2013 Brazil - Telecoms, Mobile, Broadband and Forecasts

Publication Overview

A lot is happening in Brazil, as the country gets ready for the FIFA World Cup in 2014 and the Summer Olympic Games in 2016. This annual report provides a comprehensive overview of trends and developments in Brazil’s fixed-line, mobile, broadband, and pay TV sectors. Subjects include:


  • Market and industry analyses and overviews;
  • Facts, figures, and statistics;
  • Government policies affecting the telecoms industry;
  • Telecom infrastructure;
  • International satellites and submarine fibre optic cables;
  • Major players, revenues, subscribers, mobile ARPU;
  • Fixed broadband (ADSL, cable modem, WiFi, WiMAX, TDD-LTE, FttH, BPL);
  • Internet and VoIP;
  • Convergence and triple play solutions;
  • Pay TV market;
  • Mobile voice and data markets;
  • Next generation mobile (3G, 4G, mobile broadband, LTE);
  • Scenario forecasts for the fixed-line, mobile, and broadband markets for the years 2015 and 2020. 

Key developments:

Brazil’s telecom revenues are expected to reach R$234 billion (US$117 billion) in 2013; Anatel has identified five SMP operators in the fixed-line sector (Vivo, Oi, Embratel/Net, CTBC, Sercomtel) and four SMP operators in the mobile sector (Oi, Claro, TIM Brasil, Vivo); mobile companies had to submit investment plans to lift a sales ban imposed by Anatel; Spanish firm IslaLink has been chosen to build the ACSea section linking Brazil and Europe; Oi has completed a company reorganisation to simplify its shareholder structure; the auction rules attached to the 4G licences include significant rollout obligations; in the provision of 3G/UMTS services, Claro is the market leader and is well ahead of its competitors; Nextel is gradually rolling out full 3G services in São Paulo and Rio de Janeiro; Brazil’s National Broadband Plan proceeds slowly but surely, with more than 1.2 million users connected in 2,300 municipalities; four operators have launched FttH services (Vivo, Oi, GVT, and TIM Brasil); international WiFi provider Vex has been bought by Oi and rebranded Oi WiFi; Brazil’s online sales escalate, driven by social commerce (s-commerce); Brazil is the world’s second-largest consumer of Twitter; América Móvil’s Embratel has gained control of Net; Net has ambitious expansion plans, having been authorised to provide services nationwide; Sky Brasil’s new shareholder agreement has been approved by Anatel; Via Embratel satellite TV service has been rebranded Claro TV; Vivo TV has absorbed TVA, having acquired 100% of the company.

Companies covered in this report include:

Oi, TelefônicaBrasil/Vivo, TIM Brasil, Claro/Embratel/Net Serviços, GVT, Nextel Brasil, Algar/CTBC Telecom, Sercomtel, Unicel/Aeiou, Porto Seguro, Datora Telecom, Virgin Mobile, Sisteer, Terapar, Sky Brasil, Universo Online (UOL), Neovia

Researcher:- Lucia Bibolini
Current publication date:- March 2013 (12th Edition)

Executive Summary

Brazil ramps up its telecom services ahead of the 2014 FIFA World Cup

BuddeComm’s yearly update of Brazil - Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Brazil, including the regulator’s statistics, company data, and other industry indicators to end-2012, as well as estimates for 2013 and expected market developments in the coming years.

Economic climate

For Brazil, 2012 was a disappointing year, with GDP growth well below expectations. The sluggish result has been blamed on the unfavourable global environment. The only sector that grew in 2012 was services; industrial and agricultural activities both shrank. Investments in 2012 were down 3.6% – and yet, paradoxically, domestic consumption rose by 3.1%, buoyed by a general sense of optimism. To revive the economy, President Dilma Rousseff adopted a series of measures to help spur much needed investment.

Investment opportunities

With the upcoming 2014 FIFA World Cup and 2016 Olympic Games being held in Brazil, operators are rushing to roll out new technology such as LTE and FttH networks. The Brazilian government has issued a law offering tax breaks for new telecom investments in networks that support access to fixed or mobile broadband. Companies wishing to secure the tax breaks must submit their network projects to the Communications Ministry by 30 June 2013.

