Brazilian telecom market to reach $97B by 2016, study says

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Brazil’s telecom services market is poised to grow to U.S. $97 billion in 2016 from $66 billion in 2010, driven mostly by the increase of pay-TV, broadband and mobile data, consulting firm Frost & Sullivan said in a study presented in to a small group of the country’s telecom players.

The study predicts that one of the main factors that will boost Brazil’s telecom market in 2016 will be the portion of mobile carriers revenues coming from data services, which Frost expects will increase to 35% from its current level of 15%. This could contribute even more to the growth of mobile’s share in the total market, which today accounts for 46% of the telecom services market and is estimated to reach 53% in five years.

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The growth also includes an expected increase of 22% in pay-TV and fixed-broadband services between 2010 and 2016. Brazil currently has one of the lowest pay-TV and broadband penetration in Latin America. For example, in 2010, Argentina had 66.5% of pay-TV penetration and Chile had 49.5%, but in Brazil the figure was only 16.6% of total households.

A similar trend is seen in the broadband segment. Brazil closed 2010 with 22.1% of total households with broadband access, while Argentina had 53.5%, Mexico 42.1% and Chile 40%.

“We believe that both penetration will grow a lot. There’s a huge potential,” said Renato Pasquini, Frost’s industry analyst.

As consequence, Frost predicts an increase in the sales of TV, computers and Wi-Fi-enabled devices. In 2010, personal computers’ penetration was 38.3% while fixed-broadband penetration was 22.1%, which is expected to climb to 62.8% by 2016.

In addition, the new grants of cable- TV given by Anatel, after 11 years of waiting, and the recent change in the Brazilian regulatory framework, which removed the barrier of foreign capital in telecom firms and allowed telephone operators to provide pay-TVs, are also contributing to the boost. Both stimulates the entry of new competitors, the current expansion to new cities and market consolidation.

“TIM might launch pay-TV in 2012; GVT has already announced its service and it is expected Sercomtel’s launch this year,” the study said.

In addition, those players who already offer pay-TV services are working to expand their coverage outside their traditional area. Telefónica is going outside São Paulo state; TVA is expanding to 25 new cities; and Oi plans to reach São Paulo while Net eyes big cities such as Niterói, in Rio de Janeiro, Salvador (Bahia) and Recife (Fortaleza).

Frost’s study also expects that fixed-broadband penetration will surpass that of landlines by 2016. Frost forecasts that subscribers will migrate from dial-up connections to broadband naked offer by operators at popular prices.

However, until 2013, there will be an increase in the number of fixed-lines, but after that it might decrease.

The revenue of fixed-lines and long distance calls may also continue to drop, while VoIP and mobile penetration increase. “Almost 50% of total households only have mobile lines,” the study said.

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