mavam brasil 10th edition - messaging

Grupo Convergencia | Convergencialatina | Convergencia Research

Avenida Belgrano 680 – Piso 9 (C1092AAT) - Buenos Aires, Argentina

T. + 54 11 4345-3036

[email protected] | wwww.convergencialatina.com | [email protected]

MAVAM Brazil 10th Edición

Editorial

Oliveira Vancrei

Acision

VP regional Am´wrica Latina

As the global leader in mobile messaging with more than one

SMS infrastructure market (as calculated by Informa Telecoms & Media in

Acision launches the tenth edition of MAVAM Brazil with the special theme

¨Messaging”. This edition continues to demonstrate Acision’s commitment to

providing a tool that analysis the trends associated with the consumption of mobile

VAS and messagin

and how this impacts operators.

In 2011, we witnessed the Brazilian carriers launch aggressive pricing models and

offers around SMS to encourage the uptake of this service, while also highlightin

the advantages and potential of using it. However, while widely used in other

countries in Latin America, we still see low penetration in the Brazilian market.

Subscribers have started to respond positively to alternative and better pricing

models, and t

Brazil, with some carriers experiencing a rise in traffic by up to four times,

depending on the carrier.

Net sales of SMS and MMS during the third quarter of 2011 reached R$ 964

million, repre

stands for a major proportion of mobile VAS today, we have used this MAVAM

research to better understand the reasons that motivate or inhibit the use of text

and multimedia messaging, with the resul

We also demonstrate that opportunities based on SMS go beyond the basic

service as we know it today with value

an enriched user experience through services such as group messaging, auto

reply / auto

increase messaging revenues by up to 15 percent and vastly improve the

messaging experience and relevance for the end

In addition, we expect to see widespread adoption

and Prepaid SMS Reply services in

collect call procedure enables prepaid customers to send messages even when

out of credit.

We also expect IP Messaging services to be a priority for oper

they seek to deliver new innovative services to compete with ‘OTT’ messaging

services. IP Messaging, such as is RCS

the same user experience, reach and reliability that users have become

accustom

network and delivering services such as IM, group chat, file transfer and video

sharing. Operators will also begin to adopt cloud

become a prominent delivery model

will be brought to market faster.

With this in mind, this edition of MAVAM has researched the potential demand for

new messaging services that enrich and expand the use of messaging, how users

use messaging servi

and driving up operator revenue.

We hope you enjoy reading!

| 2 |

As the global leader in mobile messaging with more than one

SMS infrastructure market (as calculated by Informa Telecoms & Media in




VAS and messaging across the Brazilian mobile market during the last quarter

and how this impacts operators.


offers around SMS to encourage the uptake of this service, while also highlightin




models, and this research indicates that consumption of SMS is increasing in


depending on the carrier.


million, representing 37.1% of VAS revenues. Although SMS and messaging



and multimedia messaging, with the results represented in this report.


service as we know it today with value-added, personalised messaging providing

an enriched user experience through services such as group messaging, auto

reply / auto-signature and parental control. These services have the potential to


messaging experience and relevance for the end-user.

In addition, we expect to see widespread adoption of services like Collect SMS

and Prepaid SMS Reply services in 2012, which modelled on the well known


out of credit.

We also expect IP Messaging services to be a priority for oper


services. IP Messaging, such as is RCS-e, is key to delivering services that have


accustomed to with SMS, while leveraging the capabilities of broadband IP


sharing. Operators will also begin to adopt cloud-based services, which will

become a prominent delivery model in 2012, also means that these innovations

will be brought to market faster.



use messaging services and looks at business models for paying for each service

and driving up operator revenue.

We hope you enjoy reading!

As the global leader in mobile messaging with more than one-third of the global

SMS infrastructure market (as calculated by Informa Telecoms & Media in 2011),




g across the Brazilian mobile market during the last quarter


offers around SMS to encourage the uptake of this service, while also highlighting




his research indicates that consumption of SMS is increasing in



senting 37.1% of VAS revenues. Although SMS and messaging



ts represented in this report.


added, personalised messaging providing

an enriched user experience through services such as group messaging, auto-

signature and parental control. These services have the potential to


of services like Collect SMS

2012, which modelled on the well known


We also expect IP Messaging services to be a priority for operators in 2012, as


e, is key to delivering services that have


ed to with SMS, while leveraging the capabilities of broadband IP


based services, which will

in 2012, also means that these innovations



ces and looks at business models for paying for each service

| 3 |

Index

1. Introduction ....................................................................................................................................................................................................... 4

1.1. Value Added Services worldwide ............................................................................................................................................................... 5

1.2. Value Added services in Latin America ...................................................................................................................................................... 9

1.3. Value Added Services in Brazil ................................................................................................................................................................ 12

2. MAVAM (Acision Monitor for Mobile VAS) ...................................................................................................................................................... 16

3. Messaging Services (Special Topic) ............................................................................................................................................................... 17

3.1. SMS ........................................................................................................................................................................................................ 18

3.1.1. Future importance of SMS ................................................................................................................................................................ 20

3.1.2. Barriers to SMS usage ...................................................................................................................................................................... 20

3.1.3. New SMS and MMS-based services ................................................................................................................................................. 21

3.2. MMS ........................................................................................................................................................................................................ 25

3.3. Instant messaging (IM) ............................................................................................................................................................................ 28

3.4. Advantages of SMS over instant messaging ............................................................................................................................................ 33

3.5. Advantages of instant messaging over SMS ............................................................................................................................................ 34

3.5.1. Service preference among recipients ................................................................................................................................................ 35

3.5.2. Service preference based on circumstances ..................................................................................................................................... 36

3.5.3. Service speed and reliability .............................................................................................................................................................. 37

3.6. Use of messaging during end of year festivities ....................................................................................................................................... 38

3.7. Use of advertising to reduce SMS prices ................................................................................................................................................. 39

4. MAVAM Brazil ................................................................................................................................................................................................ 40

4.1. Entertainment .......................................................................................................................................................................................... 40

4.1.1. File types (images, music, games, ringtones and videos) .................................................................................................................. 40

4.1.2. Mobile TV (viewing) .......................................................................................................................................................................... 41

4.2. E-Mail ...................................................................................................................................................................................................... 41

4.3. Mobile Internet ......................................................................................................................................................................................... 43

4.4. Social Networks ....................................................................................................................................................................................... 45

4.5. Mobile Marketing ..................................................................................................................................................................................... 47

4.6. Cash and mobile banking ........................................................................................................................................................................ 49

4.7. GPS and maps ........................................................................................................................................................................................ 50

5. Conclusions .................................................................................................................................................................................................... 51

6. Glossary ......................................................................................................................................................................................................... 52

7. Technical File ................................................................................................................................................................................................. 56

8. Equipo ............................................................................................................................................................................................................ 58

| 4 |

1. Introduction

During the third quarter of 2011, we saw mobile telephony connections pass the 100% milestone in Latin America,

although there are still countries like Mexico, Bolivia, Nicaragua, Cuba, Peru and others yet to hit this mark. Today,

there is more than one connection per person because of circumstances where people own more than two

telephones, have machine to machine (M2M) connections, mobile broadband USB modems and connections

which are almost redundant.

