Vivo and TIM Participacoes SA, the respective Brazilian subsidiaries of Telefonica (TEF - Free Report) and Telecom Italia S.p.A’s (TI - Free Report) , have expanded their market share in Brazil. Latin America’s biggest nation also registered higher growth in mobile subscriber addition in Jul 2013 from the previous month.
According to Brazilian telecom regulator Anatel, total number of registered mobile phone customers grew 0.4% in July in the country compared with merely 0.07% in June. The nation’s customers increased 1.26 million to touch 267 million at the end of the month. Vivo and TIM were the biggest contributors to this growth.
Vivo, the largest wireless carrier in Brazil expanded its market share to 28.69% in July from 28.67% in previous month. Runner-up TIM registered 50 basis points sequential growth and now holds a 27.22% share in the Brazilian wireless market. The news had a huge positive impact on the TIM shareholders as the stock gained 8.28% during Aug 30 day trade on Nasdaq.
Vivo offered the best service quality considering the least number of complaints received by Anatel. This was primary reason for its sequential subscriber growth. TIM, however, gained popularity on its competitive pricing, improvement in quality and marketing investments.
On the contrary, the market share of Claro, America Movil S.A.B. de C.V.’s (AMX - Free Report) Brazilian arm, slipped to 24.97% in Jul as compared to 25.01% in Jun. Home grown Oi SA also lost ground and currently holds an 18.66% share of the Brazilian wireless market.
Telefonica, which has been struggling in Europe, has also reported declining revenues in Brazil. Revenues from Europe slid 10.7% while in Brazil the top line fell 3.9% in the second quarter of 2013. However, we see the Brazilian subscriber growth in favourable light as the company is banking on the Latin American market to compensate for the current weakness in Europe.
Telefonica currently carries a Zacks Rank #3 (Hold).