2015 Brazil - Telecoms, IP Networks and Digital Media

Market changes see Telefónica merge fixed-line and mobile operations while Oi divests Portugal Telecom interest

The Brazilian telecom sector has seen considerable changes in recent quarters, with the key players consolidating their holdings under a single brand. The market has seen sustained though slow revenue growth despite a difficult economic climate. Although the number of fixed lines in Brazil continues to increase slowly, partly attributed to VoIP connections, teledensity remains low. International infrastructure is set to improve considerably during the next two years as new cables are laid connecting to the US and Angola, while the government has also commissioned a review of an Amazon basin network connecting key areas of the country. The state-owned Telebrás will from 2017 also make use of a new satellite (under construction) to improve broadband connectivity) in rural areas.

The 2014 FIFA World Cup held in Brazil provided a stimulus to operators providing new technologies and networks such as LTE and FttP. The 2016 Olympic Games will similarly provide further encouragement from all stakeholders to improve infrastructure, though most benefits are likely to be limited to cities where events are being held.

Four companies (Telefónica’s Vivo, América Móvil’s Claro, Telecom Italia’s TIM Brasil, and the domestic player Oi) still dominate Brazil’s mobile market, though an emerging MVNO sector should begin to provide real price competition from 2016.

Operators are rolling out LTE networks at a fast pace in an effort to gain subscribers and secure revenue from mobile data services. Three of the four major mobile companies – Vivo, Claro, TIM Brasil and Oi – have secured spectrum in the 700MHz band for LTE services, though this spectrum is unlikely to be made available before late 2016 or early 2017. Mobile broadband is being supported by the declining cost of smartphones. M-commerce remains low in terms of transactions, but the country is an m-commerce pioneer in the region, and a number of initiatives between mobile network operators, banks and credit card companies have targeted the large number of people without bank accounts.

Brazil has one of the largest broadband markets in Latin America, though broadband penetration is only slightly above the regional average. The pay TV market is the largest in Latin America, with considerable room for further growth which has encouraged investors such as AT&T to gain a foothold in the market.

This report profiles the major and some minor fixed-line operators, and provides an overview of the broadband market, accompanied by updated statistics, market analyses, and forecasts to 2020. It also reviews the mobile voice and data markets, profiles the mobile operators and assesses their strategies as they endeavour to exploit opportunities offered by the fast developing mobile broadband sector.

Key developments:

• Telebras aiming to use the SDGC satellite for broadband services from 2017;
• New submarine cables linking Brazil with Europe, Angola and the US;
• Government studies Northern Connection cable network across the Amazon basin;
• Telecom revenue reaches R$234 billion;
• New Antenna Law aimed at extending network footprints and improving mobile services;
• Auction for the 700MHz band leaves two blocks unsold;
• Telefónica rebrands newly acquired GVT as Vivo;
• Embratel and Net Serviços merge with Claro Brasil;

Report update includes regulator’s market data to April 2015; operator data to Q1 2015; recent market developments.

Companies mentioned in this report:

Vivo (Telefônica Brasil), TIM Brasil, Oi, Embratel, Net Serviços, GVT, CTBC/Algar Telecom; Global Crossing, Star One, TelesatBrasil, Hispamar, Telebrás, Claro, TIM Brasil, Intelig, Sercomtel, Nextel Brasil, AlgarUnicel/Aeiou, Porto Seguro, Datora Telecom, Virgin Mobile, Sisteer, Terapar, Universo Online (UOL), Neovia, Eletropaulo Telecom, Copel, BuscaPé, Sky Brasil, Claro TV, Vivo TV, Oi TV.