2011 also saw smartphone penetration increase and mobile broadband services evolve. Mobile broadband is also

driving a surge in post-paid clients for operators, especially in major markets, while pre-paid plans still account for

the larger share of the market. Social networks and apps are the drivers of this new phase for mobile broadband.

In 2012, the main markets in Latin America will have adopted portability and a number of mobile virtual network

operator (MVNO) businesses will be built. Today, Columbia has the biggest MVNO market which is principally

focused on broadband. New virtual mobile operators are expected to enter the markets in Brazil, Argentina, Mexico

and Chile, as well as other countries. These operators focus on niche markets and their potential market share is

estimated to be 2%. Virgin Mobile is expected to be the newest entrant, which is seeking to become the first

regional mobile virtual operator focusing on the 14-34 age range.

The arrival of mobile virtual operators brings a new outlook for spectrum in various countries, generally attracting

new players who will increase competition.

Based on these factors, 2012 should see more competition rise, especially in mobile broadband, with growing use

of social networks and application by pre-paid clients as well as new businesses.

| 5 |

Telefónica

AT& T / Verizon

Vodafone

China Telecom

France Telecom

America Móvil + TEF Latam

NTT Docomo

1.1. Value Added Services worldwide

To understand the value added services (VAS) business worldwide, we analyzed VAS evolution for the world’s

biggest mobile carriers in various regions of the world. We compared the 3Q values for 2010 and 2011, except for

China Mobile, whose data only allows us to compare changes between 1H 2010 and 1H 2011.

The companies evaluated are:

� América Móvil – Latin America

� AT&T - United States

� China Mobile – China*

� Orange - France

� NTT Docomo - Japan

� Telefónica

� Telefónica Spain

� Telefónica United Kingdom

� Telefónica Latin America

* China Mobile 1H 2010 x 1H 2011

� Verizon – United States

� Vodafone

� Vodafone United Kingdom

� Vodafone Germany

� Vodafone India

Chart 1

Operators analyzed

| 6 |

Chart 2

Change in share of voice service revenue vs. value added service (VAS) revenue. Between the

second and third quarter 2011. Except China Mobile, comparing 1H 2010 with 1H 2011

Source: Convergencia Research based on carriers’ published financial reports.

VAS continues to grow its share of total revenue among the carriers surveyed, independent of country. Positive

changes in voice service revenue contributions are normally explained by specific events, such as regulatory

measures (reduced interconnection fees – Se MAVAM Brazil 9th Edition), competition or seasonal effect.

In more advanced countries, the increase is mainly based on mobile Internet revenues driven by the increasing

number of smartphones. In countries where there is still room to grow the number of connections, SMS still plays a

major role in VAS growth.

4%

-5%

1% 1%

-3%

2%

-3%

2%

-3%

3%4%

3%

-4%

3%2%

3%

-1%

5%

0%

6%

-1%

7%

-1%

16%

-10%

-5%

0%

5%

10%

15%

20%

America Movil Telefónica Latin America AT&T United States

France Telecom France NTT Docomo Vodafone United Kingdom

Telecom Italy Telefónica United Kingdom VerizonVodafone Germany Telefónica Spain Vodafone India

Voice Services VAS Services

| 7 |

Chart 3

VAS share of total ARPU. 3Q 2011. Except China Mobile, comparing 1H 2010 with 1H 2011

Source: Convergencia Research based on carriers’ corresponding financial reports – 3Q 2011

It is interesting to compare the operations of Vodafone UK, Germany and India.

In the UK, Vodafone’s VAS represent 46% of service sales and this share is almost identical to its main competitor,

O2 UK (Telefonica).

In the UK, which has a significant number of smartphones, Vodafone’s mobile Internet service sales have grown

around 3% quarterly/per quarter, while messaging (SMS and MMS) grow around 2%. However, in Germany

messaging revenues are also growing at 2%, while mobile Internet revenues are growing at 6%.

In contrast, India, which has mobile penetration of around 70% of the population, SMS grows at around 43% and

mobile Internet at just 2%, mainly because 3G networks were only recently launched (See previous editions of

MAVAM).

In the US, both Verizon and AT&T present similar figures to Vodafone, with VAS growth of no more than 5% per

quarter and voice revenues declining by 1 to 3%, depending on the carrier, although in this market VAS

contribution (40%) is lower that the European countries where Vodafone operates. In Japan, voice and data growth

rates for NTT Docomo are similar to the USA, but the main difference is that VAS (contributing 54% of revenues) is

NTT Docomo’s main source of income, instead of voice revenues, on which other carriers depend.

54

%

46

%

46

%

43

%

40

%

39

%

35

%

32

%

30

%

26

%

25

%

25

%

16

%

0%

20%

40%

60%

80%

100%

VA

S o

ve

r th

e t

ota

l %

| 8 |

At China Mobile, whose figures only allow for a six-monthly comparison, the number of subscribers grew 11.3%

annually between the first semester of 2010 and 2011 to 617 million lines, in a country where 75% penetration still

offers room for post-paid plan growth. As new users are usually “low usage clients” and the “one client with several

chips” is becoming more commonplace, total ARPU dropped 3% in the first half of 2011, year on year.

China Mobile has 35 million 3G subscribers (5% of its customer base). At the end of the first half of 2011, VAS

represented 32.2% of carrier revenues, up 18% year on year compared with 5% for voice services, in local

currency. Of the VAS, the contribution made by SMS has dropped almost 1 percentage point, while revenue for

voice services, mobile Internet and “other VAS” rose between 0.5 and 1 percentage point.

Chart 4

Mobile penetration vs. VAS contribution to ARPU. 3Q 2011. China Mobile 1H 2010 x 1H 2011

Source: Convergencia Research based on carriers’ corresponding financial reports and penetration data from various sources.

0%

20%

40%

60%

80%

100%

120%

140%

160%VAS % 3Q 11

Penetration / 100 inhabitants

| 9 |

1.2. Value Added services in Latin America

The third quarter of 2011 ended with 607 million mobile telephone lines (including 10.5 million trunking2 lines) in

Latin America and the Caribbean1. The number of lines brings regional penetration up to 104% -taking into account

trunking lines and 102% without them-, although some countries3 have yet to achieve this level of mobile

subscriptions. South America4 and Mexico represent 89% of these lines (540.4 million). The remainder are in

Central America5 (41.7 million) and the Caribbean6 (24.6 million).

The main regional telecom holdings are America Movil, operating in 18 countries, and Telefonica, in 14. Together,

they represent 64% of lines in Latin America and the Caribbean (37% and 27% respectively).

