Vivo prioritizes high-end users to drive growth

Friday, February 25, 2011

Brazilian mobile operator Vivo (NYSE: VIV) emphasized higher-end consumers to realize year-on-year revenue gain of 10.1% and a profit bump of 325% in the fourth quarter, chief executive Roberto Lima said in a conference call with investors.

"We decided not to engage in a price war," he said.

The company conceded a sliver of its overall industry-leading market share, which fell 0.04% from 4Q09 to 4Q10, to increase subscribers with data packages and post-paid plans.

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Eying mobile broadband users, Vivo prioritized expenditures on its 3G network. The operator concluded Q4 with 40.1% of the data connections and 72% of all net additions in this segment.

Vivo increased its market share of post-paid clients, meanwhile, to 35.2% to close 2010.

The focus on elevated-Arpu subscribers, along with heightened brand recognition, also helped lower the company's customer acquisition costs, Lima added, as Vivo concentrated on up-selling its existing patrons.

Still, Vivo's prepaid business remained profitable, Lima said, adding that customer support costs for post-paid users were higher.