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Brazil's CDMA Base Heading Towards Extinction

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The latest monthly data from Anatel, the Brazilian regulator, shows a marked reduction in the pace of the growth in the market. This should come as no surprise the fourth quarter saw a record number of new connections and included two of the four best months ever. The industry added a total of 1.31m new connections in January, to take the market total to 151.9m, equivalent to nearly 70% penetration.

The regional split shows that of the 24 states in Brazil, all but two saw an increase over the course of the month. The exceptions are Amazonas and Roraima, which lost 204k and 24k accounts respectively, more than 9% of 10% of their total base. The next worst result was the +0.51% rise in Rio de Janeiro so this suggests something more than just ordinary trading. It looks as though TNL has culled inactive customers from the base it acquired when it bought TeleNorte, which operates in this region. The quality of that base has always been rather questionable, as readers may recall - in December 2006, TeleNorte had the dubious distinction of becoming the first operator to report an annualised churn rate of more than 100% on its pre-paid base.

The market share numbers that accompany the subscriber data suggest that while Claro, the America Movil subsidiary, has continued to outpace TIM, it has been unable to make much of an inroad into Vivo's lead. Claro has grown from 38.7m to 39.1m, but Vivo has moved from 44.9m to 45.3m, so the relative positioning is broadly unchanged. TIM, the number three operator, appears to be losing market share and is now some 2.5m behind Claro and not much more than 6m ahead of the proforma total of 30.4m that TNL will have following its merger with Brasil Telecom.

The last point to note relates to technology. Anatel gives us a choice of two numbers for the W-CDMA base: we prefer the higher (2.7m) rather than the lower (1.9m) which would imply a month on month drop of nearly 0.5m - or twice the number of CDMA disconnections. Since Vivo's move to GSM, the number of CDMA accounts has dropped by over 10m and now stands at just 12.6m. It can only be a matter of time before it disappears from this part of the world altogether.


Monthly Net Additions, 01/07 – 01/09

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