Until when will Vivo continue to gain postpaid market share?
Mobile results in Jul/14 show, again, that Vivo is the leader in postpaid net adds, answering for 52% of the net adds inside this segment.
In the end of 2007, Vivo's leadership inside the postpaid segment was threatened by TIM. Vivo had 30.3% of the market and TIM had 29.0%, difference of only 1. percentage points.
In Jul/14, this difference between the market share of both companies in postpaid had increased to 22.2 percentage points.
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In 2008, Claro threatened Vivo's postpaid leadership. Vivo had an advantage of 2.6 percentage points over Claro. In Jul/14 this difference had increased to 18.0 percentage points.
Vivo ended Jul/14 holding 41.3% of the postpaid market share, and if the current trends are kept, the company may end the year having market share of about 43.0% inside this segment.
How to explain Vivo's performance in postpaid?
Vivo's success inside postpaid segment can be explained by its brand, which was associated to service of good quality and to its leadership in 3G and 4G coverage.
M2M terminals also contributed to this leadership, which represented 11.4% of Vivo's postpaid accesses in Jul/14. Vivo's postpaid market share was, however, a bit bigger if we exclude M2M terminals (42.8%).
Other point is that Vivo decided to focus on postpaid growth instead of prepaid, focusing on profitability and on other operation indicators.
Vivo was the market share leader inside prepaid segment until 2012, when the carrier lost this leadership to TIM. In Jul/14 its market share in prepaid reached 25.0%, getting behind Claro (25.4%) and TIM (29.3%).
The reduction of the time to turn off inactive prepaid accesses contributed to the reduction of Vivo's prepaid base. After this phase of base adjustment, Vivo's market share loss inside this segment started to be affected by the strategy about encouraging migration of clients from prepaid to postpaid control plans.
The focus on postpaid is justified. After all, Vivo's postpaid ARPU in 2Q14 (without M2M) reached R$49.1, against R$ 12.1 registered in prepaid segment.
This strategy has helped Vivo to avoid the drop of its ARPU while it continues to drop at other operators.
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Note: ARPU is the monthly average net revenue per user.
Until when will Vivo continue to gain market share in postpaid?
Mobile growth in Jul/14 repeated the trends observed in the previous months. Prepaid presented negative net adds (- 43 thousand accesses) and postpaid (+ 490 thousands) continued to be responsible for the mobile growth in Brazil.
Vivo led postpaid net adds.
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And TIM was the leader in prepaid net adds.
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