# Speedtest® Market Report

### Brazil

#### Published August 18, 2016

The economic and political turmoil in Brazil has created a tumultuous environment for the telecommunications industry, but it is proving to grow despite the less-than-ideal conditions. Fixed broadband speeds have shown marginal year-over-year improvements from June 2015 to June 2016 of an 8% increase in download speeds to 16.53 Mbps and 11% increase in upload speeds to 6.08 Mbps. Mobile broadband is where drastic improvement was seen with download speeds improving 37% from last year to 11.31 Mbps in June and upload speeds gaining by 35% to 4.27 Mbps. While both of the fixed and mobile broadband sectors are controlled primarily by a handful of providers, it remains to be seen how a relatively small competitive field will impact internet service in the future. Thus far, it looks like speeds have been improving despite the other factors plaguing the country. This report focuses primarily on January to June 2016 unless otherwise stated.

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### Brazil Fixed Broadband Speeds

### Report Stats

#### TEST COUNT:

14,648,230

#### 1-YEAR CHANGE (DOWNLOAD):

8 %

#### 1-YEAR CHANGE (UPLOAD):

11 %

### Brazil Mobile Speeds

### Report Stats

#### TEST COUNT:

2,450,815

#### 1-YEAR CHANGE (DOWNLOAD):

37 %

#### 1-YEAR CHANGE (UPLOAD):

35 %

Since Internet arrived in Brazil over 20 years ago, broadband services have proven to be as diverse as every other aspect of life in the country. While São Paulo is the most connected city of Latin America, large portions of the country don’t have anything the United States’ Federal Communications Commission (FCC) would classify as broadband (25 Mbps download and 3 Mbps upload). A large and sparsely populated territory isn’t promising when your business is burying fiber in the ground or planting 4G towers, and Brazil shares this trouble with every other big country in the world. It doesn’t help that telecommunications in Brazil is highly regulated, highly taxed and highly concentrated in few national players: three groups share a combined 85% of the broadband market and four groups share 98% of the mobile market (three of them also operate in the broadband market).

The three groups that sell both broadband and mobile packages are: Vivo, a subsidiary of Telefonica Spain; TIM, which is part of Telecom Itália; and Oi, which recently filed for judicial protection, and is the only Brazilian telecom company among the big four. América Móvil from Mexico, the fourth relevant player, operates under two different brands: NET for fixed broadband and Claro for mobile.

Various regional players fill the gap where the big players do not have coverage, but they do not qualify as top providers because there aren’t enough consumer tests for a complete understanding of their network at a national level. You won’t see TIM Live in overall Brazil results for this reason either; their consumer tests were not high enough to show at the national level.

Brazil has been in political and economic turmoil since the presidential election of 2014, and one crisis worsens the other. The Brazilian economy is in its third year of contraction, totaling an astonishing 10% decline, mostly due to a government that raised its spending at a time when the main exports of Brazil, mainly commodities, lost substantial value. Brazilian families are indebted and facing unemployment. In 5 years, the Brazilian Real lost almost half of its purchase power against the dollar. Meanwhile, the biggest corruption scandal (Petrolao) is spreading through the political class and, coupled with mismanagement of the government budget, caused the impeachment of president Dilma Roussef. In this context, companies would rather wait for an economic recovery and political stability than invest in a failing market. This instability could have impacts on speeds and the prices of broadband services for years to come, but we will have to wait and see how big those impacts are for Brazil. However, according to Anatel, the country’s telecom regulator, the promising trend is that the price of broadband has fallen a remarkable 71% in 6 years.

### Brazil Fastest ISPs

### Download

#### FASTEST: Vivo

Vivo, best known in Brazil as a mobile carrier, is the fastest ISP provider in three cities, all of them in São Paulo state, where Vivo Fibra was first launched in 2012. The strategy behind the acquisition of GVT, which Vivo closed and rolled into its operations in April 2016, is to expand its fixed line operations to the rest of Brazil.

