How to reduce mobile telephony cancellation rate in Brazil?
 |
In 2014, were added to the Brazilian mobile base:
+ |
131 million new chips sold by operators (gross additions) |
- |
122 million chips cancelled by users (cancellations) |
= |
10 million net adds |
In other words:
Despite of of the small reduction shown in 2014, cancellation rate (churn) continues to be high in all the carriers.
 |
| Monthly Churn | 2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
| TIM | 3.5% |
3.5% |
4.0% |
4.0% |
4.2% |
4.1% |
| Oi | 3.5% |
3.5% |
3.9% |
3.6% |
3.9% |
3.9% |
| Vivo | 2.5% |
2.7% |
2.8% |
3.5% |
3.8% |
3.7% |
| Claro | 2.9% |
3.2% |
3.9% |
3.8% |
3.4% |
3.3% |
| Total | 3.0% |
3.2% |
3.6% |
3.7% |
3.8% |
3.7% |
One of the factors for the high churn is the great presence of prepaid inside Brazilian mobile base.
Prepaid presents higher churn in comparison with postpaid. Vivo, for example, presented in 2014 monthly churn of 4.7% in prepaid and 1.6% in postpaid (without M2M). Other operators don't publish these information.
In fact, operators that have higher churn (TIM and Oi) are also the ones holding bigger prepaid participation inside their bases.
 |
The reduction of Brazilian churn in 2014 is associated to the drop in the prepaid participation inside the total of mobile accesses.
Analyzing what happened to Vivo in 2014 we observe the impact of the churn of each segment over operator's net adds.
| Vivo (million) |
2013 |
2014 |
||
Gross Additions (+) |
Cancellations (-) |
Net adds (=) |
||
| Mobile Accesses | 77.2 |
37.0 |
34.3 |
2.7 |
| Prepaid | 53.6 |
28.2 |
30.2 |
-2.0 |
| Postpaid without M2M | 21.3 |
7.6 |
4.1 |
3.5 |
| M2M | 2.4 |
- |
- |
1.1 |
While 53.7% of the postpaid sales made up for the cancellations, inside prepaid sales weren't enough to do the same due to the high churn.
Note that despite the smaller churn in postpaid, like Vivo's (1.6%), it's still bigger when compared with operators like Verizon and AT&T from the United States (average of 1.3%).
If Vivo had presented monthly churn of 1.3% in postpaid in 2014, its cancellations would have dropped and its net adds inside this segment would have increased from 3.5 million to 4.3 million.
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