Vivo discusses GSM overlay plans with vendors

27 Jun 2006

Brazil’s largest mobile operator Vivo is holding talks with various equipment suppliers about proposals to roll out a GSM overlay on its existing CDMA network, writes BNamericas citing local newspaper Gazeta Mercantil. Vivo, Brazil’s sole CDMA operator, is said to be consulting companies such as Ericsson, Siemens, Nokia, Huawei and Alcatel over the plan, to determine the exact cost of such an undertaking. It is estimated that the project could eat up as much as EUR2 billion (USD2.51 billion) of the EUR9 billion global investment budget set aside by Vivo co-owner Telefónica Móviles for the period 2006-09.

Although Vivo maintains its grip as the leading mobile operator in the country with 32.9% of subscribers in May 2006, its share has slipped from 33.33% in April and from 40% in January 2005. Merrill Lynch has downgraded Vivo saying ‘its share price did not reflect the risk of a significant increase in investments, the loss of clients and pressure on operating margins that a migration to GSM could cause.’ Telefónica Móviles and Vivo partner Portugal Telecom have established a group of senior executives to restructure Vivo’s business strategy and halt its sliding market share.