During the quarter through September 30, 2011, total sales for mobile operators in the countries researched were

23,397 billion dollars (without trunking services revenues), up 17% year on year. Convergencia Research

estimates that 2011 should end with sales 14% up on 2010 to 91,500 billion dollars.

89% of regional revenues are generated in South America and Mexico (17,138 million dollars and 3,753 million

dollars respectively) and the remaining 11% is split between Central America (1,446 million dollars) and the

Caribbean (1,061 million dollars).

Voice revenues were up 11% between 3Q 2010 and 3Q 2011 to 15,967 billion dollars.

Revenues from device sales rose to 2,052 billion dollars, 20% up on the 1,716 billion dollars registered last year.

Value added services (VAS) continue to show the most robust growth. During the third quarter of 2011 they

generated 5,378 billion dollars, 40% up year on year. This means that VAS now represent 25% of service revenues

(voice + VAS), compared with 21% previously.

2 Trunking or Specialized Mobile Service (SME for its initials in Portuguese) is a service of terrestrial mobile telecommunications of collective

interest that uses the radio system, mainly, to perform delivery operations or other forms of telecommunications. Sourse: Annex to resolution

No. 404 of May 5, 2005 (Anatel).

3 Bolivia, Paraguay, Perú, Venezuela, Guyana y Guyana Francesa, México, Belice, Costa Rica, Guatemala, Honduras y Nicaragua, Antillas

Francesas, Bonaire, Cuba, Curazao, Haití, Islas Turcas y Caicos, Montserrat, Puerto Rico, República Dominicana y Santa Lucía.

4 Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Guiana, French Guiana, Paraguay, Peru, Suriname, Uruguay and Venezuela.

5 Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama.

6 Anguilla, Antigua and Barbados, French Antilles, Aruba, Bahamas, Barbados, Bermuda, Bonaire, Cuba, Curacao, Dominica, Granada, Haiti,

Cayman Islands, Turks and Caicos Islands, British Virgin Islands, Jamaica, Montserrat, Porto Rico, Dominican Republic, Saint Kitts and Neves,

Saint Vicente and the Grenadines, Santa Lucia, Trinidad and Tobago.

| 10 |

Chart 5

Mobile telephony revenue growth in Latin America, by service type. 3Q 2010 x 3Q 2011

Chart 6

Mobile telephony sales by revenue source. 3Q 2010 x 3Q 2011

Of the added value services, SMS and MMS have a 51% market share, with mobile Internet at 38% and other VAS

representing 11%. Other VAS revenue flows include, for example, mobile marketing, revenue sharing for content

and application downloads, mobile banking solutions and others.

Mobile Internet revenues have risen 69%, driven by the growth of smartphones, which now represent around 10%

of all cell phones in Latin America.

US

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US

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10%

15%

20%

25%

30%

35%

40%

45%

USD 0

USD 5,000

USD 10,000

USD 15,000

USD 20,000

USD 25,000

Total Mobile Phone Service

Voice Service VAS Terminals

Re

ve

nu

es

in U

SD

Mill

ion

3Q 10 3Q 11 Variation

USD 20,006

USD 23.397

USD 1.527 USD 337USD 840 USD 543 USD 144

USD 0

USD 5,000

USD 10,000

USD 15,000

USD 20,000

USD 25,000

3Q10 Voice Serv. Terminals Internet Messaging Other VAS 3Q11

Re

ve

nu

es

in U

SD

Millio

n

Voice Serv. Terminals Internet Messaging Other VAS

| 11 |

Brazil is the biggest mobile Internet market by revenue and users, although Central America and countries with low

levels of fixed line broadband penetration also drive significant volumes.

Text and multimedia messaging services have seen sales rise by 25%, mainly because there are still countries with

very low usage levels and there are still opportunities to increase usage through devices and other commercial

tactics.

The other VAS’s have seen revenues rise by 31%, based on new mobile businesses like mobile payments, mobile

marketing and application downloads, among others.

Chart 7

VAS Revenue Shares. Through 3Q 2011.

USD 15,96775%

USD 2,71451%

USD 2,05238%

USD 61311%

USD 5,37825%

Voice Serv. VAS SMS + MMS Internet Other VAS

| 12 |

1.3. Value Added Services in Brazil

Brazil ended the third quarter of 2011 with 231 million mobile telephone connections (including 3.9 million trunking

lines from Nextel), representing 120% penetration of the local population. Annual growth is 19% between the third

quarters of 2010 and 2011. When this study was being concluded, Anatel announced that there were 242.2 million

mobile lines at the end of December 2011, which increases penetration to 124%.

Chart 8

Mobile Telephone connections by operator. Variation between 3Q 2011 and 3Q 2011

Vivo remains in the top spot by number of connections, with 67 million connections and year on year growth of

16%. In second spot is TIM, with 59.2 million connections and 26% annual growth. In third place is Claro, which

grew by 18% and now has 57.5 million subscribers. Oi is in fourth place with 42.8 million connections and posted

the lowest annual growth (15%).

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20,000

30,000

40,000

50,000

60,000

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Vivo Claro TIM Oi

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3Q10 3Q11 Variation

| 13 |

Chart 9

Market share by number of lines. In thousands.

Vivo and Oi increased ARPU, which fell slightly for Claro and TIM in these quarters.

Vivo remained leader in ARPU (25.2 BRL and $ 16). In second place is TIM with ARPU of 23.5 BRL and $12.9.

Chart 10

Total ARPU for the major operators. 3Q 2010 and 3Q 2011, in BRL and US$

Gross mobile sales, including device sales in the third quarter of 2011 were 21,332 billion BRL, up 11% year on

year.

Vivo67,038

30%Claro

57,51425%

TIM59,210

26%

Oi42,871

19%

CTBC633

0.28%

Sercomtel76

0.03%

US

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US

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USD 0

USD 2

USD 4

USD 6

USD 8

USD 10

USD 12

USD 14

USD 16

USD 18

Vivo Claro TIM Oi

AR

PU

-In

US

D

3Q10 3Q11

R$

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R$ 5

R$ 10

R$ 15

R$ 20

R$ 25

R$ 30

Vivo Claro TIM Oi

AR

PU

-In

R$

3Q10 3Q11

| 14 |

Chart 11

Gross and net revenues for the mobile telephone business. 3Q 2010 and 3Q 2011, in BRL and US$

Mobile services represent 92.7% of all gross sales, up 10% year on year. The remaining 7.3% is revenues from

devices, which rose 14%.

Between July and September 2011, net VAS sales reached 2,601 billion BRL, up 36% year on year. VAS revenues

represent 19.83% of Brazilian mobile operators’ service sales, similar to the contribution recorded in 2Q 2011.

In the third quarter, mobile broadband generated net sales of 1,413 billion BRL, representing 54.3% of the VAS

business. Annual growth was 64%.

Instant messaging services (SMS + MMS) rose 14% to 0,964 billion BRL. SMS represents 37.10% of VAS.

