Page 39 - 2012 Annual Report

VIVENDI l 2012 l Annual Report 39
GROUP PROFILE – BUSINESSES – LITIGATION – RISK FACTORS 1
1
SECTION 2 - BUSINESSES
GVT
2.6. GVT
2.6.1. Strategy/Positioning
Two kinds of operators lead the Brazilian fixed telecommunications
services market: concessionaries who are subject to universal service
obligations (they result from the privatization of the incumbent
Telebras); and alternative operators that compete with concessionaries
in their Regions. The provision of fixed-line local telephony in Brazil is
organized into three Regions: Region I (Northern and Northeast regions,
including Rio de Janeiro), Region II (Center and Southeast, and the
Federal District – Distrito Federal – not considered to be a Region) and
Region III (São Paulo). A fourth Region is composed of national and
international long-distance operations. This was determined by Anatel
(Brazilian Telecommunications Agency, which promotes and develops
telecommunications).
In late 2000, GVT began operating as the second operator, or a mirror
company to the local incumbent in Region II. It currently operates in 139
Brazilian cities in 20 states and in Brasilia (the Federal District). The
company has licenses to operate all types of fixed-line telecommunications
services nationwide.
GVT continues to pursue a strategy of growth by expanding its network
coverage in current cities and expanding its territorial reach in other
additional key markets located outside Region II, creating a national
presence in all populated areas of Brazil. In 2012, the company launched
operations in 20 cities, including three state capitals in the Northeast.
Together, the 20 new cities have almost 5 million inhabitants. The
company is currently planning to launch its network in 14 additional cities
in 2013, including the city of São Paulo, which is Brazil’s biggest market
with almost 12 million inhabitants.
GVT is the fastest growing telecommunications service provider in Brazil in
terms of revenue and EBITDA. The company’s Compounded Annual Growth
Rate (CAGR) over the period 2006-2011 is 34% for Revenue and 40% for
EBITDA. In 2012, these indicators indicated a rise of 28% in revenue
growth and a rise of 33% in EBITDA (at constant foreign exchange rate).
GVT offers innovative bundles combining high quality and performance at
very competitive prices for all market sectors: i.e., Retail/Small to Medium
Enterprises (“SME”) and Corporate. It delivers up to 100 Mbps speed
for broadband to the retail market with differentiated value-added services
and also integrates an innovative Pay-TV service to retail customers.
In August 2012, GVT launched “Power Combo GVT”, a new “triple-play
offer” of products offering more benefits to customers that acquire it
including Broadband Internet, Pay-TV and fixed-line telephony. This new
triple-play offer addresses people’s desire to always be connected and to
have quick access to all Internet content on all of their devices (personal
computers, tablet computers, smartphones and TVs).
This is part of the strategy to lead the broadband and Pay-TV multiservice
segment in Brazil, delivering content, interactivity and managed services
over broadband Internet. The company is aware of the need to deliver
ultra-high speed Internet, enabling the customer to have a truly connected
home, with many devices operating over the same broadband connection.
It is this conviction that, following the 2012 Power Combo GVT launch,
gave rise to its new positioning as the operator that makes the future
happen today: “Você no Futuro, Hoje”.
GVT is considered to be the most established and well-recognized
alternative to the incumbent fixed-line and Pay-TV providers (the
“Incumbents”) in the Brazilian market, enabling it to continue to gain
market share from its main competitors in its current areas of operation,
as well as in new areas where it launches services. In 2012, GVT captured
an average share of approximately 23.9% of the voice and broadband
markets, as well as 5.7% of the Pay-TV market, in the 139 cities where
it operates. An average of 28% of new customers in the Pay-TV market
became customers of GVT during the year.
In 2012, GVT further improved the quality of its services. It was recognized
as the “Fixed-line Telephony Telecom Operator that treats its customers
with the greatest respect”, according to an independent national study
of consumers (conducted by the Shopper Experience consultancy, in
partnership with “Consumidor Moderno” Magazine). GVT was chosen as
the best customer service company in the broadband segment and fixed-
line telephony by the Brazilian Customers’ Relationship Institute (IBRC)
and is listed as one of the 25 best companies from all sectors.
INFO Magazine (the main Brazilian technology publication) classed GVT’s
broadband service as the best in Brazil for the fourth consecutive year,
and also classed GVT as the most reliable fixed-line telephony company
for the third year in a row. The company is ranked as one of the 20 most
innovative Brazilian companies for the fourth consecutive year, according
to the Best Innovator Prize as determined by ATKearney.
2.6.2. Products and Services
GVT offers comprehensive and advanced telecommunications services
to markets ranging from large, stable sectors with strong cash flow
generation (such as conventional telephony) to high-growth sectors (such
as broadband, Pay-TV using satellite and IPTV technology, Internet services
and VoIP). This approach allows the company to target a broad market
and offer one-stop shopping for all the fixed-line telecommunications,
Internet and Pay-TV services that its customers require. GVT’s presence
across different markets with diversified products and customer segments
helps stabilize its revenues and reduces its exposure to any one end-
user application or customer. It continues to offer flexible bundles at
competitive prices for comparable products and services offered by its
main competitors, while at the same time increasing its margins over the
preceding years.
GVT is the leading alternative fixed-line telecommunications and Pay-TV
operator in Brazil.