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Telecom Equipment >> Brazil

Brazil Country Market
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Telecommunications  Equip Sector


Overview: According to IDC (International Data Corporation) government is the second largest market in size and investments in information technology. IDC estimates that the global market will spend US$ 161 billion in 2008 and will continue to invest an estimated 6.6% per year until 2011.

These figures reflect a very positive scenario for Brazil. Among all BRIC countries (Brazil, Russia, India, and China), Brazil positions itself in second place only behind China in terms of investments in information technology, says IDC. It is also estimated that investments in IT in Brazil will be larger than the country’s GDP growth (estimated by federal government at a 1.5% for 2009).

In 2008, 18% of Brazil’s electric-electronic exports went to the United States. Although this was a nine percent reduction from 2007, the United States is still Brazil’s second largest export market, after ALADI (Latin America Free Trade Agreement) countries. According to ABINEE, imports of IT products are expected to grow and are estimated to reach a 23% increase compared to 2007.

Opportunities: With roughly 35% of the region’s revenues, Brazil remains Latin America’s largest telecom market. Net revenue from telecom equipment including services was near US$62 billion in 2008 and the market estimates this to reach US$74 billion in 2012. Sector revenues are split among fixed carriers (32%), mobile carriers (34%), manufactured products (16%) and services (18%). Motorola, Nokia, Nortel and Cisco have manufacturing facilities in Brazil, giving the country one of the region’s best telecom infrastructures.

Strong competition is expected to continue in the coming years, highlighting the need to enhance the existing network. The third generation technology (3G) was launched in 2008 and telecommunication companies need to strengthen their organization and expand their networks to prepare for future competition.

Telecom equipment suppliers in Brazil expect total revenues to reach US$9.6 billion in 2008, or 21% above 2007's estimated sales of US$7.8 billion. Opportunities for U.S. suppliers exist in the areas of 2G-network maintenance, 3G-network services and applications, broadband internet infrastructure, application software, and wireless communication networks. Trends continue to be toward convergence, i.e., adding telecommunications services, to maximize the benefits derived from investments and efficient operations.

Imports from the United States increased in 2008 by 66% thanks to the favorable exchange rate. Some of the items most imported include semiconductors, telecommunications and informatics components. For 2009 a decrease in imports is expected due to the devaluation of the Brazilian real - 32% in late 2008.

Fast-changing technology, competitive prices, and the emergence of capital-rich players have all contributed to an increase in competition within Brazil’s telecommunications market. The number of fixed line subscriptions decreased significantly. However, the number of mobile phone users experienced significant growth, from 120 million in 2007 to 151 million in 2008, a market penetration of 78%. This number ranks Brazil in fifth place in terms of cellular phone users, just behind of China, United States, India and Russia.

Between 1998 and 2008 the Brazilian telecommunications sector invested more than US$ 70 million to expand, modernize, and increase the quality of services provided. In 2008 the investments made by the fixed telecommunications carriers and Pay TV service providers accounted for approximately US$ 7 million and another US$ 10 million is expected to be invested by the private sector in the coming years.

Cellular Phone Services: The mobile phone market is dominated by GSM-based technologies. Telecom operators recognize the need to broaden their offerings in order to win the loyalty of new customers, retain existing users, and benefit from the market potential of non-voice services. Price cutting and value-added services including: faster data transmission, enhanced multimedia capabilities and improved Short Message Services (SMS) are the most critical strategies for luring customers.
 
Satellites: After years of stagnation, the satellite market grew between 5 to 8% in 2008. The demand for this service is still growing especially in the video segment. Telefonica Group uses satellite technology to provide Direct to Home (DTH) services. New compression technologies will force the reduction of prices for this type of services and as a result of that, regional broadcasters are planning to change the current microwave distribution infrastructure for satellite solution. There are good prospects for trunking services for regions where there is no optical fiber, distant learning, corporate TV (with media and sales points), and municipalities that are interested in building its own Internet network.

Broadband: Broadband closed 2008 with approximately 10 million subscribers, a 25% increase to previous year. Such increase is due to the offer of triple play services - telephony, broadband and Pay TV in the same package. All the largest telecom carriers operating in country already offer this alternative. The competitive structure has been changing due to telecommunications convergence. Carriers are looking for opportunities to expand their business by bundling voice, data, and video, in order to address the triple-play demand and protect the voice market from VoIP and Pay TV operators' approach. Several carriers are keen on establishing partnerships or even acquire other companies to offer triple-play services.

Pay TV Market: The Brazilian market for Pay TV generated US$ 3.4 billion by late 2008 with approximately 6.1 million subscribers. This market is expected to grow at least 15% in the next year mainly because of the increase of the broadband penetration in country. Internet access, VoIP (Voice over the Internet Protocol), Triple-Play Services (combination of voice, video and data), and Wi-Max (wireless networking specification used for long-haul and backhaul connections), are bringing a new flow of investments and contribute for the expansion of this market over the next few years. The fixed telephony operators are starting to launch IPTV Services but there are still some regulations issues for the provision of such services. Current regulation does not allow fixed telephony operators to offer TV broadcasting. Best prospects for US suppliers include all type of solutions to improve the broadband market via cable modem, home networking platforms, IP telephones, IPTV software and video-on-demand services, among others.

Auction of 3.5 GHz WiMAX bands are still on hold: Brazil’s telecommunications regulatory agency, ANATEL, is planning to auction the 3.5 GHz frequency band in July 2009. After public consultations the agency is still evaluating the best model to auction this frequency in order to increase competition between players and minimize the prices of services to final customers. The main issue is whether fixed line operators can take part in the auction in regions where they already provide telephony services.

Brazil’s wireless industry trends towards convergence, i.e., adding a range of telecom services to a single medium to maximize benefit and efficiency. Despite the economic downturn Motorola, Nokia, Samsung, Sony-Ericsson, Siemens, and LG intend to increase cell phone production to meet growing domestic and regional demand, and even export to North America. High Definition Television was launched in December 2007. TV broadcasters will be looking for products/services to provide interactivity and mobility.




  2012 3rd International Conference on Environmental Science and Development (ICESD 2012)