Did Claro decide to focus on profitability in 2014?
Claro, which led mobile growth in Brazil in 2013, presented in the first quarter of 2014 (1Q14) reduction in its net adds that totalized 45 thousand mobile accesses.
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The drop occurred mainly inside the prepaid segment in which the operators showed negative net adds (-244 thousand).
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Claro's net adds reduction seems to be more associated with a reduction in sales (gross additions), that reached 2.2 million mobile accesses in 1Q14, than with a supposed cleaning inside prepaid base.
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Cancellations hit 2.2 million in 1Q14 and are close to the figure showed in 2013. Claro's churn of 3.2% in 1Q14 was slightly superior to 1Q13 (3.1%) and smaller than it was in 4Q13 (3.6%).
The strategy adopted by Claro can be part of a major effort made by América Móvil Group in order to improve its profitability in Brazil. In fact, Group's EBITDA Margin, that includes Claro, Embratel and Net, increased in 1Q14.
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Claro's ARPU is been kept stable in R$ 15.0 since 1Q13. In a scenario of low growth in the operator's cellular base, revenue growth starts to depend on the growth of data ARPU. One of Claro's advantages to seek this growth is the fact that the operator had already migrated 61.3% of its base to 3G.
If the trend observed since 4Q13 gets confirmed Claro will present annual growth in services net revenue close to the growth of mobile accesses inside the operator's base.
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Postpaid represented 40.7% of Claro's services net revenue in 2013 and prepaid 26.3%. Interconnection, which showed drop of 3.6% in the year due to the reduction of VUM, still represented 30.5% of Claro's services net revenue in 2013.
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