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Publication Date: July 2008
EVENT SPOTLIGHT
Mobile operator Vivo Participações posted losses between May 30 and June 6, 2008, down 14.3% over the week at US$6.01. Vivo, Brazil’s largest mobile operator, was affected by news that the National Telecommunications Authority (Anatel) is considering going forward with the reduction of mobile interconnection fees. This previously wasn’t expected to occur until 2010.
As in Brazil, mobile interconnection rates (fees charged to the originating networks by a mobile operator to complete a call) are decreasing systematically throughout the region. In most cases, after a detailed cost analysis, regulators proposed changes in order to foster competition and reduce pricing, which affects the end user. Since lower interconnection rates mean lower interconnection revenue, mobile operators are obligated to offset losses with new products and services. Recently, mobile data revenue has done well to compensate for drops in interconnection revenue. Pyramid Research believes that interconnection rates are falling in Latin America as regulators seek to compensate for market imbalances. As a result, we believe that mobile data revenue will be one of the key sources to mitigate the drops in interconnection fees because of the fact that they are driven by customer demand, rather than a regulated tariff.
Author: Jose Mario Lopez
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