### Upload

#### FASTEST: Vivo

Similar to the download standing, Vivo is at the top of the upload game as well. The installation of Vivo Fibra in São Paulo state has improved not only download, but upload speeds there. If you’re lucky enough to live in the same area where service is located, and can afford to pay for it, then you have access to world-class speeds.

The three big operators, Vivo, NET and Oi, are also the ones that stand ahead in Speedtest results.

Vivo, considered a national player and the top performer in the Brazil tests, has a vast presence in the state of São Paulo, but a limited presence in the rest of the country. Looking at a list of where Vivo provides service in Brazil, only three of their top 200 cities, based on test count, are outside of São Paulo Region. Similarly, when looking at top download speeds, 186 out of the top 200 cities are in São Paulo. Vivo shows an impressive top tier download speed of 91.48 Mbps. Besides the download speed, Vivo’s upload speed shows 56.2 Mbps, which is the fastest upload speed and the best upload to download in the country with a ratio of 61%. This all goes to show that despite their small footprint, Vivo’s speeds are astronomical compared to its competition.

Vivo, however, purchased Global Village Telecom (GVT), once owned by the French group Vivendi, in September 2014. The GVT brand was killed by Vivo in April 2016. The purchase of GVT gives Vivo an extensive network that spans the most populated cities of Brazil and that was, at the time of the purchase, considered the best broadband amongst consumers. This access to GVT’s network should help increase Vivo’s market reach.

NET, which operates mostly in state capitals, is at a distant second nationally, with a top download speed of 57.43 Mbps, and an upload speed of 6.11 Mbps; a disappointing upload to download ratio of 10%.

Lastly Oi, grappling with bankruptcy, has the worst indicators, with a mere 12.66 Mbps average and a subpar upload speed of 0.94 Mbps (that is only 7% of the download). Given the financial calamity of the company, there is no sign of improvement in the horizon.

Recently, the biggest topic discussed in the media regarding the Internet is the download quota. In February 2016, Vivo announced they would include a quota clause in new contracts and other players followed suit. Anatel, the Brazilian Telecom regulator, has both supported and dropped support to the measure a couple of times since then.

#### HOW SPEEDTEST MEASURES FIXED BROADBAND

ISPs offering fixed broadband services are ranked based on top speed performance, which is determined using the 90th percentile of the download and upload speeds, or Top 10%, of each ISP’s Speedtest results. While many ISPs offer various service tiers, our aim is to determine who is fastest by showing the performance achieved by each residential ISP’s top tier. These speeds represent customers who subscribe to faster service tiers and provide an accurate view of the top-end performance of a given ISP. It is important to note that customers subscribing to higher tiers will generally pay more for their service than the average subscriber. For purposes of this report, only Top Providers in a given location were included in the analysis. Each ISP that accounts for at least 3% of the total sample size in the geographic area are included as a Top Provider. When analyzing Brazil overall, we use the average speed, as it represents the experience of a typical Brazilian consumer. When comparing ISPs individually, we use top speed performance, as it represents the performance a consumer could reasonably expect to receive if they subscribe to one of the ISP’s higher tiers of service.

The Ministry of Science and Technology released a note saying the quota imposition was illegal. Politicians were quick to propose laws prohibiting the quota, but they have yet to be approved. Download quotas are highly unpopular and it is likely that a law will eventually be passed prohibiting or strictly regulating the imposition of download quotas, which may increase prices and hurt investments in the long run.

### Brazil Fastest Mobile

### Download

#### FASTEST: Claro

Claro is the fastest mobile provider in all but one of the biggest cities in Brazil. In the past three years, Claro and its sister companies invested together US$ 10 billion in Brazil.

### Upload

#### FASTEST: Claro

Claro also provides the fastest upload speeds compared to the competition. Their upload to download ratio is 35%.

