- In 2011, will Brazil come up with a National Broadband Plan capable of overcome the existing gap in the country?
- Will operators increase their current 3G coverage?
- Will there be growth in the implementation of optical fiber networks, including in FTTH offer?
- Will the new carriers make convergent offers?
- What will happen to Tim in 2011?
- Will MVNOs arrive in Brazil in 2011? Which companies will be the candidates?
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