Competition

The asymmetric measures introduced by the General Competition Plan in November 2012 are a significant step in the Brazilian telecom environment. The regulation of network unbundling and controlled wholesale prices should pave the way for a more competitive broadband market. The General Competition Plan requires operators with Significant Market Power (SMP) to share their networks and infrastructure with small or new service providers, at reference prices approved by Anatel.

Fixed/mobile consolidation

Fixed/mobile consolidation is reshaping Brazil’s telecom industry. Telefónica operates through Telefônica Brasil, which has integrated its fixed-line and mobile services under the brand name Vivo, previously only used for its mobile business. The América Móvil group in Brazil comprises long-distance incumbent Embratel, mobile operator Claro, and cable TV provider Net Serviços. The group has started to integrate its fixed and mobile services under the brand name Claro – which likewise was previously used solely for mobile services. Oi offers all fixed line and mobile services under the Oi brand name.

Fixed-line market

Brazil’s fixed-line teledensity is slightly higher than average for South America, and the number of fixed lines continues to grow – but ever so slowly; teledensity has gone up by only one percentage point in six years. The two regional incumbents Oi and Vivo control 43% and 24% respectively of the country’s fixed lines in service, but they mostly keep to their own regions of operations despite the lifting of geographical restrictions. While their basic telephony services have been losing customers, the Claro/Embratel/Net group and GVT have been steadily increasing their local market share (respectively to 22% and 8%). GVT is the country’s most successful alternative network provider, offering fixed-line services only.

Mobile market

Brazil is home to more than one third of all mobile users in Latin America and the Caribbean. Mobile penetration is upward of 132% and still growing. Thanks to the rules attached to the 3G licences auctioned in December 2007, which required operators to extend services to all towns and municipalities with no mobile coverage, Brazil managed to achieve mobile coverage of all its 5,565 municipalities in December 2012. Four companies dominate the country’s mobile telecom market: Vivo, Claro, Oi, and Telecom Italia’s TIM Brasil. Together, these four operators control 97% of the country’s mobile subscriber base. Vivo is the leader, TIM Brasil and Claro compete neck-and-neck for second place, and Oi is fourth.

Broadband market

In preparation for the FIFA World Cup and Olympic Games, substantial investments and regulatory reforms are being implemented to boost Brazil’s broadband development – such as the General Competition Plan and the National Broadband Plan. Also, the Atlantic Cable System (ACSea), when completed, should substantially increase bandwidth and reduce broadband prices. Oi is Brazil’s leading broadband network operator, closely followed by Net; Vivo is in third place, and GVT is fourth. Oi and Vivo, which use mainly ADSL technology, have been losing market share to Net and GVT, which offer faster connections – the first over HFC cable, and the second over a NGN network with a Fibre-to-the-Cabinet architecture.

Broadcasting

Since 1996, Brazil’s pay TV market has experienced sustained growth, not even slowing down during the global credit crunch of 2008/09. Although Brazil has the largest number of pay TV subscribers in Latin America, its pay TV penetration lags behind other major countries such as Argentina, Chile, Venezuela, Mexico, and Colombia. There is therefore ample room for growth, and investors have been eager to gain a foothold in the market, especially since the pay TV law of 2011 removed restrictions on foreign investment and on telcos being able to provide pay TV services.

Market highlights:

  • To tackle the problem of insufficient bandwidth, the Brazilian government has entrusted state-owned Telebrás with the construction of a new submarine cable network – the Atlantic Cable System (ACSea) – linking Brazil with the USA, Europe, Africa, and several Latin American countries. The ACSea submarine cable will increase bandwidth and reduce broadband prices for all of Latin America.
  • Brazil’s incipient MVNO market has attracted a great deal of interest from national and international investors. The most significant MVNO operator with plans to enter Brazil is Virgin Mobile, but its service launch, scheduled for the second half of 2013, may be delayed due to bureaucratic complications and difficulties in reaching MVNO agreements with mobile network operators.
  • Vivo, Claro, TIM Brasil, and Oi have won 4G licences and are deploying LTE networks. The government is keen for Brazil to have LTE services available for the FIFA World Cup. Claro was the first of the mobile operators to launch commercial LTE services, in December 2012.
  • Smartphone penetration in Brazil is slightly lower than the estimated world average, but sales are expected to soar in 2013, partly thanks to a tax break introduced by the government at the start of the year, which should help lower the average selling price of smartphone handsets.
  • In preparation for the World Cup, Hispasat has launched Amazonas-3, a satellite equipped with 33 Ku-band and 19 C-band transponders, as well as nine Ka-band spot beams. Amazonas-3 has been built to transport higher capacity telecom data than any other satellite in the region.
  • Although GVT has garnered an excellent reputation and has been performing extremely well financially and operationally, its parent company Vivendi has been trying to sell it – and GVT’s future will depend on the outcome of the sale – if it materialises.

This report is essential reading for those needing high-level strategic information and objective analysis on the telecom sector in Brazil. It provides further information on:

  • Regulatory environment;
  • Economic trend and its impact on telecommunications;
  • Telecoms operators – consolidations, acquisitions, new licences;
  • Company performances and ARPU statistics;
  • Analyses of Brazil’s broadband and mobile sectors;
  • Spectrum auctions and regulatory issues;
  • 3G and 4G developments, including HSPA and LTE technologies;
  • Historical and current subscriber statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents

