SAO PAULO, Brazil-One year after the privatization of A-band cellular operators in Brazil and just shortly following the auctions that defined the B-band operators, the Brazilian wireless market is going through a period of consolidation. At this point, it is already possible to identify the leaders among the 20 operators serving the country.
The following information on the Brazilian operators is as of the third quarter of 1999 and was extracted from a sector annual report by Brazil’s Telecom Journal.
Telesp Celular-Band A-state of Paulo. Currently, the company has 66 percent of the market, with 2.13 million users. Telesp competes with Tess in the interior of Sao Paulo state and B-band operator BCP in the Sao Paulo metropolitan area, with 55 percent of the Sao Paulo metropolitan market. Since the privatization, Telesp Celular has grown 140 percent, reaching an expected net income of R$1.8 billion in the first half of 1999 and approximately R$1.7 billion in 1998. A big part of this growth is due to Telesp’s launch of prepaid cellular service, which brought in 50 percent of new users in the first half of 1999 and which Telesp forecasts will represent 70 percent of new company sales for 1999.
BCP-Band B-Sao Paulo metropolitan area. With 45 percent of the market, BCP currently has 1 million users in the greater Sao Paulo city area, and in 1998, had a net income of around R$600 million. After operating a year in the country, BCP has already addressed the repressed demand and now invests in promotional campaigns to get new users. It has, for example, started offering an automatic roaming service with the United States-one of the most visited markets by Brazilian travelers-without users changing handsets or wireless numbers.
Tess-Band B-Interior of Sao Paulo state. With 12 percent of the market and approximately 150,000 subscribers, the company will not divulge its income. It did state, however, that by the end of 1999 it will have invested a total of R$700 million in the network and that by April, it plans to reach a target of 500,000 subscribers. The company said it has promised to its 629 employees-a number that will grow to 1,000 by the end of the year-that if this target is reached, they each will be rewarded with an ocean cruise for two people.
Telefonica Celular-Band A-states of Rio de Janeiro and Espirito Santo. Telefonica currently has 66.75 percent of the market with 1.4 million subscribers. With a R$300 million investment in 1999, the company expects to end the year with approximately 2 million users, increasing its sales, which in 1998 were R$922.6 million. The company seems to be on the right track as the first-half results for 1999 showed R$739.4 million in sales.
ATL-Band B-states of Rio de Janeiro and Espirito Santo. After six months of operation, ATL has already reached 602,000 users, or 33.25 percent of the market. Part of the company’s success can be attributed to its service distribution, which is supported by direct sales to consumers through a range of popular department stores, according to ATL. The company does not release sales figures, but is investing R$150 million to expand its network with the objective of increasing its coverage area from 82 percent to 92 percent of the population.
Telemig Celular-Band A-state of Minas Gerais. With 85 percent of the market and 576,000 subscribers, Telemig presented a net income of R$439.6 million in 1998 and R$239.6 million for the first half of 1999. The operator plans to invest R$300 million through 2000 with the objective of maintaining service quality and customer satisfaction levels at 95 percent, system availability at more than 98 percent and the capability to reach the called party on the first attempt at more than 90 percent. These levels were reached last July.
Maxitel-Band B-state of Minas Gerais. Although Maxitel just started its operations in December 1998, it has a 15-percent market stake and 130,000 users. Because it arrived in the market long after Telemig Celular, Maxitel has adopted an aggressive policy for garnering new users: It became the first operator to eliminate the habilitation tax-a tax on establishing a wireless service-and also the first to offer a pricing package that doesn’t include roaming charges within the concession area. Currently, its coverage area includes about 30 cities, a number scheduled to increase to 160 by the end of 1999 due to investments of around R$200 million.
Tele Celular Sul-Band A-states of Paran and Santa Catarina. The company does not disclose its market share, but announced a net income of R$504.2 million for 1998. In 1999, Tele Celular Sul scheduled investments of R$340 million, targeting coverage expansion (today at 195 counties), services expansion and employee hiring (to increase from 356 as of July 1998 to 1,200 by year-end 1999).
Global Telecom-Band B-states of Paran and Santa Catarina. This carrier operates with a very low profile in the market-not divulging subscriber figures, sales or investments. Global Telecom started its operations in December 1998 and says it is targeting 50-percent coverage for the 14 million inhabitants of its concession area. The company has eliminated the habilitation tax and, according to company statements, offers prices 20 percent to 30 percent less than those charged by Tele Celular Sul.
Telecom Italia Mobile-Band A-state of Rio Grande do Sul. With 90 percent of the market and 750,000 users, Telecom Italia Mobile seems to be in a stable situation. The company achieved a net income of R$303.4 million for the first half of 1999 and has already invested around R$1 billion-R$350 million in 1999-to expand and improve its infrastructure. As a result, its coverage is 95 percent of the state’s urban population and 85 percent of its concession area overall.
Telet-Band B-state of Rio Grande do Sul. With only 10 percent of the market and 85,000 subscribers, Telet, which just began operations in February 1999, has bet on aggressiveness. The company has invested around R$800 million to date, and its network currently covers 70 cities and 55 percent of the population in its concession area of 5 million people. By the end of this year, coverage is scheduled to increase to 110 cities and 7 million people.
Centro-Oeste Celular-Band A-states of Acre, Rondonia, Mato Grosso, Mato Grosso do Sul, Tocantins, Goi s and the Federal District. The operator today has a 73-percent market share, with 630,000 subscribers. Its net income in 1998 was R$482.6 million and R$217.8 million in the first half of 1999. The company’s coverage area includes 85 percent of its concession area’s population and 238 cities with plans for 268 cities by year-end. It plans to invest R$320 million to continue its digitization efforts and install a network-management system.
Americel-Band B-states of Acre, Rondonia, Mato Grosso, Mato Grosso do Sul, Tocantins, Goi s and the Federal District. Americel has about 190,000 users and 27 percent of the market. The company, which was the first B-band carrier to begin operations in Brazil, had a net income of R$136.4 million in 1998 after two years of losses. For 1999, Americel planned to invest approximately R$90 million to expand its network.
Amazonia Celular-Band A-states of Amazonas, Para, Maranhao, Roraima and Amapa. The company currently has 100 percent of the market because its B-band competitor has not yet started operating. It has about 259,000 users and had a net income of R$238.1 million in 1998 and R$130.9 million in first-half 1999. With 626 employees, the operator invested R$31.4 million in first-half 1999.
Norte Brasil Telecom-Band B-states of Amazonas, Para, Maranhao, Roraima and Amapa. This new carrier began services last November. Its Nortel Networks platform-from a contract valued at US$60 million-has a capacity of about 250,000 users. Initially, the operator will offer services only in the capitals of the five states comprising its concession area.
Telefonica Celular
-Band A-states of Bahia and Sergipe. Telefonica has 65 percent of the
market with 410,000 subscribers. It reported sales of R$249.2 million in 1998 and R$166.2 million in the first half of 1999. Serving an area with 15 million inhabitants, the operator is concentrating on training its 959 employees. From August 1998 through the first half of 1999, the carrier invested R$140,000 in an employee education and development program.
Maxitel-Band B-states of Bahia and Sergipe. With 35 percent of the market and 200,000 subscribers, Maxitel does not divulge its sales figures. However, the company said its investment plans for 1999 totaled R$110 million. Maxitel started its operations in April 1998, and its coverage area now reaches 52 cities, or 48 percent of the population of the two states. Its goal was to reach 72 cities, or 54 percent of the population, by year-end 1999.
Tele Nordeste Celular-Band A-states of Alagoas, Pernambuco, Para
