Telecoms fight for a US$ 545 billion-market
Folha de S. Paulo - 05/04/2008
Oi's acquisition of BrT (Brasil Telecom), in case it becomes effective, will open a new phase in the competition among the telephone giants in the country. In the dispute, a market that this year will reach R$ 150 billion (US$ 91 billion) - sum of the revenues of the companies that operate with landline and mobile telephones, broad band internet services, and Pay TV. Analysts also project a growth in income around 10% a year until 2012. This means that nearly R$ 900 billion (US$ 545.5 billion) will be at stake in next the five years (including 2008). The joust will be fought among three big groups, in two battlefields. The groups: Spanish Telefónica, Mexican Telmex, and the national group that will result from Oi's purchase of Brasil Telecom - which, however, still depends on changes in the legislation and authorization from governmental agencies. The battlefields are: the market of prepaid cell phones (aimed at classes C, D and E) and the broad band internet service for classes A and B, mainly the Pay TV and Internet access. In the case of Pay TV, the permission for the telecoms to offer the service still depends on changes in the so-called Cable Law. Anyhow, specialists declare the dispute for the consumer with greater purchasing power will only increase in the mid-term. Nowadays, the post-paid cell phone market has practically stagnated and the market of conventional landline telephone is declining. In the short term, in the next two years, the dispute - which is expected to be fierce - shall have one single target: the millions of Brazilians who are migrating to the "new class C". With the market of the developed countries walking towards stabilization, the major operators are more and more aiming at the emerging countries. Among them, Brazil has an important role, due to the rise of a contingent of 35 million people who, in the last years, have left D and E classes towards the C class. Nonetheless, the operators face a challenge: to obtain increasing profits with a low-cost service (the prepaid cell phone service) with lower and lower fees because of competition.