Claro Ends "1 Real" Handset Promotion"

Brazilian mobile operator Claro ended its 1 real (US$0.45) promotion for handsets on May 16, Claro said in a press release.

Claro launched the promotion, valid only for the Nokia 6101, Motorola V191 and LG C1100 models, in a bid to rapidly increase the client base.

"Claro originally intended to stop on this date [May 16]," Janaina Gomes a press officer for Claro told BNamericas.

The result of the promotion was "good," Gomes added, without divulging the figures or future plans.

PROMOTIONS HIT MOBILE MARGINS

Backed by the financial muscle of Mexico's América Móvil, Claro has been widely viewed as leading the way in aggressive promotions, but this has put renewed pressure on margins, according to analysts.

"The first quarter [2006] results showed how competition is getting stronger and squeezing margins," Alexander Garcia, a telecoms analyst at Ágora Senior CTVM told BNamericas. It is only recently that handset subsidies have returned, he added.

"Some mobile operators lost clients and new clients were mainly prepaid, which pressured Arpu," Garcia added.

"We saw a slow-down in terms of sales after Christmas, but now companies have slipped back into their old ways," said Thomas Abreu, a telecoms analyst at Pyramid Research.

The acquisition cost to acquire subscribers is up and Arpu is up, Abreu told BNamericas.

"Claro's aggressive subsidies force other companies to follow," Abreu noted. Except for Vivo and perhaps TIM, the likes of smaller mobile companies such as Brasil Telecom GSM and Oi have to follow [Claro]."

Minas Gerais operator Telemig will also "fight fire with fire," said Abreu, referring to Claro's recent entry and promotional drive in Minas Gerais state.

BNamericas.com"

Posted to the site on 18th May 2006