When will Oi get to grow again?
By Eduardo Tude
Oi's revenue (counting the last four months) is falling since the second quarter of 2010.
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The revenue of these four quarters until 3Q11 (R$ 44.3 billion) was R$ 2.0 billion smaller than the revenue registered in the four quarter until 3Q10 (R$ 46.3 billion).
The growth in the revenue of mobile, data and other services isn't enough to make up for the drop in fixed telephony revenue.
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It's the opposite of what happens with Telefônica and América Móvil Groups (Claro, Embratel and Net), fixed telephony revenue still represents about 50% of Oi's total revenue.
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Besides, Fixed telephony revenue presented reduction of 11.2% when we compare the last four quarters with the four quarter before. In this period mobile revenue increased 6.8% and fixed data/others 2.0%.
If these rates remain constant in the next years, Oi's total gross revenue will resume growth only in 2018.
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Note: Annual revenue growth of -11.2% in fixed telephony, 6.8% in mobile and 2% in data/others.
In order to change this climate Oi will need to increase more in broadband/pay TV and reduce the erosion rate in its fixed telephony revenue.
Telefônica's revenue (without Vivo), for example, dropped only 1.0% in 2010. The revenue of data/other services increased 8.1% and the erosion in its fixed telephony revenue hit 3.4%.
Increasing in broadband and pay TV isn't enough for Oi. If Oi's revenue of data/other services grow, in the next years, 6.8%, like it happens in cellular, the growth of total revenue will become positive in 2015, not in 2018 as the previous scenario indicated.
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Nota: crescimento anual da receita de -11,2% na telefonia fixa, 6,8% no móvel e 6,8% em dados/outros.
Para ter um crescimento positivo da receita em 2012 a Oi precisará também reduzir a taxa de erosão da receita da telefonia fixa.
A figura a seguir apresenta um cenário com a erosão da receita de telefonia fixa reduzida para -6,0%.
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Note: annual revenue growth of -6.0% in fixed telephony, 6.8% in mobile and 2% in data/others.
These scenarios are a sample of the challenges that Oi must to face while defining its strategy for the next years.
The operator needs to increase cellular, broadband and pay TV revenues, but reducing the erosion in its fixed telephony revenue is the most important part of the puzzle. It isn't an easy task. The trend points out to a fall in the main items that form Oi's fixed telephony revenue.
| Oi 's gross revenue | ||
| Accumulated 4Q10 to 3Q11 | R$ Million | Growth* |
| Local (Fixed - Fixed) | 11,668 | -9.6% |
| Fixed Mobile Local (VC1) | 3,610 | -12.0% |
| Long Distance (Fixed and mobile) | 3,934 | -12.7% |
| Fixed Mobile (VC2/3) | 1,026 | -20.7% |
| Network Usage | 923 | -5.7% |
| Pay Phones | 374 | -36.9% |
| Additional Services/Advanced Voice | 1,317 | -2.1% |
| Fixed Telephony | 22,853 | -11.6% |
*about the last four quarters
The board becomes more complex next year by the liberation of cable TV licenses what may increase the competition not only in pay TV, but in broadband in fixed telephony. Oi will have to invest in high speed broadband in order to increase revenue inside this segment and reduce client loss in fixed telephony which happened due to other companies' services packages.
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