Other VAS’s grew 6% generating net sales of 0,224 billion BRL. Other VAS represented 8.6% of the value added

business.

US

D 1

0,2

60

US

D 1

2,0

71

US

D 7

,02

3

US

D 8

,67

7

USD 770

USD 936

USD 480

USD 721

USD 11,029

USD 13,007

USD 7,503

USD 9,397

USD 0

USD 5,000

USD 10,000

USD 15,000

USD 20,000

3Q10 3Q11 3Q10 3Q11

Gross revenues in USD Net revenues in USD

In M

illi

on

US

D

Voice Services

Terminals

R$

17

,95

5

R$

19

,79

7

R$

12

,29

1

R$

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,23

1

R$ 1,347R$ 1,535

R$ 840

R$ 1,182

R$ 19,301R$ 21,332

R$ 13,130

R$ 15,412

R$ 0

R$ 5,000

R$ 10,000

R$ 15,000

R$ 20,000

R$ 25,000

3Q10 3Q11 3Q10 3Q11

Gross revenues in R$ Net revenues in R$

In M

illi

on

R$

Voice Services

Terminals

| 15 |

Chart 12

Net revenue distribution by service. 3Q 2011, in millions of BRL and US$

Vivo retains top spot in VAS as a percentage contribution to total revenues (23%). VAS represents 18% of service

sales to both TIM and Oi.

Chart 13

Net VAS sales as a percentage of service sales. Quarterly evolution 2009 – 3Q 2011.

USD 6,411R$ 10,514

80%USD 588R$ 964

37%

USD 862R$ 1,413

54%

USD 136R$ 224

9%

USD 1,586R$ 2,601

20%

Voice Serv. VAS SMS + MMS Internet Other VAS

13% 13%

15%

17%

20%

22% 22%23%

22%

23% 23%

11%12%

12%11%

12%13% 13%

14%

15%

17%18%

9% 9% 10% 10%11%

12% 11%12%

15%16%

18%

0%

5%

10%

15%

20%

25%

3Q 2009

3Q 2009

3Q 2009

4Q 2009

3Q 2010

3Q 2010

3Q 2010

4Q 2010

1Q 2011

2Q 2011

3Q 2011

Vivo

TIM

Oi

| 16 |

2. MAVAM (Acision Monitor for Mobile VAS)

MAVAM Acision aims at analyzing the trends of value added services in Latin America. This study has been carried

out in Brazil since 2009. It started to be carried out in Mexico in 2010 and in Argentina in 2011.

This edition of MAVAM Brazil has the following methodological features:

a) It was carried out through a survey addressed to 1,493 mobile phone users across Brazil, by means of two

different surveying techniques: the Computer-assisted Web Interviewing (CAWI) technique and Computer-

assisted Telephone Interviewing (CATI) technique. The sample consists of 193 people interviewed on the phone

(CATI) from December 5th through December 15th, 2011, and of 1,300 people interviewed on the Internet

(CAWI) from December 5th through December 16th, 2011.

b) The geographic area covered by the sample comprises all of Brazil’s regions. The sample considers the number

of inhabitants, their socioeconomic status, age and gender in order to improve representativeness nationwide.

As the number of Internet users is lower than the number of mobile users, and given that the sample represents

a population which is very familiar with the use of technology, the values obtained in some cases bar projections

from applying to the entire market, and they are only reference and indicative data. These cases are explained

throughout the study.

c) The CAWI was supplemented by the CATI in order to create a group for data monitoring and comparison

purposes.

d) The services analyzed in this edition include:

� Messaging

• SMS

• MMS

• E-mail

• Instant messaging

� Entertainment

• Music

• Images

• Games

• Ringtones

• TV

• Video

� Mobile Internet

• Social networks

• Payments and mobile banking

• Mobile Marketing

• Location services (GPS)

Brazil: Geographical areas

Sample Participation

North 44 2.9%

North-East 266 17.8%

South-East 840 56.3%

South 256 17.1%

Center-West 87 5.8%

| 17 |

3. Messaging Services (Special Topic)

Widespread adoption of mobile telephony is also reflected by text messaging services. It is reasonable to say that

almost 100% of telephones worldwide can be used to send and receive messages. However, as seen in previous

editions of MAVAM, frequency of SMS usage differs by country.

The increasing number of smartphones available and instant (IM) or over the top ‘OTT’ messaging solutions for

mobile phones are challenging traditional text messaging services in the field of interpersonal communications.

This is why this tenth edition of MAVAM will look at the new products and solutions that seek to enrich traditional

SMS and generate new operator revenues.

The characteristics of the messaging services examined in this section are:

1. Automatic signature: define a signature or greeting at the end of messages (E.g.: “I’m on vacation”, “I’m busy

right now / I’m out of office”).

2. Personal White List / Black List: create contact lists to define who can and cannot send messages to users.

3. Automatic forwarding: allows for automatic resending of messages received to another telephone number (e.g.

your personal or work phone).

4. Automatic email forwarding: allows messages received to be automatically forwarded to an email account for

backup or reading on a PC.

5. Distribution list: to send messages to a group of contacts whose recipients can also respond to the entire group.

6. Delivery receipt: receive a delivery confirmation for sent messages.

7. Search: ability to search saved messages

8. Reminders: Receive reminders for appointments.

9. The party called pays for sending the message: in order to be able to send a message, it is paid for by the

recipient.

10. Cloud-based archive to save all messages in a cloud storage service provided by the operator.

11. Multiple SIM cards: the ability to send messages from any other device (tablets, dongles, USB modems, etc.).

12. Alias: configure names or nicknames for a user’s number.

13. SMS Pager: receive text messages or calls without showing a number, but showing a nickname: people send

SMS messages to a service center (for example, 12345) starting with the nickname, followed by the message.

We also compare the features users find most important in an instant messaging and SMS services. Additionally,

we look at situations in which users prefer to use other forms of communication.

| 18 |

Although our assessment is based on message communications between persons, we should point out that

machine to machine communications and enterprise messaging through the adoption as a new B2C (business to

consumer) communication channel (e.g. mobile couponing, promotions, SMS bank services, government

procedures, etc.) will play an important role in the future of SMS.

3.1. SMS

89% of participants said they have used some sort of text messaging (SMS) service in the last three months. These

figures have remained steady over the past four quarters with positive and negative variations not exceeding one

percentage point.

Chart 14

Use of text messaging (SMS). Base: total sample (4Q 2010: 1,206 cases; 1Q 2011; 1,494 cases; 2Q 2011: 1,570 cases; 4Q

2011: 1,493 cases)

Among SMS users, usage frequency shows a slightly upward trend. 58% of users send more than one SMS daily,

2 percentage points up on the second quarter of 2011, while at the same time the proportion of those not using the

service has fallen (21% versus 24% in the second quarter).

