Is the profitability of Telecom operators in Brazil high?
EBITDA margin, relation between EBITDA and net revenue, is one of the main indicators to evaluate the profitability of a company.
EBITDA is gotten deducting the costs and operational expenditures from the net revenue.
It represents the generation of the company's cash before the consideration of revenues/financial expenditures, tax income and social contribution. it also doesn't considers depreciation, amortization and patrimonial equity.
The average EBITDA margin of Telecom operators in Brazil has remained in about 30% over the last years.
GVT, company that provides fixed services (fixed telephony, broadband and pay TV) and is focused in markets with higher purchase power, is the only operator to present EBITDA margin superior to 40%.
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Telefônica and Oi have got EBITDA margin higher than the Brazilian average, superior to 30%. On the other hand the EBITDA margin registered by TIM and América Móvil in Brazil (Claro, Embratel and Net) was didn't reach 30%. A possibility of merging these three companies that form América Móvil in Brazil can improve its profitability and increase EBITDA margin. TIM is the only carrier to have more than 90% of its revenue gotten from mobile service.
How can we compare the EBITDA margin gotten by operators in Brazil with other operators' in the world?
The EBITDA margin got by Groups controllers of the main Telecom companies operating in Brazil present EBITDA margin between 34% and 36% in 2012, dropping in the last 2 years. The exception was Vivendi, which held EBITDA margin oscillating between 18 and 20% and revenue isn't exclusively from telecom.
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Note: Portugal Telecom is Oi's shareholder not controler.
EBITDA margin of the main integrated operators (fixed and mobile services) in countries that are more developed in the offer of high speed broadband (United States and Korea) is still low.
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These examples show that EBITDA margin superior to 40% aren't the rule inside big Telecom operators anymore. These margins are only found in carriers that have big market share in the area where they provide services, such as Telcel in Mexico (70% of the cellular market share) with EBITDA margin reaching 45% in 2012.
Despite of the importance, EBITDA margin isn't the only form to evaluate the profitability of a company. Between others, we can name profit/net revenue.
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