Should mobile operators continue to subsidize cell phone sales in Brazil?
Cell phone sales have been an option used by operators in order to conquer new clients. In Brazil, however, the participation of cell phone sales in carriers' gross revenue is increasing.
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Vivo, Claro, Tim and Oi's gross revenue with cell phones sales dropped from R$ 9.2 billion in 2005 to R$ 6.1 billion in 2010. The fall happened in all the operators.
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Anatel's rule, which in 2010 set as mandatory selling of unlocked handsets, contributed for this scenario making impracticable selling subsidized handsets for prepaid segment.
So carriers concentrated the sales of subsidized handsets in postpaid segment and, mainly, for corporative market reducing its cell phones stocks.
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Oi, which led the campaign for unlocking cell phones, stayed in a better position in this new scenario. The three other operators, international groups, acquired handsets for lower prices due to the fact that these companies have a global volume of cell phones to purchase.
However, the reduction of the subsidies for cell phones also helped to decrease operator's client acquisition cost.
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In 2005, these four companies spent R$ 6.6 billion in the acquisition of handsets. On that time, almost 100% of the cell phones sales were performed by the mobile operators. 35 million handsets were sold on that year in Brazil.
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In 2010 this scenario changed. Those same four operators spent R$ 4.4 billion for acquiring cell phones and about 57 million handsets were sold in the domestic market. In 2011, most of the cell phones in Brazil may be sold directly for costumers, without going through carriers' stores.
Mobile operators won't abandon completely cell phone sales. Selling subsidized handsets associated with a postpaid service or corporative plan is still a good option to conquer higher ARPU clients. The desire of possessing a sophisticated smartphone or a tablet will continue to be exploited by carriers, mainly for those that are focusing these segments, such as Vivo and Claro.
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