89%90%90%

88%

80%

85%

90%

95%

100%

4Q20112Q20111Q20114Q2010

Perc

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| 19 |

Chart 15

Use of text messaging (SMS). Base: total sample (1,493 cases)

Increased frequency can be explained as a result of the more aggressive bundles and offerings in the SMS market

during 2011. For example, when we finalized this edition, Brazilian operators were offering pre-paid SMS packages

that reduced SMS prices by between 50% (Claro) and 88% (Oi). Monthly packages of 100 SMS messages cost

around $5.

6%

5% 21%

21%

58%

Yes89%

I have not sent any SMS over the last 3 months

I do not make use of the service

I send very few text messages. I hardly ever send text messages

I send one SMS per week

I send more than one SMS per week

| 20 |

3.1.1. Future importance of SMS

Participants were asked to compare the importance of SMS services today and in the future. 46% said that SMS

will be more important than it is now, while 18% felt it would be less important.

Chart 16

Future importance of SMS. Base: total sample (1,493 cases)

3.1.2. Barriers to SMS usage

It is important to ask what impedes greater SMS usage. Among SMS users (89% of the sample), the main reason

they do not use the service more is that there is no need to (16%), the service is expensive (18%) and some users

prefer voice communications (18%). Other less common responses include a lack of (pre-paid) credit and

promotional messaging packages (7%) and a lack of contacts who use the service (3%).

Among non-users (11% of participants), the main reason for lack of uptake (for 66%7) is that they prefer voice

communications. This adoption barrier has remained constant throughout MAVAM’s 2011 surveys. Other reasons

include a lack of usage – where user is not familiarized with its use (24%) or no need to use the service (21%).

Price does not seem to be a significant barrier to people who have not adopted the service.

7 Multiple response.

27%

19%

28%

8%11%

7%

0%

20%

40%

60%

80%

100%

It will be more important than

today

It will be more important

It will be important

It will have small

importance

It will be less important than

today

I don't know / no answer

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46%

18%

| 21 |

3.1.3. New SMS and MMS-based services

Preferred products and solutions

Interviewees were asked to look at a list of 13 services as add-ons and improvements to text messaging as we

know it today, and select the ones they would like to use. Each participant was allowed to select more than one

option from the list.

The most popular were: delivery receipt (86%), multiple SIM cards (85%), reminders (82%) and searching saved

messages (80%).

Chart 17

Which of these features would you like to see available for SMS (text messaging) Service. Base: total sample (1,493 cases). Multiple responses.

Participants were asked how difficult it was to understand each of the proposed services. Between 2% and 4% of

interviewees had difficulty understanding the value of the proposed services. The biggest percentage (4%) was

recorded for the following solutions: automatically forwarding received messages, creating discussion lists, creating

nicknames (aliases) and the SMS Pager.

60%

63%

63%

66%

68%

70%

71%

71%

72%

80%

82%

85%

86%

0% 20% 40% 60% 80% 100%

Auto-send to another cell phone

SMS Beeper

Paid in the destination

Cloud message

White/black lists personalization

Auto-send to an email account

Distribuition list

Auto-signature

Alias

Search

Reminders

Multiple SIM

Receipt notif ication

Percentage of cases

| 22 |

Most important services

Interviewees were asked how likely they were to buy each of the selected solutions. In this case, participants used

a scale of importance ranging from 1 (not important) to 5 (very important).

Of the four features with the biggest potential for adoption (delivery receipt, multiple SIM cards, reminders and

searches) users said that delivery confirmation was the most important (81%).

Chart 18

How important are each of the SMS services you said you would like to have in the future? Base: cases in which users would like certain features. Note: to make the graph easier to read, we have only included the features with the most potential.

8%

7%

6%

7%

20%

14%

17%

12%

72%

79%

77%

81%

0% 20% 40% 60% 80% 100%

Search

Reminders

Multiple SIM

Receipt notif ication

Percentage of cases

Not important / Somewhat important Neutral Important / Very important

| 23 |

Willingness to pay for a service

The services people would be more willing to pay for include reminders (44%), automatic SMS forwarding to an

email account (43%), Multiple SIM cards (43%), cloud-based files (43%) and the SMS Pager (41%).

For these five services, the average value people would be willing to pay is between 3.4 and 3.8 BRL. The highest

and most frequently mentioned value is 5 BRL for the automatic forwarding and cloud storage service.

Willingness to pay for SMS service features. Base: 852 (Number of people who said they would like to have each of the

services). Multiple responses.

Feature % of people that

would be willing to pay for the service

Average value people would be

willing to pay

Most frequently mentioned value

Reminders 44% R$3.5 R$0.5

Auto-send to an email account 43% R$3.4 R$5.0

Multiple SIM 43% R$3.7 R$1.0

Cloud message 43% R$3.8 R$5.0

SMS Beeper 41% R$4.3 R$1.0

Auto-send to another cell phone 39% R$3.1 R$1.0

Receipt notification 39% R$3.3 R$0.5

Paid in the destination 38% R$3.2 R$0.5

Distribuition list 37% R$4.0 R$1.0

White/black lists personalization 35% R$5.1 R$5.0

Auto-signature 30% R$4.6 R$5.0

Search 29% R$3.3 R$0.5

Alias 27% R$3.7 R$1.0

| 24 |

New feature configuration

33% of users who would consider using at least one of the suggested products said that the ideal method for

configuring the service would be via an application installed on their phone. In second place, 26% of participants

said that the best option would be SMS configuration and 24% said they would prefer to configure the service via

the operator’s Internet portal.

Chart 19

What would be the best way to configure the SMS services listed. Base: People who like to have at least one

feature (1,428 cases). Multiple responses.

33%

26%

24%

8%

4%

3%

2%

0% 20% 40% 60% 80% 100%

Through an app installed on your cell phone

Sending an SMS to conf igure services

Through the operator's web site

Through an app installed on your computer

through a complement installed in the email manager

Through a WAP portal

Other

Percentage of cases

| 25 |

3.2. MMS

MMS usage has remained stable throughout the second quarter of 2011: 12% of the sample said they sent at least

one MMS per week (active users). 77% of interviewees said that their cell phones were able to send multimedia

messages, similar to the figure in the second quarter (75%).

Chart 20

MMS (Multimedia Messaging) usage. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)

In this edition, we surveyed the occasions and situations that users send MMS messages. Our results showed that

69% of users who sent MMS messages in the last three months said they do so on special occasions like birthdays

and other celebrations. 33% send MMS messages when they are with friends, and 27% send them at the

weekends. Other situations mentioned by 11% of the sample are: when they want to send photos to relatives or as

a surprise, when they want someone’s opinion about something they are going to buy or want to show someone a

photo taken in an unusual situation.

75%

12%

6% 5%

77%

10%7%

5%

0%

20%

40%

60%

80%

100%

Mobile Phones enabled to send MMS

I send very few MMS, I hardly send MMS

I send one MMS in average

I send more than one MMS

Perc

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2Q2011

4Q2011

12% of active users

10% of users who may prospectively be turned

into active users

77% of users with MMS-enabled cell phones

| 26 |

Chart 21

In which situations do you send Multimedia Messages (MMS). Base: Users sending at least one MMS in the last

three months (325 cases). Multiple responses.

