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Oi Telecom

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OI Telecom

Oi’s profile of activites covers a broad range of communications products. The company offers fixed and mobile telephony as well as internet services (ISP and broadband) to private and corporate clients including other telecoms companies in Brazil. The balance shows a high percentage of cash flow generation through their wireline operations and a smaller percentage of the high-growth services mobile and broadband[1].
Brazil’s telecom market changed rapidly after the privatisation of state owned companies in the late 90’s last century. Today approximately 300 Internet Service Provider compete in the brazilian internet market. Although the first broadband connections were established in 1999, fast internet access is still largely limited to major cities. However, as shown in table 1 the internet market is fast growing with 65% rising in 2005 and 41% in 2006 to 36 million internet subscribers in the end of 2007. It is the world seventh largest internet market and it is estimated to grow further in the next years.

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Table 1: Brazil Telecoms Sector - Internet

The fixed-line market in Brazil is still dominated by the former state owned operating companies Oi (former Tele Norte Leste) and Telesp. Together these companies run more than 94% of the fixed-lines in Brazil. Oi has had the concession to provide wireline services in 9 states, which as shown in figure 1 form region II. With the state allowance in 2003 every company could operate in each other’s concession area. In spite of the new regulation most of their services still remain limited to their original operating areas which provide the firms with a high potential of customer acquisition in competitor controlled areas[2].

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Figure 1: Brazil’s regional breakdown in the telecom sector

However, telephone main lines declined constantly in recent years, due to the very high

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