Brazil’s average download speeds have improved by 37% from last year, ending June 2016 with 11.31 Mbps. 4G download speeds have also improved slightly by 5% year-over-year to 21.27 Mbps in June 2016. Since its debut in 2013, Brazil’s 4G coverage has reached 500 cities. Although this is only 9% of Brazil’s 5,570 municipalities, it effectively covers 55% of the country’s population. TIM alone covers 443 cities (52% of the country population) while Claro, Vivo and Oi each cover less than 200 cities (between 45% and 48% of the population, each).

Claro, the top performer with 19.01 Mbps, is the third largest mobile operator in Brazil. Claro was set to invest R$ 30 billion (US$ 8.8 billion) in the past three years. Recently, however, the company forecast a its “Claro Investment Cuts” to between 10% and 20% in its investment for 2016. The new investment structure is dependent on the growth of economy, which doesn’t look promising for 2016 and 2017. Claro also provides the fastest 4G connection speeds nationwide with 29.19 Mbps download and 10.72 Mbps upload.

Vivo is the biggest mobile operator in market share and comes in second in our charts with an average download speed of 15.00 Mbps. Vivo has invested R$ 226 billion (US$ 66 billion) from 1998 to 2004 in Brazil and intends to invest R$ 8.9 billion (US$ 2.6 billion) in 2016. Vivo is using the massive fiber network of former GVT, which spans 159 cities, to connect its transmission towers and improve the quality of its mobile portfolio. An expected 30% of Vivo’s towers will be connected to fiber by the end of 2016, which is expected to enhance its backhaul operation.

Oi comes in third place with a distant 11.39 Mbps download speed. The company has just filed for judicial recovery with R$ 65 billion (US$ 19 billion) in debt, the biggest request for recovery in Brazil’s history. Oi tried to exchange the payment of R$ 1.2 billion (US$ 354 million) in fines from Anatel into investment, but the negotiation was halted after the judicial recovery request. No additional investments are anticipated from Oi in the near future.

#### HOW SPEEDTEST MEASURES MOBILE CARRIERS

The top mobile carriers in Brazil are ranked using the average download speed of “Modern Devices” - those devices that are capable of connecting to the fastest, broadly-available wireless networks. In Brazil, this means devices capable of 4G LTE. This ensures we provide an accurate view of the typical performance a user can achieve using a modern smartphone or tablet on a given mobile network. Top carriers are those that each account for at least 3% of the sample size in the geographic area. When analyzing the country as a whole, we use the mean value of all cellular results to account for the typical user. However, when analyzing individual carriers, we look at “Modern Devices” to account for top speeds available in Brazil.

TIM is in fourth place with 11.12 Mbps, not far behind Oi. TIM deployed 4G in 22 new municipalities in April alone, totaling 443 cities, more than double that of second place Vivo. TIM invested R$ 800 million (US$ 236 million) in its Brazilian operation in the first quarter of 2016.

Nextel is fifth with a not-so-thrilling 5.12 Mbps download speed, having 4G presence only in Rio de Janeiro city. Nextel Brazil, not to be confused with Nextel Communications, was formerly a radio trunk operator and is moving towards operating as a 3G and 4G provider. The company is currently seeking to sell shares to raise money for its operations. Nextel has 1% of the Brazilian market.

## City Leaders

## Market Summary

Brazil suffers from a concentrated telecom sector and suffocating regulation and legislation. However, as we’ve seen, Brazil’s fixed and mobile broadband speeds have increased nationally while prices have decreased. Normally, this is terrific news for consumers, but the political and economic environment will likely impact speeds and prices moving forward as company’s reassess continued investments in the country. Vivo’s purchase and absorption of GVT is expected to have a positive impact in both the broadband and mobile landscapes. Also, if Claro and its competition can continue to improve speeds at the same rate as the past year, then Brazilian’s will win on the mobile front. Oi’s bankruptcy, however, may prove enough to destabilize the industry placing consumers in a worse position overall.

This report was written with contributions by Roger Krolow.

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