Ércio Zilli, the president of Brazil’s national association of mobile phone companies Acel, has told local newspaper Valor Econômico that consolidation of the country’s wireless market is ‘inevitable’. According to reports from BNamericas, Zilli told the paper that there is not enough room for four or five companies to survive, adding that recent overtures by América Móvil-backed Claro regarding the acquisition of number two operator TIM Brasil, is proof positive that the sector is heading towards a shake down. Elsewhere, speculation exists over whether Portugal Telecom will withdraw from its joint venture with Telefónica in Brazil’s largest mobile phone company Vivo.
Zilli notes that the Brazilian mobile phone market is one of the least profitable in the world, largely the result of slow economic growth and tough competition, adding that the government’s target of 5% GDP growth in 2007 is likely to make matters worse. ‘Margins may get worse next year… It is difficult to improve margins when there is low economic growth and intense competition,’ Zilli said.