As the user base is so low (12% of active users), we asked why people didn’t use MMS more. 41% said that

sending MMS messages is expensive. 18% believe that the service does not work properly and 16% said that they

did not use the service more regularly because they are not sure if the messages are received. Among other

reasons not listed (13%), people said they didn’t see a need to use MMS, they preferred not to send photos in

messages and email is better for sending photos.

Chart 22

What are your reasons for not using MMS messages on your cell phone (or not using them more)? Base: total sample (1,493 cases). Multiple responses.

69%

33%

27%

19%

11%

0% 10% 20% 30% 40% 50% 60% 70% 80%

On special occasions (eg: anniversaries, birthdays,

etc..)

When hanging out with f riends

On holidays

For some labor issue

Other situation

Percentage of cases

41%

16%

8%

8%

18%

24%

13%

0% 10% 20% 30% 40% 50%

It is very expensive

I do not have how to conf irm if the receiver received the message

My cell phone is easy to send MMS

My cell phone is not conf igured to send MMS

MMS service does not work well

Never try sending a multimedia message

Other reasons

Percentage of cases

| 27 |

Response to incentives

55% of interviewees said that one incentive for MMS usage would be lower prices. Another, similar to SMS, would

be delivery confirmation (29%).

22% believe that MMS messaging packages would also encourage usage.

Among the 5% of responses presenting other incentives, the most interesting are: faster delivery, offering support

for using the service on mobile phones and that all devices should be able to open these types of message.

Chart 23

What would encourage you to use MMS messaging more (or more frequently)? Base: total sample

(1,493 cases). Multiple responses.

55%

29%

22%

13%

5%

16%

0% 10% 20% 30% 40% 50% 60%

Cost per message should be lower (for example: it could cost the same as SMS)

Be sure that the message will reach the destination

Operators would have to of fer MMS bundle

Owning a cell phone able to send MMS

Others

Don't know

Percentage of cases

| 28 |

3.3. Instant messaging (IM)

44% of participants have used some sort of instant messaging service from their mobile phones in the past three

months.

Chart 24

Access to instant messaging. Base: total sample (4Q 2010: 1,206 cases; 1Q 2011; 1,494 cases; 2Q 2011: 1,570 cases; 4Q

2011: 1,493 cases)

Chart 25

Use of instant messaging. Base: total sample (1,493 cases)

IM usage increases when people switch to new devices. 56% of people who bought their device in the last six

months have used instant messaging. This percentage drops to 51% and 33% among people who have had the

same device for between 6 months and one year and for more than one year, respectively.

44%

33%

28%

20%

0%

20%

40%

60%

80%

100%

4Q 20112Q 20111Q 20114Q 2010

Perc

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44%

19%

37%

Yes, I made use of Instant Messaging services during the last three months

No, I didn't make use of Instant Messaging services during the last three months

I never made use of Instant Messaging services during the last three months

| 29 |

IM usage is higher if people have smartphones (66%) compared with people who use traditional phones (27%).

Men (47%) use instant messaging more than women (40%).

Of those who use instant messaging (44%), the most frequently mentioned chat service is Facebook (29%),

followed by Twitter (20%) when used as a messenger. While Twitter is not an instant messaging service, rather

more of a social network, the immediate delivery and short message length result in users treating the service in

roughly the same way as an instant messaging service.

Chart 26

Use of instant messaging as a platform. Base: IM users (653 cases). Multiple responses.

We asked people who said they used the IM services in Chart 27 how many messages they sent and received on

average every week over the past three months. The results show that some platforms are used to send messages

and others to receive them.

Twitter, BBM and Skype are preferred to send messages and GTalk, eBuddy, iMessage, Facebook Chat and

WhatsApp to receive them.

eBuddy posts the biggest difference between the average number of messages sent and received: 15 places.

Twitter (2.4 posts) and Facebook Chat (1.5 posts) are the most balanced services in terms of messages sent and

received.

29%

20%

10%

10%

7%

7%

2%

2%

4%

0% 5% 10% 15% 20% 25% 30% 35%

Facebook Chat

Twitter

eBuddy XMS

Google Talk

iMessage

Skype Messenger

BlackBerry Messenger/Ping

WhatsApp

Others

Percentage of cases

| 30 |

Chart 27

Average number of messages sent and received via instant messaging services. Base: Users who

have used each of the services.

Barriers to instant messaging adoption

The main reason that people do not use instant messaging from their mobile phone is that their phone does not

allow for installation of this type of application (54%). Second ranked is the low speed and reliability of mobile

internet connections (20%). Third place is the fact that people prefer to access these services from a PC or

notebook, make voice calls or use SMS (8%).

Chart 28

What reasons keep you from using (or using more often) instant messaging services from the cell phone you use with the greatest frequency? Base: total sample (1,493 cases). Multiple responses.

37.3

48.0

28.3

39.6

21.5

39.0

26.7

39.1

29.1

33.1

30.8

32.8

30.1

37.5

30.8

35.5

0 10 20 30 40 50 60

Google Talk

eBuddy XMS

Twitter

iMessage

BlackBerry Messenger/Ping

Facebook Chat

Skype Messenger

WhatsApp

Messanges per week

Average messages received per week

Average messages sent per week

54%

20%

8%

7%

5%

4%

4%

0% 10% 20% 30% 40% 50% 60%

My phone does not support IM

Internet connection is too slow

I prefer to access in my computer in the of f ice / fazer chamadas de voz ou enviar SMS

Not interesting / need / time

The internet connection f rom the cell phone is expensive / i don't have credit or data bundle to

access the internet

Don't know how to use or access the application

Others

Percentage of cases

| 31 |

Requirements for a new instant messaging service

Interviewees were asked what the main characteristics should be for a new instant messaging service.

In first place are reasons based on the type of contract. 59% of the sample said that the cost of using the service

should be included in the plan (this is the most common form of benefit).

In second place are reasons linked to guaranteed performance. 56% said it should work smoothly.

Chart 29

Features a new instant messaging service should offer. Base: total sample (1,493 cases). Multiple responses.

59%

56%

52%

51%

40%

39%

38%

35%

32%

27%

25%

20%

14%

4%

0% 20% 40% 60% 80%

It must be without cost / included in the contract

Service should always work, without troubles

Cost must be reasonable

It must be sure message is received af ter seconds

Service should be used also in the computer

Able to share f iles, images, videos with my f riends

Able to see when the other party is typing an answer

Able to contact anyone

Able to contact all SMS users

Able to chat with others in the contact group

Able to see the latter conversations

Able to share status and feelings with f riends

Able to share my location

Others

Percentage of cases

| 32 |

If the new service meets the quality and feature requirements described, 76% of those interviewed said they would

use the service. Potential for instant messaging is greater among people between 18 and 24 years of age (81%)

and 25-34 (79%).

