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VIVO, Ceragon Join Forces

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Telefonica Brasil, S.A.’s (VIV - Free Report) business arm, Vivo, has signed a deal with Ceragon to deploy the next phase of its 4GLTE network across the country. As per the contract, Ceragon – a wireless backhaul vendor – will offer short haul solutions through its FibeAir flagship products to the Brazilian carrier at nearly $6 million.

Ceragon is the global wireless backhaul partner of Vivo’s parent company, Telef (TEF - Free Report) has already assisted Telef to rollout its 4GLTE technology in six different cities. This will further boost ViVo’s 4GLTE deployment program.

Increased usage of smartphones and tablets has led to network congestion. In order to improve data speed, most telecom operators have already adopted or are planning to adopt 4GLTE technology. ViVo is not an exception to this trend.

Recently, Telefonica Brasil SA declared second-quarter 2013 results, where its net income fell 15.8% year over year. However, revenues rose by 3.0% year over year on the back of better performance of its Mobile Business segment, which accounted for 10.1% year over year. Moreover, higher demand for data and value added services (VAS) has led to 3.4% growth of Average Revenue Per User (ARPU).

Hence, we believe that ViVo is planning to deploy nationwide 4GLTE network, which will not only drive ARPU but will also improve its subscriber churn. Moreover, the company aims to attain 4GLTE coverage across the country before the start of football World Cup 2014.

Other Stocks to Consider

Other Latin American telecom service providers worth considering are America Movil S.A.B. de C.V. (AMX - Free Report) and Hawaiian Telcom Holdco Inc. . Both carry a Zacks Rank #3 (Hold).

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