Vivo to Launch Postpaid GSM Handsets by End of Q1

Brazil's leading mobile operator Vivo Participações plans to launch postpaid GSM handsets by the end of the first quarter of 2007, said company president Roberto Lima during an earnings results conference call.

Vivo, which operates using CDMA technology, started to test its prepaid GSM handsets in the cities of São Paulo and Rio de Janeiro in December 2006 and is now rolling out its prepaid handsets across other major cities, Lima said.

The operator does not intend to surpass the estimated investment of 1.08bn reais (US$514mn) for the GSM network. "This is the number," the president said.

For the postpaid GSM service, Vivo, which is a joint venture between Spain's Telefónica and Portugal Telecom, will offer international and national roaming services, the executive said.

ANALYSTS

Some analysts expressed concerned about the cost of the GSM overlay project and the eventual outcome.

The development and implementation of Vivo's GSM network is still at an early stage, Carlos Constantini, an analyst at Deutsche Bank Equity Research, said in a research note.

This could demand higher-than-anticipated capex and/or trigger a major increase in churn rates, he warned.

In the opinion of André Roche, telecoms analyst with local brokerage Unibanco Corretora, Vivo's migration to GSM is risky.

"If they migrate too slowly, they will still continue to lose market share to TIM or Claro, whereas if they migrate too fast, they will see their margins drop," he told BNamericas.

Vivo, which is the sole Brazilian supplier of CDMA handsets, recorded just over 29mn subscribers at the end of last year compared with 29.8mn at end-2005."

Posted to the site on 9th February 2007