  • 1. Key Statistics
  • 2. Telecommunications Market
    • 2.1 Country overview
      • 2.1.1 Economic background
      • 2.1.2 GDP growth
      • 2.1.3 Outlook
    • 2.2 Overview of Brazil’s telecom market
    • 2.3 Market analysis – 2013
    • 2.4 Market outlook - short to long term
  • 3. Regulatory Environment
    • 3.1 Regulatory developments
    • 3.2 General Plan for Updating Telecom Regulations (PGR)
    • 3.3 Regulatory authority
      • 3.3.1 Anatel
    • 3.4 Privatisation of Telebrás
    • 3.5 Mirror companies
    • 3.6 Telecom sector liberalisation in Brazil
    • 3.7 General Competition Plan
    • 3.8 Concessions and authorisations
    • 3.9 Universal service goals
    • 3.10 Government telecom funds (Fust, Fistel, and Funttel)
    • 3.11 Foreign investment
    • 3.12 Number portability
    • 3.13 Access
    • 3.14 Interconnection
    • 3.15 Fixed-line contract renewal – 2006
    • 3.16 Fixed-line contract renewal – 2011
    • 3.17 Mobile consumer rights
    • 3.18 Taxes and tax exemptions
  • 4. Fixed Network Market
    • 4.1 Overview of fixed network market
    • 4.2 Oi (Telemar)
      • 4.2.1 Shareholders
      • 4.2.2 Acquisition of Brasil Telecom
      • 4.2.3 Oi - outlook
    • 4.3 Vivo (Telefônica Brasil)
      • 4.3.1 Acquisition of TVA
      • 4.3.2 Telesp-Vivo merger
    • 4.4 Embratel
      • 4.4.1 Shareholders
      • 4.4.2 Acquisition of Vésper
      • 4.4.3 Acquisition of Net
    • 4.5 GVT
      • 4.5.1 Shareholders
      • 4.5.2 Vivendi’s decision to sell GVT
    • 4.6 TIM Brasil
      • 4.6.1 Intelig Telecom
    • 4.7 CTBC/Algar Telecom
    • 4.8 Sercomtel
  • 5. Telecommunications Infrastructure
    • 5.1 National telecom network
      • 5.1.1 Fixed-line statistics
      • 5.1.2 Public payphones
    • 5.2 International infrastructure
      • 5.2.1 Submarine cable networks
      • 5.2.2 Satellite networks
    • 5.3 Infrastructure developments
      • 5.3.1 IP and voice over internetprotocol (VoIP)
      • 5.3.2 Very small aperture terminal (VSAT) networks
    • 5.4 Wholesale
  • 6. Broadband Market
    • 6.1 Overview
      • 6.1.1 Broadband statistics
      • 6.1.2 Broadband market analysis
      • 6.1.3 Digital inclusion and GESAC
    • 6.2 National broadband plan
      • 6.2.1 Inception
      • 6.2.2 Network
      • 6.2.3 Goals and realisations
      • 6.2.4 Major participating operators
      • 6.2.5 Price and speed
    • 6.3 Brazil’s ISP market
      • 6.3.1 Overview
      • 6.3.2 Universo Online (UOL)
    • 6.4 Broadband network operators
      • 6.4.1 Market share statistics
      • 6.4.2 Oi Velox
      • 6.4.3 Net Vírtua
      • 6.4.4 Vivo Speedy
      • 6.4.5 Power GVT
      • 6.4.6 TIM Brasil
    • 6.5 Cable modems
    • 6.6 Asymmetrical digital subscriber line (ADSL)
    • 6.7 Fibre-to-the-home (FttH) networks
    • 6.8 Broadband Powerline (BPL)
    • 6.9 Fixed wireless broadband
      • 6.9.1 WiFi
      • 6.9.2 WiMAX
      • 6.9.3 TDD-LTE
    • 6.10 Media convergence
      • 6.10.1 Overview of media convergence
      • 6.10.2 Broadband TV (IPTV)
  • 7. Digital Media / Digital Economy
    • 7.1 Digital economy
      • 7.1.1 E-commerce
      • 7.1.2 S-commerce
      • 7.1.3 E-government
      • 7.1.4 E-health
      • 7.1.5 E-learning
      • 7.1.6 Online games
      • 7.1.7 Smart meters/smart grids
    • 7.2 Digital media
      • 7.2.1 Overview
    • 7.3 Broadcasting market
      • 7.3.1 Pay TV overview
      • 7.3.2 Regulatory issues
      • 7.3.3 Pay TV players
      • 7.3.4 Cable TV
      • 7.3.5 Multichannel multipoint distribution systems (MMDS)
      • 7.3.6 Satellite-based digital pay TV developments
      • 7.3.7 Digital terrestrial TV (DTTV)
  • 8. Mobile Communications
    • 8.1 Overview of Brazil’s mobile market
      • 8.1.1 Mobile statistics
      • 8.1.2 Average revenue per user (ARPU)
    • 8.2 Regulatory issues
      • 8.2.1 Number portability (NP)
      • 8.2.2 Mobile spectrum allocation and concession areas
      • 8.2.3 Mobile Virtual Network Operators (MVNO)
    • 8.3 Mobile technologies
      • 8.3.1 Mobile generations
