Brazilian Mobile Market Consolidation Isn't Over, Says Yankee Group Report.

Business Editors/High-Tech Writers

BOSTON--(BUSINESS WIRE)--Jan. 5, 2004

With Brazil's ever-changing competitive communications market, winning companies now have to position themselves as full-service providers (FSP) rather than only fixed-line or mobile operators. According to the Yankee Group report, "Competition and Consolidation Drive Brazil's Mobile Operators to Become Full-Service Providers," these companies will be able to provide fixed and mobile services, local and long-distance calls, voice and data services, and applications and content.

"Brazilian market consolidation has not finished. Operators are looking for scalability to remain competitive," says Luis Minoru, Yankee Group Wireless/Mobile Latin America senior analyst. "Consequently, we foresee operators becoming national service providers instead of remaining regional operators.

"The Yankee Group recommends that operators focus on becoming full-service providers. As competition increases and the number of new users decreases, the battle against churn becomes paramount," says Minoru. "To avoid churn, operators will have to demonstrate more value to customers. However, we anticipate that network vendors will have tough times ahead. As the market consolidates, operators' bargaining power increases. In addition, operators have agreed to share infrastructure to decrease operational costs even further."

Findings of the report include:

By the end of the first quarter of 2003, Brazil had 35.2 million mobile users. The largest operator is Vivo with 48 percent market share, followed by Claro and TIM.

Seven groups control Brazil's mobile market. However, in the next 12 months the number of competitors will decrease to four or five. Three pending deals involving Opportunity Bank and Telecom Italia-owned assets (Brasil Telecom PCS, Telemig Celular, and Amazonia Celular) will impact the market's future. Consequently, by 2004, there will be either three or four nationwide groups competing in Brazil's mobile market.

NOTE TO EDITORS

For interviews, contact Luis Minoru, [e-mail].

The Yankee Group (http://www.yankeegroup.com)

The Yankee Group is the global leader in communications & networking research and consulting. The company helps businesses understand the opportunities, risks, and competitive pressures of developing, deploying, and consuming products and services that drive communication or information exchange. Now in its fourth decade, the Yankee Group is based in Boston with offices throughout North America, Europe, Latin America, and the Pacific Rim.