Chart 30

What would be your attitude towards using a single instant messaging service? Base: total sample

(1,493 cases)

22% of people who said they used instant messaging reported they would only do so if it is free of charge. 9% did

not say how much they were willing to pay.

58% of people who use the service would be willing to pay between 0.25 and 2.00 BRL per month.

How much would you be willing to pay for these services? Base: total sample (1,493 cases)

Value people would be willing to pay %

Nothing or would only use if free of charge 22%

Less than 0.25 BRL per month 14%

Between 0.25 and 0.50 BRL per month 17%



More than 2.00 BRL per month 12%

Don't know 9%

41%

35%

18%

2%2%3%

0%

20%

40%

60%

80%

100%

Certainly would use

Probably would use

Maybe yes or no

Probably would not use

Certainly would not use

Don't know

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Would use it

76%

Would not use it

4%

| 33 |

3.4. Advantages of SMS over instant messaging

We asked people the advantages each service had over the other.

46% of people said that SMS costs less than instant messaging. While the total amount a user pays for SMS

messages depends on usage, the view that text messaging is cheaper than instant messaging can be linked to the

position that, generally speaking, better quality phones like smartphones are needed to use instant messaging, as

well as a data plan. The importance of this response is that the user’s perceptions can be altered through product

communication proposals.

Another 33% said that unlike instant messaging, people know that when someone receives an SMS text message,

the message is important. This response reveals that instant messaging is a communication method used in more

informal situations.

In third place as a comparative advantage over instant messaging, with 32%, is the ability to communicate with

anyone. This response may indicate the users know that only more expensive devices provide IM access, while

SMS is available on almost any device on the market.

Chart 31

In your opinion, what are the advantages of SMS compared with instant messaging services used from your mobile phone? Base: 1,322 cases. Multiple responses. Note: We have only shown the five most significant

advantages for illustrative purposes.

Other advantages of SMS over IM mentioned: ease of use (no additional application needed), no Internet access

required and unlimited SMS packages are available.

46%

33%

32%

25%

23%

0% 10% 20% 30% 40% 50%

Have low cost

When I use SMS I know that the recipient knows it's an important message

I can communicate with any person

I can easily send a message to a large quantity of people

To know that the message is received af ter seconds

Percentage of cases

| 34 |

3.5. Advantages of instant messaging over SMS

Among the advantages of instant messaging over SMS, 41% of interviewees mentioned low cost. In this case, we

can presume that when a user has chosen a more expensive device that allows for instant messaging and

subsequently pays for a data plan, they realize that in general terms, instant messaging does not incur any

additional cost. The fact that the advantage of both services are linked to a perception of lower cost for subscribers

means that operators need to pay special attention to their pricing models when expanding either service.

38% said that one advantage is IM can be used on a PC. This is important because it reveals all communication

options need to be available on several devices (voice, messaging, emails, video, etc.).

38% also said that an IM advantage over SMS is knowing the message will be received in a matter of seconds.

Chart 32

In your opinion, what are the advantages of instant messaging services (e.g.: WhatsApp, Skype Messenger, Facebook Chat, BlackBerry Messenger, Google Talk, etc.) Compared with SMS/MMS? Base: 1,322 cases. Multiple responses. Note: We have only shown the five most significant advantages for illustrative

purposes.

Other benefits of IM over SMS mentioned by interviewees is that IM is free, you can speak to people whose

telephone number you do not know, it can be used over Wi-Fi and you can see the status of other contacts.

41%

38%

38%

35%

35%

0% 10% 20% 30% 40% 50%

Have low cost

Use the service also in the personal computer

To know that the message is received af ter seconds

Be sure that the answer will be received fast

Be sure the receiver will read the message promptly

Percentage of cases

| 35 |

3.5.1. Service preference among recipients

In this edition of MAVAM, we asked whether recipients preferred to receive messages by SMS or IM, when sent by

a friend, relative, business partner, colleague or based on the message content: work vs. personal.

SMS was the preferred option in each situation, especially in the workplace. 39% of the sample said they prefer

SMS when they need to communicate with work colleagues and 40% prefer text messages when dealing with work

issues.

Chart 33

Preferred method of communication for each recipient. Base: 1,322 cases. Note: We have omitted percentages for

people who said they would not use either service to facilitate viewing. Multiple responses.

33%

38% 36%39% 40%

20%

38%35% 36%

31%

25%

16%

25%

19% 21% 20% 19%

9%

0%

20%

40%

60%

80%

100%

Friends Relatives Boyfriend/ Girlfriend -

Husband/Wife

Work colleagues

Work issues Others

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SMS (Text Messages)

Sometimes SMS, sometimes Instant Messaging

IM sent f rom my cell phoneSMS is mostly usedwithin work situations

| 36 |

3.5.2. Service preference based on circumstances

37% of people said they prefer SMS over IM when they send what they consider to be “important information”.

When the importance of a message means it needs to be received as quickly as possible, 31% prefer sending their

message via IM, rather than SMS.

Chart 34

Under what circumstances would you prefer to use SMS instead of instant messaging from your cell phone? Base: 1,322 cases. Multiple responses.

53%

37%

26%

40%

51%

28%

27%

4%

5%

39%

20%

21%

46%

31%

24%

11%

0% 20% 40% 60% 80% 100%

When I answer an incoming SMS / When I answer an incoming instant messaging

When I send important information

When I want to make sure the message will be received

When the person that I want to contact doesn't have the instant messaging that I use/ When I have the cell phone

number of the person that I want to contact

When the person that I want to contact is not available (not online)

When I need the message being received quickly

When I want to be assured that the message will be read as soon as possible

Others

Don't know

Percentage of cases

SMS is preferred over IM

IM is preferred over SMS

SMS is mostly used when important information has to be sent

when compare to IM.

The latter is mostly used when amessage has to be received quickly

| 37 |

3.5.3. Service speed and reliability

For 42% of participants, instant messaging services are as reliable as SMS, but 31% believe SMS is more reliable

than IM. These two variables show us that users tend to believe that SMS is more reliable.

Chart 35

Speed and reliability of SMS and IM. Base: total sample (1,493 cases)

The main advantage of the SMS messaging system is the perception of “speed” or immediate communication. 40%

of people say that instant messages are delivered faster than SMS.

31%42%

13%14%

Services Reliability

The SMS is more reliable/fast as instant messaging

The SMS is as reliable/fast as instant messaging

Instant messaging is more reliable/faster than SMS

Don't know

18%

28%

40%

15%

Service delivery speed

| 38 |

3.6. Use of messaging during end of year festivities

69% of interviewees said they intended to use some sort of

messaging service over Christmas and New Year8.

Chart 36

Intention of using messaging services for festive greetings. Base: total sample (1,493 cases)

94% of people who said they planned to use messages over the year-end period were inclined to use SMS. The

second largest group (37%) intended to send Christmas greetings via Facebook. In third place is MMS multimedia

messaging (12%).

