Date: June 23, 2010
Pages: 15
US$ 895.00
Publisher: Ovum
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)

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Oi is the umbrella brand under which Tele Norte Leste Participacoes operates, and is the market leader in the Brazilian telecoms market. With an extensive service portfolio, Oi is aggressively pushing triple- and quad-play services, and is well positioned as a strong player in this market. Bundled offerings have the potential to enable Oi to generate additional revenues from its existing customers by cross-selling its services, while at the same time keeping its subscriber acquisition costs low. Bundled services are also a key tool to attract customers from other service providers, especially following the implementation of fixed and mobile number portability.

However, the market dynamics in the converged services space have changed during 2010, with the top two mobile operators, Vivo and Claro, announcing intentions to expand their service portfolios. If the mergers of Claro with Embratel and Vivo with Telefonica Brazil are completed, the market could become very competitive for Oi. Both Vivo and Claro have strong marketing and branding credentials and both have a much larger existing mobile subscriber base than Oi, giving them greater scope to cross-sell and upsell fixed-line and broadband services.

Oi has identified mobile as a high-growth market and is taking several initiatives to drive its growth. To increase the uptake of its mobile services, it is targeting post-paid subscribers with its bundled offerings. In the prepaid segment, Oi has moved completely to a SIM-only model to reduce costs associated with handset subsidies in an effort to ensure that low-ARPU customers are profitable. However, this seems to have had some negative effects on Oi's net additions, leading to a decline in its overall market share.

Although Oi had shown interest in international expansion, aspiring to achieve a subscriber base of approximately 30 million in Latin America, the Caribbean, and Portuguese-speaking Africa over the next five years, it is yet to take any initiatives in this direction. Given its large debt at a time when revenue growth is slowing and margins are shrinking, focusing on issues closer to its home market and putting international expansion on hold has been a prudent step by senior management.
Executive summary
In a nutshell
Ovum view
SWOT analysis
External conditions
Competitor environment
Strategic objectives
Bundled services to attract post-paid customers
Counting on VASs to boost mobile ARPU
Driving growth through mobile prepaid segment
SIM-only offering
Incentives and promotions
Broadband: an important growth driver
Pay-TV: making some headway
Operational analysis
Future outlook
Company information
Quick integration of Brasil Telecom
Financial highlights
Segment analysis


Table 1: Oi operational analysis
Table 2: Oi key financial indicators
Table 3: Oi segment analysis


Figure 1: Tele Norte Leste Participacoes' structure
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