teleco.com.br

12/03/2013

Vivo, Claro and Oi are cellular leaders in 3Q13

In the 3rd quarter of 2013 (3Q13), Vivo led in four of the seven mobile indicators monitored by Teleco. Claro was the leader in two and Oi in one.

Indicator		Leaders in
Indicator		1Q13	2Q13	3Q13
Mobile Accesses	Market Share	Vivo	Vivo	Vivo
Growth	Net Adds	Claro	TIM	Claro
Revenue	Net Revenue	Vivo	Vivo	Vivo
Revenue by Client	ARPU	Vivo	Vivo	Vivo
Profitability	EBITDA Margin	Vivo	Vivo	Oi
Quality	Complaints to Anatel	Vivo	Vivo	Vivo
Coverage	Covered Population	Claro	Claro	Claro

Note: The order doesn't reflect the importance of the indicators. CTBC and Sercomtel weren't included in this analysis.

Since 2007, Teleco monitors operators performance in Brazil measuring through these seven indicators.

Since 1Q13, quality started to be evaluated through the indicator of complaints in Anatel. In April/2012, Anatel suspended the report of the incicators about accomplishment of quality targets by carriores.

The following shows the result for each of these indicators in 3Q13.

Market Share: Vivo leads, but loses market share in prepaid

Vivo, the biggest mobile operator in Brazil, ended 3Q13 counting 76.6 million mobile accesses and market share reached 28.56%.

Claro was the only one to show growth in 3Q13's market share.

-	Market Share							Market Share Variation (percentage points)
-	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13	p.p. (QUA)	p.p. (3Q13/3Q12)
Vivo	29.81%	29.56%	29.67%	29.08%	28.78%	28.67%	28.56%	(0.11)	(1.11)
TIM	26.80%	26.89%	26.81%	26.87%	26.98%	27.17%	27.17%	0.00	0.36
Claro	24.56%	24.58%	24.51%	24.92%	25.11%	25.01%	25.14%	0.13	0.63
Oi	18.53%	18.65%	18.69%	18.81%	18.74%	18.71%	18.64%	(0.07)	(0.05)

Vivo kept the market share leadership in two regions, in 11 of the 27 states (including Brasília) and in em 28 of the 67 area codes .

-	Líder em Market Share no 3T13
-	Region	States	Area Codes
Vivo	II e III	11	28
Claro	-	8	18(+1)
Tim	I	7(+1)	17
Oi	-	1 (-1)	4(-1)

*Including Brasília

In 3Q13, TIM conquered from Oi the market share leadership in Paraíba, which is also one area code (83), but lost to Claro the leadership in area code 49 (Chapecó - SC).

Vivo's market share loss occurs inside the prepaid segment due to the adoption of a more restrict rule to turn off prepaid inactive accesses when compared with other operators and an effort in migrating its base to postapid. Kept the current trends, Vivo can be overtaken by Claro in prepaid market share in this year.

Prepaid	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
TIM	28.1%	28.1%	28.1%	28.3%	28.5%	28.8%	28.8%
Vivo	28.3%	28.0%	28.0%	27.2%	26.7%	26.3%	25.8%
Claro	23.7%	24.0%	24.1%	24.7%	25.0%	25.0%	25.3%
Oi	19.6%	19.6%	19.5%	19.5%	19.4%	19.6%	19.7%

In postpaid, Vivo continues to amplify its market share leadership.

Postpaid	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
Vivo	36.5%	36.6%	36.9%	36.9%	37.1%	37.8%	38.9%
Claro	28.2%	27.0%	26.2%	25.7%	25.5%	25.1%	24.4%
TIM	21.2%	21.3%	21.1%	21.0%	20.8%	20.8%	21.0%
Oi	13.6%	14.5%	15.3%	15.8%	15.9%	15.3%	14.7%

Growth: Claro resumes the leadership in net adds

Claro led growth in the quarter, followed by TIM and Vivo.

-	Net Adds (Thousands)
-	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
Claro	1,217	1,370	481	1,791	1,070	164	960
TIM	3,134	1,656	535	935	856	963	697
Vivo	3,230	936	1,086	(668)	(150)	212	415
Oi	986	1,302	604	862	256	215	305

Net adds of 2.5 million mobile accesses of 3Q13 were the highest registered in 2013.

Claro led after having presented good performance inside the prepaid segment.

Vivo led postpaid by holding net adds superior to what was registered by the three other operators altogether inside this segment, but presented negative net adds of 1,039 thousand prepaid accesses.

Net Revenue: Vivo lead growth in the quarter

Vivo remained in the leadership by registering revenue of R$ 5.7 billion in 3Q13 and growth of 3.6% in comparison with 2Q13.

