Wireless market close to saturation

The number of mobile phone subscribers in Brazil is growing more slowly because the market is close to saturation rather than as a reflection of the weak economy. Telco earnings reports for the first quarter of 2003 show growth of less than 14% compared with about 20% in 2002 and more than 30% in 2001.
Raphael Biderman, an analyst with Unibanco, says penetration rates in metropolitan São Paulo and Rio de Janeiro have already exceeded Anatel?s projections for 2005 and 2006 as well as the emerging-market average (about 30% in both cases). Wireless penetration is above 31% in São Paulo and 34.5% in Rio.
For Jacqueline Lison, an analyst with Fator Doria Atherino, telcos aren?t as interested as they were in growing their wireless customer base. Instead, she says, they want to enhance the quality of their existing base, reducing delinquency and building revenue by introducing more value added services. In particular they plan to target small and medium business.

Only Telemar-Oi and Telecom Italia Mobile (TIM), the newest and largest GSM carriers, continue to pursue aggressive growth strategies. For example, TIM is currently offering handsets at a subsidized price of 99 Brazilian Reals (now about 34 US Dollars). Oi has a similar sales approach and has signed up 1.7 million customers in only nine months, albeit at the very high cost of a 5.7% allowance for bad debts.