Average price of cellular minute fell 41% in two years in Brazil
By Eduardo Tude
The competition between the four main cellular operators in Brazil led to a drop of 40.8% in the average price of the minute in the last two years. It fell from R$ 0.34 in 3Q09 to R$ 0.20 in 3Q11.
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Note: Average minute price in R$ with taxes dividing voice ARPU by MOU. It’s different than ARPM (average revenue per minute) which doesn’t include taxes.
TIM’s Infinity Plan, which costs R$ 0.25 by local or long distance on-net call, was the main issue to encourage this process. The success gotten by TIM (that became the leader in long distance minutes, overtook Claro in cellular market share and leads cellular growth in 2011) made other operators launch similar offers.
Prepaid Plans
| Operator | Plan |
On-net |
Other operators (by minute) |
For Fixed Tel. |
| TIM | Infinity |
R$ 0.25 by call |
R$ 1.39 |
R$ 0.50 by call |
| Claro | Fala mais Brasil |
R$ 0.21 by call |
R$ 1.12 |
R$ 0.50 by call |
| VIVO | Sempre |
R$ 0.05 by minute |
R$ 1.42 |
R$ 0.10 by minute |
Note: Oi offers minutes as bonus that cause the drop of on-net minute price to the levels of other carriers
In postpaid TIM also innovated by launching Liberty Plano that has unlimited minutes and established a trend that is being followed by Vivo and Claro.
Consequently the minutes used monthly on cellular in Brazil increased 38.4% in two years reaching 122 minutes in 3Q11.
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Note: Oi doesn’t release this data.
These plans are contributing to decrease the number of pay phones (TUP) as an option to make calls. Oi’s average gross revenue by pay phone dropped from R$ 92.0 in 3Q09 to R$ 22.0 in 3Q11 (-76% in two years).
The drop in cellular average minute price meant a decrease of 9% in cellular ARPU of Brazil, reaching R$ 24.0 in 3Q09 and R$ 21.8 in 3Q11.
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The drop wasn’t bigger due to the growth of data ARPU, mainly Vivo’s, in which data ARPU represented 23.4% of the total ARPU in 3Q11.
TIM and Claro felt with more intensity in their ARPU the drop of prices in voice minute. These operators are seeking to increase data revenue with plans costing R$ 0.50 by day for SMS or Internet.
Part of Oi's ARPU stability can be a result of less aggressiveness in promotions. The carrier holds the smallest growth in the last two years.
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Despite of the drop in the cellular average minute price in Brazil and the "death of long distance", by the fact that long distance calls and local call s are having the same price, voice communication in Brazil continue to happen in among tribes.
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The prices for cellular on-net and between fixed telephones are much cheaper than for cellular of other carriers. Despite of being a positive factor, the gradual drop of interconnection values paid to cellular operators (VUM) won't decrease substantially this difference. VUM is likely to fall from the current average value of R$ 0.427 to R$ 0.312 in 2014.
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