IHS Global Insight Perspective | |
Significance | As expected, Telefónica has been given the green light to buy Portugal Telecom's stake in Brasilcel. |
Implications | The approval solidifies the Spanish group's presence in Brazil, but carries several conditions. |
Outlook | Large-scale consolidation within the Brazilian market is unlikely, although TIM Brasil and smaller goups could be targeted. |
As expected, the Brazilian regulator, Anatel, has approved the acquisition of Portugal Telecom’s 50% stake in Brasilcel by Telefónica. The deal gives the Spanish group 100% ownership of Brasilcel, which held 88.9% of Vivo’s common shares at the end of 2009. Anatel applied several conditions to the acquisition:
- to provide mobile coverage to 35 municipalities that currently lack it by 2011;
- to add a further 83 municipalities to Vivo’s current plans to provide 3G coverage to 2,832 municipalities; and
- to provide access to its fibre-optic infrastructure to support the creation of a research network between universities in São Paolo.
Mobile Market Shares by Operator | |||||
Aug-09 | Aug-10 | ||||
Total Mobile Subscribers ('000) | Market Share (%) | Total Mobile Subscribers ('000) | Market Share (%) | Subscriber Growth Aug-10/Aug-09 (%) | |
Vivo | 48,333.9 | 29.4 | 57,265.2 | 30.2 | 18.5 |
Claro | 41,872.8 | 25.5 | 48,164.6 | 25.4 | 15.0 |
Tim | 39,211.3 | 23.8 | 45,941.7 | 24.3 | 17.2 |
Oi | 34,508.0 | 21.0 | 37,384.1 | 19.7 | 8.3 |
CTBC | 502.5 | 0.3 | 576.3 | 0.3 | 14.7 |
Sercomtel | 9.1 | 0.0 | 76.1 | 0.0 | 739.6 |
Unicel | 19.8 | 0.0 | 20.3 | 0.0 | 2.8 |
Total | 164,539.0 | 100.0 | 189,428.4 | 100.0 | 15.2 |
Source: Anatel and IHS Global Insight | |||||
Outlook and Implications
- Conditions Applied, But Competition Not an Issue: Although the acquisition deal has not reduced the number of mobile players in the market, Anatel has applied conditions that will require additional investment from Telefónica. These conditions will support government efforts towards digital inclusion and promoting mobile broadband uptake (see Brazil: 24 August 2010: Brazil's National Broadband Plan—Status Update).
- Future M&A in Mobile Sector: This stance suggests that Anatel and other government authorities may impose other conditions on groups seeking to expand their presence or enter the Brazilian market. Given Telecom Italia’s debt burden, TIM Brasil has often been mentioned as a target for an international group. The combination of any of Vivo, Claro, TIM or Oi looks unlikely on competitive grounds, although some consolidation between the smaller operators and/or Nextel Brazil or GVT, which is controlled by Vivendi, could be possible. Vodafone has been reported as interested in entering the Brazilian market (it only has presence in one—India—of the four BRIC countries).