06/02/2013

Will the participation of Prepaid resume growth in Brazil?

 

The participation of prepaid in the total of mobile accesses in Brazil dropped to 79.8% in April/2013, against 81.8% in one year.

 

 

This dropp in prepaid participation happened due to the fall in month net adds inside this segment, which since Jun/12 are below 1 million.

 

 

The adjustments promoted by operators in their prepaid client basis have affected net adds inside this segment, that goes thorugh an accommodation phase after a long period of strong growth.

 

Since Jul/12, it's possible to observe operators getting negative net adds in the month, like shown below.

 

 

 

Prepaid Net Adds

 

Thousands	May/12	Jun/12	Jul/12	Aug/12	Sep/12	Oct/12	Nov/12	Dec/12	Jan/13	Feb/13	Mar/13	Apr/13
Vivo	50	8	281	28	-0	-852	-516	-148	-556	-107	-202	-19
TIM	375	242	-368	530	112	-125	-19	656	167	32	449	65
Claro	831	405	126	79	207	448	313	696	221	403	98	-382
Oi	316	57	-319	67	202	260	380	-372	38	4	-129	138
Outras	4	14	15	-3	-7	-13	-0	4	22	34	34	31
Total	1.575	726	-266	700	514	-283	158	837	-107	366	250	-168

 

It's possible to find signals of adjustments of clients base in all operators:

• Vivo, which reduced the time to turn off inactive prepaid accesses of its base to 50 days went through a long period of accomodation in its base that seems to be close to an end. In April, net adds were close to become positive again (-19 thousand).
• TIM registered negative net adds in Jul/12 (-368 thousand), Oct/12 (-125 thousand) and Nov/12 (-19 thousand). In 2013, showed reduced net adds in February (32 thousand) and April (65 thousand).
• Claro, which is leading prepaid net adds in the last 12 months, presented negative net adds in April (-382 thousand). The adjustment occorred mainly in São Paulo with net adds of -257 thousand prepaid subscribers in Apr/13.
• Oi got negative net adds in Jul/12 (-319 thousand), Dec/12 (-372 thousand) and Mar/13 (-129 thousand).

These adjustments in clients base may continue to exist in the coming months, with less intensity though. Adjustments have positive impact in indicators of ARPU, MOU (minutes of use) and in the reduction in the value paid for fiscalization taxes (FISTEL). It drives, however, to growth in operators churn.

 

 

The adjustement made by Claro in Apr/13, for example, will drive to growth of churn in 2Q13, but may contribute to improve ARPU and MOU.

 

Finally, the reduction of prepaid growth doesn't mean that this segment is starting to be less important for operators.

 

Claro's prepaid revenue, for example, represented 23% of its services net revenue in 2012. This participation is even bigger when considered interconnection revenues relative to this segment.

 

 

You could ask:

• Will participation of prepaid resume growth in Brazil?
• Should operators adopt a uniform criteria to turn off prepaid accesses?
• What's prepaid importance for mobile operators in Brazil?

 

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