01/09/2014
What to follow in 2014
After two years registering regular performance (more details), Brazilian Telecom sector shows optimist climate about 2014.
According to the poll carried out by Teleco, 47% expect 2014 to be better or much better than 2013. The optimism, however, smaller than what was registered in polls carried out in the two previous years when this percentage reached 60% and 73%.
Below, we show the ten main to be followed in 2014. 4G, mergers and acquisitions are likely to be the hottest themes of the year.
- Will 2014 be the year of 4G technology?
- There big expectation about 2014 to be the year of 4G technology. Teleco estimates that the number of 4G mobile accesses in Brazil will jump from about 1 million in 2013 to 5 million by the end of 2014. Coverage may increase, but the price of 4G smartphones will still be an obstacle for a quick expansion.
- The auction of 700 MHz frequencies, planned to happen in 2014, may help to keep theme as hot.
- Mergers and Acquisitions may continue to call attention in 2014
- Telefônica and Telecom Itália
- Telefônica needs the approval from Anatel/CADE in 2014 to conclude the acquisition of Telco (Telecom Itália's controller). Depending of this approval is the conversion of Telco's stocks, acquired in 2013, into stocks giving the right to vote and the acquisition of the remaining stocks of Telco through an option given to Telefônica by other Telco's stakeholders. The deadline is Feb 15th, 2015.
- This authorization will be given by the Brazilian regulator agencies only if Telecom Itália gets committed to sell TIM Brasil. The first manifestation of CADE indicates that it will require this sale to be done to another company "which has experience in the sector and has no participation in any other telephony company in Brazil"
- Oi and Portugal Telecom
- In 2014 we may see the end of the process previewed to the merger of Oi with Portugal Telecom forming CorpCo having stocks negotiated in the new BM&FBOVESPA's market. Important steps are Oi's increase of capital and companies incorporations, simplification of stakeholders which can generate reaction from minority shareholders.
- Other operators
- Everything indicates that in 2014 will it happen the so expected consolidation of América Móvil's companies by merging Claro, Embratel and Net.
- The changes that happened at Vivendi, with assets sales and SFR's spin-off, make uncertain the future of GVT in the Group. The alternatives continue to be open the capital or sell it.
- This will be a decisive year for Nextel. If the company doesn't manage to get signs of recovery it may be acquired by other operator.
- The World Cup will set focus on the services provided by Brazilian Telecom companies, mainly inside the stadiums and places gathering a lot of people to watch the matches, where accesses to data services (messaging, Facebook, video,..) are more and more required by users.
- After the approval of the regulation the scenario is set to mobile payments spread in Brazil in 2014. The solution is mature, partnerships are being made and mobile payments start to gain room in the world.
- 3G are likely to continue to advance in order to become the main mobile technology in the country. GSM handsets still represented more than 60% of the devices in 2013, but they can be overtaken by 3G cell phones in the end of 2014.
- Postpaid may keep the two digit growth in 2014, getting benefit from the migration of clients from prepaid plans to controlled plans and from the growth of data services.
- Growth of operators' data revenue
- By the drop in fixed voice revenue and mobile voice showing low growth, operators start to rely on data to increase revenue. This scenario justifies the heavy investments to build a news infrastructure for mobile and fixed broadband.
- The focus in data service has driven operators to encourage smartphones sales, which overtook common cell phones in 2013. The competition between suppliers may continue to be strong in 2014, with Nokia, now Microsoft, in better position to face Samsung and Apple.
- Growth of fixed broadband and pay TV
- More than 50% of the broadband accesses in Brazil had speed superior to 2 Mbps by the end of 2013. This percentage is likely to increase in 2014 by the advance of high speed networks. The growth in number of accesses may, however, keep the same pace of the previous years. The same goes to pay TV which, after a period of strong DTH growth, starts to have a slower performance and contribution of cable TV, stimulated by new SeAC authorizations.
- Revision of concession contracts
- A revision of the Concession Contracts for Commuted Fixed Telephony Service, to the period 2016-2020, may become effective in Dec/2015. Anatel started the discussion through one public consultation about themes like universalization, pay phones, quality and long distance.
We have to register also the discussion about Civil Rights Framework for the Internet, which is in the Brazilian Congress, and the change of internet address to IPV6, can become a hot theme if it present problems during transmission.
There are some themes that aren't among the hottest but still deserve attention having potential to become important in the coming years. They are: MVNO, Femtocell, M2M and PGMC.
You could ask:
- Will the year be good for the Brazilian telecom sector?
- Will 2014 be The year for 4G?
- Will Telefônica get the control over Telecom Itália?
- How will be the performance of telecom operators during the World Cup?
- Will 3G become the main mobile technology in Brazil?
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