      • 8.3.2 Mobile handsets/smartphones
      • 8.3.3 Femtocells
    • 8.4 Mobile voice services
      • 8.4.1 Prepaid cards
    • 8.5 Mobile messaging
      • 8.5.1 Short message service (SMS)
    • 8.6 Mobile broadband
    • 8.7 Mobile content and applications
      • 8.7.1 M-banking
      • 8.7.2 M-commerce
      • 8.7.3 Mobile games
    • 8.8 Mobile satellite
    • 8.9 Mobile operators in Brazil
      • 8.9.1 Overview
      • 8.9.2 Vivo (Telefônica Brasil)
      • 8.9.3 TIM Brasil
      • 8.9.4 Claro
      • 8.9.5 Oi
      • 8.9.6 Nextel Brasil
      • 8.9.7 Algar/CTBC Telecom
      • 8.9.8 Sercomtel Celular
      • 8.9.9 Unicel/Aeiou (defunct)
    • 8.10 Mobile Virtual Network Operators (MVNO)
      • 8.10.1 Overview
      • 8.10.2 Porto Seguro
      • 8.10.3 Datora (Sermatel)
      • 8.10.4 Virgin Mobile
  • 9. Forecasts
    • 9.1 Forecasts – fixed-line market 2015; 2020
      • 9.1.1 Scenario 1 – higher fixed line growth
      • 9.1.2 Scenario 2 – lower fixed-line growth
    • 9.2 Forecasts – fixed broadband market 2015; 2020
      • 9.2.1 Scenario 1 – higher broadband growth
      • 9.2.2 Scenario 2 – lower broadband growth
    • 9.3 Forecasts – mobile market 2015; 2020
      • 9.3.1 Scenario 1 – higher mobile market growth
      • 9.3.2 Scenario 2 – lower mobile market growth
    • 9.4 Notes on scenario forecasts
    • Table 1 – Country statistics – 2013
    • Table 2 – Telephone network statistics – 2013
    • Table 3 – Internet user statistics – 2013
    • Table 4 – Broadband statistics – 2013
    • Table 5 – Mobile statistics – 2013
    • Table 6 – National telecommunications authority
    • Table 7 – Evolution of GDP in Brazil – 2000 - 2013
    • Table 8 – Fixed and mobile market share – 1997 - 2013
    • Table 9 – Telecommunications revenue – 2000 - 2013
    • Table 10 – Telecom revenue by segment – 2000 - 2013
    • Table 11 – Telecommunications investment – 2000 - 2013
    • Table 12 – Telecom investment by segment – 2000 - 2013
    • Table 13 – Fixed lines in service – operators’ market share – 2006 - 2013
    • Table 14 – Oi – fixed lines in service – 1999 - 2013
    • Table 15 – Vivo – fixed lines in service – 1999 - 2013
    • Table 16 – Embratel – fixed lines in service – 2006 - 2013
    • Table 17 – GVT – fixed lines in service – 2006 - 2013
    • Table 18 – Fixed lines in service and teledensity – 1995 - 2013
    • Table 19 – Public payphones – 1996 - 2013
    • Table 20 – Vivo– wholesale accesses – 2005 - 2012
    • Table 21 – Internet users and penetration –1998 - 2013
    • Table 22 – Fixed broadband subscribers and penetration – 2001 - 2013
    • Table 23 – Broadband market share by technology – 2002 - 2013
    • Table 24 – Broadband operators’ market share – 2003 - 2013
    • Table 25 – Oi – broadband subscribers – 2001 - 2013
    • Table 26 – Net – broadband subscribers – 2001 - 2013
    • Table 27 – Vivo – broadband subscribers – 2001 - 2013
    • Table 28 – GVT – broadband subscribers – 2004 - 2013
    • Table 29 – Cable modem subscribers and penetration – 2001 - 2013
    • Table 30 – ADSL subscribers and penetration – 2001 - 2013
    • Table 31 – Brazil – B2C e-commerce spending – 2005 - 2013
    • Table 32 – Pay TV operators by technology – 2012
    • Table 33 – Pay TV subscribers and penetration – 1998 - 2013
    • Table 34 – Pay TV market share by technology – 1998 - 2013
    • Table 35 – Pay TV operators – market share – 2000 - 2013
    • Table 36 – Net Serviços – cable TV subscribers – 2000 - 2013
    • Table 37 – Cable TV subscribers and penetration – 1998 - 2013
    • Table 38 – MMDS subscribers and penetration – 1998 - 2013
    • Table 39 – DTH subscribers and penetration – 1998 - 2013
    • Table 40 – World’s six largest mobile markets – 2012
    • Table 41 – Mobile subscribers and penetration rate – 1997 - 2013
    • Table 42 – Evolution of mobile ARPU in Brazil – major operators – 2009 - 2012
    • Table 43 – Mobile market share by technology – 2004 - 2013
    • Table 44 – 3G subscribers and penetration – 2008 - 2013
