Operators in the Brazilian telecommunication services market are realizing that traditionally profitable end-user segments such as higher end users and multinational corporations are on the edge of saturation.

The telecommunications sector in Brazil has been a key contributor to the country’s GDP and is expected to register growth rates higher than the entire Brazilian economy. The telecommunication services market is expected to grow on an average 6.1 percent from 2005 to 2011, with mobile telephony among the strongest revenue generators. "While fixed telephony services generate the most significant revenues, mobile telephony is likely to remain a key highlight of the telecommunications sector up to 2011, when it is anticipated to exceed the fixed telephony in terms of revenues share," observes the analyst of this research service. "This is largely due to the penetration strategies adopted by operators especially in terms of handset subsidies."

Introduced only in 2005, VoIP lines are expected to grow at a compound annual growth rate (CAGR) of 103.1 percent due to the increase in the number of users of long distance voice communications, wider base of broadband subscribers, and the decreasing service prices. The broadband and Internet access services are also growing rapidly largely due to operators’ campaigns to foster penetration among lower social classes of users.

Lower Class Users and SME Segment Offer New Growth Opportunities

Operators in the Brazilian telecommunication services market are realizing that traditionally profitable end-user segments such as higher end users and multinational corporations are on the edge of saturation. Their focus has therefore been on establishing affordable price policies to penetrate the lower class users and small and medium enterprises (SMEs) segments. Except for VoIP line services, in all the other service markets such as Pay-TV, Broadband and Internet access, and data communications services, the main competitors already offer or are expected to offer customized solutions and plans targeting these segments.

Aggressive pricing strategies and the consequent increase in competition levels are expected to rise from the mounting interest in lower class of users. "Currently, the five main telecommunications groups comprise 90 percent of the total Brazil telecommunication services market," says the analyst. "The change in market dynamics is expected to bring in new opportunities, especially in lower end users and SMEs segments, and open up the market to new entrants."