Brazil’s Mobile Phone Market Explosion

By Bruno De Nicola, Contributing Reporter

RIO DE JANEIRO – Brazil’s domestic mobile phone market reached 154,600 million users on the 21^st of May, making the country the fifth biggest mobile consumer in the world behind China, America, India and Russia.

The strong growth of this market – about a million users per month over the last quarter alone – is largely a result of an intense push from the leading companies of prepaid chips sales, drawing low budget consumers by the bucket load who want to avoid the monthly commitment of a contract.

The huge Brazilian mobile phone market is currently contended by four main players. Vivo, owned by Spain’s Telfonica SA and Portugal Telecom, is the leader with 29.5% of the market, Claro, the local branch of Mexico’s America Movil SA, follows with a 25.8% share, while TIM, owned by Telecom Italia Spa, comes in third with 23.6%. Oi, the only truly Brazilian company, is in fourth place with a 20,7% market share.

The present “Big Four” situation looks almost certain to change soon though, due to the inevitable reactions by the global telecommunications market to the incredible increase of mobile phone user numbers in the country.

When Telefonica SA and a group of Italian private banks acquired the majority of Telecom Italia’s stock options, it sent a shockwave through the industry. As Hélio Costa, Minister For Communications stated; “We always have to pay attention when a company spreads out to controlling over 50% of the market,” before adding; “I believe that the future should be good for the consumers”.

By buying the Italian company Telefonica SA will eventually control both Vivo and Tim, reaching out to a substancial 54% market share. A figure that may be a threat to fair competition.

According to Costa the CADE, the Board of Economic Security whose duty is to guarantee fair competition, will eventually have to take action in order to prevent any kind of illegal imbalance in the mobile phone market

The handset sector has also recieved a boost by reports that Sharp Corporation is considering entering the Brazilian market, becoming the first such Japanese producer to sell in South America. The fact that the Brazilian digital TV broadcasting system is similar to that of the Japanese is an essential asset to the the handset producing companies which nowadays need to create phones capable of receiving TV programs.