10/29/2012

What changes in operators strategy by the reduction of cellular growth rate in Brazil

 

by Eduardo Tude

 

The third quarter of 2012 (3Q12) may become the milestone for the Brazilian cellular market. The beginning of a news phase with smaller growth of the base, what can make operators review their strategies.

 

Net adds of 2.7 million mobile accesses in 3Q12 were the smallest since 1Q07. The growth of 1.07% is the smallest since Anatel started to report this information every month.

 

 

 

 

The drop in growth occurred mainly in prepaid, segment that presented net adds of 947 thousand cellulars and growth of 0.5% in the quarter.

 

The four main operators showed, in 3Q12, net adds very inferior in comparison with the figures gotten in 3Q11.

 

 

 

 

Postpaid, with net adds of 1.8 million and growth of 3.8% in the quarter, showed the better performance than prepaid, but it's also having smaller growth in comparison with 2011.

 

Oi has made the difference inside this segment, competing with Vivo for the net adds leadership, what didn't happen in 2011. The others showed drop in postpaid net adds when compared with 3Q12.

 

 

 

 

It's a fact that the punishment applied by Anatel, with the suspension of cellular sales, helped to reduce growth in July. However, the small growth continued in August and in September.

 

 

 

 

Teleco's poll pointed out that the high density is the main cause of the fall in cellular growth in Brazil along 2012.

 

 

 

 

No matter the cause, a scenario holding small growth drives to:

• Consolidation of the Brazilian market share board. It becomes difficult to gain m. share and overtake competitor.
• Necessity of finding new forms to increase revenue. It can't remain based on the growth of base and market share gain. The combination of low growth plus drop of voice prices leads to a fall in revenue, like occurred in other countries. Claro Brasil, for example, reported drop of 1.3% in its revenue of 3Q12, when compared with 3Q11, followed by drop in ARPU to R$ 15.0.

In front of this scenario, the option for operators would be to increase focus in increasing:

• Data revenue, which in the United States and Europe already represents more than 40% of the operators services revenue.
• Postpaid, as is already happening in 2012, mainly in the migration from prepaid to postpaid.
• Inside local areas with bigger potential of growth. In 3Q12, four local areas grew more than 4% in the quarter, among them are included the ones that have the following main cities: Coari - inside the state of Amazonas (6.2%), Picos - Piauí (5.6%), João Pessoa (4.1%) and Santarém (4.0%).
• MVNOs, which cover some market niches with lower subscriber acquisition cost and churn.

You could ask:

• How much cellular net adds will be counted in 2012?
• Is the smaller cellular growth a definitive trend? Why?
• What's the impact, for operators, of a smaller cellular growth rate?
• Why is postpaid having bigger growth in comparison with prepaid?
• How does the beginning of Nextel's operations in 3G can affect this scenario? What about the launch of 4G?

 

Send us your commentary!

Click on: teleco@teleco.com.br Please let us know if you authorize the publication of your commentary.   Note: The opinions expressed in the published articles in this section are their authors' responsibility.

 

 

• © 2025 Teleco    
• Legal Aspects
• Privacy
• Our Proposal
• Contact us