Revenue from its fixed-line operations continues to suffer from increasing competition, and the company is budgeting for a rise of up to 12% on capital spending in 2013 from last year.
“We are not happy with our general performance in the fixed business, mainly in TV and broadband,” said Paulo Teixeira, senior executive at Telefónica Brasil. “We are in the process of implementing a strong tactical plan to turn around this business.”
Following widespread growth in the Brazilian market, there has been a dramatic slowdown due to overcrowding in the market, increasing the battle for high spending subscribers.
Broadband competition has increased significantly in Telefónica’s core São Paulo market, contributing to a 7.6% drop in fixed-line revenue in Q4, compared to a year earlier.
An improved broadband performance is likely to boost the company’s bid to compete with América Móvil’s NET unit.
Telefónica’s decision to integrate with mobile unit Vivo also allows the company to generate more cash despite aggressive pricing set by wireless competitors.
According to Reuters, Teixeira is hoping the Brazilian wireless market will be more rational this year, due to regulatory restrictions.