    • Table 45 – Mobile prepaid/postpaid ratio – 2003 - 2013
    • Table 46 – Mobile broadband subscribers and penetration – 2008 - 2013
    • Table 47 – Fixed and mobile broadband market share – 2008 - 2013
    • Table 48 – Mobile operators’ market share – 2002 - 2013
    • Table 49 – 3G services – operators’ market share – 2009 - 2013
    • Table 50 – 3G services (phone & broadband) – operators’ annual growth – 2010 - 2013
    • Table 51 – Vivo – mobile subscribers – 2002 - 2013
    • Table 52 – Vivo/Telemig– mobile subscribers – 2002 - 2007 (historical)
    • Table 53 – TIM Brasil – mobile subscribers – 2002 - 2013
    • Table 54 – Claro – mobile subscribers – 2002 - 2013
    • Table 55 – Oi – mobile subscribers – 2002 - 2013
    • Table 56 – Oi/Amazônia/BrT – mobile subscribers –2002 - 2008 (historical)
    • Table 57 – Nextel – mobile subscribers – 2002 - 2013
    • Table 58 – CTBC – mobile subscribers – 2003 - 2013
    • Table 59 – Sercomtel – mobile subscribers – 2003 - 2013
    • Table 60 – Forecast fixed lines – higher growth scenario – 2015; 2020
    • Table 61 – Forecast fixed lines – lower growth scenario – 2015; 2020
    • Table 62 – Forecast broadband subscribers – higher growth scenario – 2015; 2020
    • Table 63 – Forecast broadband subscribers – lower growth scenario – 2015; 2020
    • Table 64 – Forecast mobile subscribers – higher growth scenario – 2015; 2020
    • Table 65 – Forecast mobile subscribers – lower growth scenario – 2015; 2020
    • Chart 1 – Fixed and mobile market share at a glance – 2001 – 2013
    • Chart 2 – Evolution of telecom revenue in Brazil – 2003 - 2013
    • Chart 3 – Evolution of telecom investment in Brazil – 2003 - 2013
    • Chart 4 – Fixed line market share at a glance – 2012
    • Chart 5 – Evolution of fixed lines in service – 1996 - 2013
    • Chart 6 – Fixed broadband technologies at a glance – 2004 - 2013
    • Chart 7 – Broadband market share at a glance – 2007 - 2013
    • Chart 8 – Evolution of pay TV in Brazil – 2001 - 2013
    • Chart 9 – Pay TV technologies at a glance – 2004 - 2013
    • Chart 10 – Pay TV operators’ market share at a glance – 2012
    • Chart 11 – Evolution of Brazil’s mobile subscriber base – 2000 - 2013
    • Chart 12 – Mobile market share by technology – 2004 - 2013
    • Chart 13 – Mobile market share at a glance – 2012
    • Chart 14 – 3G services – operators’ market share at a glance – 2009 - 2013
    • Exhibit 1 – Map of Brazil
    • Exhibit 2 – Regions and states of Brazil
    • Exhibit 3 – Oi (Telemar) group at a glance
    • Exhibit 4 – Oi – company history
    • Exhibit 5 – Telefônica Brasil (trading as Vivo) at a glance
    • Exhibit 6 – Vivo – company history
    • Exhibit 7 – Embratel at a glance
    • Exhibit 8 – Embratel – company history
    • Exhibit 9 – GVT at a glance
    • Exhibit 10 – GVT – company history
    • Exhibit 11 – Regions and States of Brazil
    • Exhibit 12 – Atlantic Cable System – planned
    • Exhibit 13 – Geostationary satellites operating in Brazil – 2013
    • Exhibit 14 – Regions and states of Brazil
    • Exhibit 15 – Net Serviços de Comunicação at a glance
    • Exhibit 16 – TVA
    • Exhibit 17 – Subdivision of Brazil into regions and areas
    • Exhibit 18 – H-band for 3G services – lots, areas, and spectrum winners
    • Exhibit 19 – Bands for 4G services – blocks, winners, and price/MHz/population
    • Exhibit 20 – Subdivision of Brazil into regions and areas for mobile licensing
    • Exhibit 21 – Telefônica Brasil (trading as Vivo) at a glance
    • Exhibit 22 – Vivo – concessions
    • Exhibit 23 – The uneasy marriage between Telefónica and Portugal Telecom (historical)
    • Exhibit 24 – TIM Brasil at a glance
    • Exhibit 25 – TIM Brasil – concession awards for frequency bands A, B, D, E
    • Exhibit 26 – Claro Brasil at a glance
    • Exhibit 27 – Claro – concessions
    • Exhibit 28 – Oi (TNL PCS) at a glance
    • Exhibit 29 – Oi – concession awards for frequency bands A, D, E, M

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