R$ million	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13	Qua Growth	Growth 3Q13/3Q12
Vivo	5,106	5,128	5,341	5,823	5,636	5,540	5,739	3.6%	7.5%
TIM	4,187	4,269	4,495	4,821	4,515	4,756	4,912	3.3%	9.3%
Claro	3,106	3,002	2,957	3,141	3,019	3,102	3,164	2.0%	7.0%
Oi	2,016	2,160	2,197	2,372	2,254	2,150	2,179	1.4%	(0.8%)

Note: Vivo's revenues don't include "Vivo Fixo" plan interconnection revenue. Claro's revenue doesn't include long distance.

TIM showed the biggest growth when comparing 3Q13 with 3Q12.

Mobile operators revenues are suffering the impact of the VUM reduction promoted by Anatel.

ARPU: Vivo amplifies ARPU leadership

A more adjusted base, with restrict rules to turn off prepaid inactive accesses, contributed to the growth of Vivo's ARPU.

ARPU (R$)	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
Vivo	22.4	21.9	22.2	23.9	23.1	22.8	23.6
Oi	21.3	21.4	22.2	21.5	20.5	20.0	20.5
TIM	19.1	18.3	18.9	19.9	18.5	18.1	18.6
Claro	17.0	16.0	15.0	16.0	15.0	15.0	15.0
ARPU Brazil	20.0	19.4	19.5	20.4	19.3	19.0	19.5

Vivo's data ARPU (R$ 7,7) represented 32.4% of the total ARPU (R$ 23.6) in 3Q13.

ARPU values informed by operators aren't comparable because companies use differente methods to determine them:

Vivo and TIM include long distance revenues. Oi and Claro include only interconnection (VUM) associated to these calls.
Vivo doesn't include revenues from the own group, like interconnection of mobile-fixed calls made with "Vivo Fixo" plan. Oi and Claro include these revenue in ARPU.

The minutes used by client per month (MOU), Brazil presented small drops in the quarter.

Minutes	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
TIM	126	127	139	150	145	148	150
Claro	105	107	122	126	121	119	133
Vivo	114	116	123	128	123	116	114
MOU Brazil	115	117	128	135	130	128	127

Note: Oi doesn't report this indicator.

Profitability: Oi leds EBITDA Margin

Oi led EBITDA margin in the quarter due to the drop in the performance registered by Telefônica/Vivo Group in this indicator due to an increase in commercial expenditures.

Since 4Q12, operators are showing smaller EBITDA margin. In this quarter, OI got to recover from the drop presented in 2Q13 due to an increase of costs and expenditures with allowance for doubtful accounts.

EBITDA Margin	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
Oi	29.7%	31.0%	31.1%	33.3%	30.5%	25.4%	30.1%
Telefônica/Vivo	34.2%	37.5%	34.4%	43.3%	32.1%	30.3%	27.6%
TIM	26.3%	26.7%	25.5%	28.4%	25.9%	24.9%	24.6%
América Móvil	26.1%	24.0%	24.1%	20.7%	24.6%	23.3%	22.3%

Note: In 2Q11, a modification was made in the criteria to determine the profitability of the indicators calcullated by TELECO, starting to conside group's EBITDA margin gathering mobile and fixed operations. It was necessary to make this modification because Vivo, Claro and TIM only report this indicator this way.

Quality: Vivo leads

In 1Q13, quality started to be evaluated through the indicator of complaints reported made to Anatel. In April 2012, Anatel suspended the report of the indicators showing the accomplishment of quality targets by operators.

Vivo and TIM presented the smallest quantity of complaints by 1000 accesses during the last three months until Jul/13. When this commentary was written, Anatel hadn't reported this indicator for Aug and Sep/13 yet.

Anatel started to report the accomplishment of these quality indicators in all the Brazilian cities.

Coverage: Claro continues to lead

Claro kept the leadership in covered population (91.3%), conquered in 4Q12.

	Covered Population
Operator	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
Claro	90.6%	90.6%	90.6%	91.2%	91.3%	91.3%	91.3%
Vivo	90.7%	90.7%	90.8%	91.0%	91.1%	91.1%	91.1%
Tim	89.6%	89.6%	89.8%	90.7%	90.8%	90.8%	90.8%
Oi	87.9%	87.9%	87.9%	87.9%	87.9%	88.2%	88.2%

Source: Anatel

However, Vivo continues to lead in the number of covered cities.

	Covered Cities
Operator	1Q12	2Q12	3Q12	4Q12	1Q13	2Q13	3Q13
Vivo	3,704	3,705	3,713	3,733	3,753	3,754	3,754
Claro	3,568	3,568	3,568	3,629	3,634	3,635	3,635
TIM	3,212	3,212	3,237	3,351	3,357	3,357	3,357
Oi	3,316	3,316	3,316	3,316	3,316	3,316	3,316

Vivo is the leader in 3G coverage, reaching 3,132 cities in 3Q13, followed by Claro (1,480), TIM (925) and Oi (888).

You could ask:

Will Vivo recover the leadership in EBITDA margin along the next quarter?
How will ARPU and MOU evolve in 4Q13?
Wil Claro overtake Vivo in prepaid market share?
Can Nextel's 3G affect this scenario?

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.

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