Brazilian Operator 3rd Quarter Profits Jump on Aquisition

Brazil's largest mobile network operator, Vivo Participacoes has reported a massive jump in 3rd quarter profits after acquiring rival operator, Telemig Celular Participacoes and higher organic revenues from data services.

The firm reported that its 3rd quarter income rose to R$129.8 million (US$59 million), from R$4.4 million (US$2 million) a year earlier - while revenue rose to R$4.1 billion (US$1.9 billion).

The company also boosted its subscriber base by over a third to 42.27 million customers after it added coverage from the Telmig acquisition - which the company said gave it a market share of 30% in the country. However, Vivo's ARPU fell by 4 percent to R$29.4 from a year earlier.

The firm said that it plans expenditure of R$6.2 billion (US$2.9 billion) over the next twelve months, including 3G expansion. In September Vivo's 3G services started being offered in more than 40 municipalities. Currently there are 222 municipalities served, and it is the largest WCDMA network in Brazil. Towards the end of 2008 the network operator will complete the coverage and operations in the Northeast region and in Brazil as a whole

Data revenue plus VAS has continued to increase its share in the Total Service Revenue. It grew from 8.2% in 3Q07 to 10% in 3Q08, that is, 40.6% increase. Several factors contributed to this: increase in the number of customers with access to Vivo Zap (mobile internet) and to SmartMail, sales of Blackberry handsets, and increase in the service revenue from Downloads (Vivo Play and Tons and Images) and SMS Content. The peer to peer SMS has continued to be the largest selling service, accounting for 44% of the data and VAS revenue. Growing at a rate of 2% per month, Vivo ZAP (mobile internet) is the second largest product, with 23% share. When compared to 2Q08, the Data and VAS Revenue grew 3.6%.

Vivo originated from the merger of several Brazilian mobile phone operations under a joint-venture owned equally by Portuguese Portugal Telecom and Spanish Telefónica.

Posted to the site on 11th November 2008