Chart 37

Service you intend to use for festive greetings. Base: users using messaging services to send festive greetings (1,026

cases). Multiple responses.

More women (72%) than men (66%) intended to send year-end greetings.

Messaging as a means of communication during year-end festivities is more popular among lower classes C1 and

C2 (70%) compared with higher classes A1 and A2 (65%).

8 The survey was carried out between December 5 and 16, 2011.

94%

37%

12%

9%

7%

2%

2%

6%

0% 20% 40% 60% 80% 100%

SMS

Facebook Messenger

MMS

Google Talk

Skype Messenger

BlackBerry Messenger

WhatsApp

Other service

Percentage of cases

69%

31%

Yes, I have planned to send Christmas messages

No, I won't use this type of service

| 39 |

3.7. Use of advertising to reduce SMS prices

In this edition of MAVAM, we asked whether people would accept insertion of operator advertisements at the end

of their text messages in exchange for lower SMS service prices. 43% said they would, while 36% said no.

Chart 38

Permission to attach advertising to users’ messages. Base: total sample (1,493 cases)

Interviewees were asked how they felt about receiving promotional SMS or MMS messages for products or

services with the possibility of making a secure purchase by automatically responding to an SMS.

Only 18% of interviewees said they would probably or definitely make the purchase. 29% of the sample said they

definitely would not make a purchase, an opinion shared by 31% of the lower socioeconomic classes C1 and C2

and 26% of higher A1 and A2 classes. Men and women shared similar opinions, as did different age ranges.

Chart 39

Buying products or service via SMS. Base: total sample (1,493 cases)

23%

20%

16%

10%

26%

4%

Yes, I certainly would allow

Yes, maybe I would allow

Maybe yes, maybe no

No, it's unlikely that I would allow

No, I certainly wouldn't allow

Don't know

43% of interviewees would accept insertion of operator advertisements

versus 36% who said they woldn't.

6%

12%

28%

22%

29%4%

Yes, I certainly would allow

Yes, maybe I would allow

Maybe yes, maybe no

No, it's unlikely that I would buy

No, I certainly wouldn't buy

Don't know

18% of interviewees wouldprobably or def initely make

the purchase via SMS

| 40 |

4. MAVAM Brazil

4.1. Entertainment

4.1.1. File types (images, music, games, ringtones and videos)

Images (88%) and games (87%) are the file types most commonly stored on cell phones. In second spot is MP3

songs (81%), followed by ringtones (73%) and finally video files (41%).

Chart 40

Storage of files on cell phones based on the type of entertainment. Base: total sample (1,493 cases)

73%

81%

88%

41%

87%

27%

19%

12%

59%

13%

0% 20% 40% 60% 80% 100%

Ringtones

MP3 Music

Images/Pictures

Videos

Games

Percentage of cases

Typ

e o

f fi

le

User has f iles User does not have f iles

| 41 |

4.1.2. Mobile TV (viewing)

9% of participants tuned in to a free-to-air television program on their cell phones in the last three months. Digital

TV remains at the same level as last quarter (2%).

Chart 41

TV on mobile phones Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)

4.2. E-Mail

36% of those interviewed said they had an email account configured on their mobile phone. This is up 38% on the

second quarter of 2011. We can presume that this is linked to the rising number of smartphones among

participants, now representing 42% of the base, compared with 32% in the second quarter of 2011.

More men (40%) than women (33%) have an email account on their cell phone. The age range with the biggest

number of people setting up email accounts on their cell phones is the 18-24 age group (41%).

3%

1%

9%

2%

0%

5%

10%

15%

20%

25%

watch any program on broadcast TV I saw some TV digital program

Perc

en

tag

e o

f cases

2Q2011

4Q2011

9% of sample tuned in to a f ree to air TV program on their cell phone in 4Q2011

| 42 |

Chart 42

Has an email account on their cell phone. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases; 1Q 2011:

1,494 cases)

36% of those who have an email account on the mobile phone say they send and receive messages daily. 26%

send and receive email ph mobile phone between one and three times a week, while the remaining 38% check

their email occasionally, three times or less per month.

Chart 43

Email send and receive frequency. Base: people who have an email account on their cell phones (536 cases)

24% 26%

36%

0%

20%

40%

60%

80%

100%

1Q2011 2Q2011 4Q2011

Perc

en

tag

e o

f cases

36% of participants have an email account on their cell phone.

This f igure is growing continuously

36%

16%

10%

4%

5%

5%

25%

0% 10% 20% 30% 40%

On daily basis

Twice or three times a week

On a weekly basis

Every 10 days

Every 15 days

Monthly / Once a month

Occasionally

Percentage of cases

62% of people with an email account on their

cell phone send and receive email at least once a week

| 43 |

4.3. Mobile Internet

The user base of people owning mobile phones offering the ability to access the Internet has remained stable at

79% of the total sample in this edition (compared with 78% in the second quarter of 2011). Of these 79%, 57%

accessed the Internet via their cell phone in the last three months. This reveals that 44% of those interviewed

accessed the Internet in the last quarter, mirroring the previous quarter (45%). 46% of people who accessed the

Internet from their mobile phone do so daily.

Chart 44

Cell phones able to access the Internet and Internet access over the last three months. Base: total sample (1,493 cases)

Internet access is more concentrated among men (64%) between 18 and 34 years of age (59% - 60%) with high

social and economic status (70%).

More people access the Internet if they have smartphones (73%) than traditional phones (40%).

More people access the Internet if they have unlimited post-paid plans (68%) than pre-paid plans phones (54%).

21%

57%

25%18%

Yes, my mobile phone is enabled for

Internet access

79%

No, my cell phone hasn't this characteristic

Yes, I connected on the internet in the last three months by my cell phone

No, I don't connected on the internet in the last three months by my cell phone

I never connected on the internet with my cell phone

| 44 |

Chart 45

Internet access by age, gender, socioeconomic profile and contract plan. Base: all participants (1,493

cases)

The main reason people do not use Internet on their mobile phone is because they have no need to do so (30%).

This barrier to adoption has dropped 10 percentage points since the second quarter of 2011.

Other reasons are cost/benefit, with mobile internet being seen as expensive in terms of the quality on offer (23%)

and people being uncertain how much they will have to pay (14%). 25% were dissatisfied with the browsing speed.

Chart 46

Reasons for not accessing the Internet. Base: respondents who did not access the Internet in the last three months via their

mobile phones (4Q 2011: 818 cases; 2Q 2011: 868 cases). Multiple responses. Note: In order to improve viewing, we have displayed the reasons representing the largest percentage of answers.

70%

55%

55%

64%

51%

45%

60%

59%

50%

54%

66%

30%

45%

45%

36%

49%

55%

40%

41%

50%

47%

34%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A

B

C

Men

Women

17 years old or less

From 18 to 24 years old


35 years old or more

Pre-Paid

Post-Paid

So

cio

-E

co

no

mic

Level

Gend

er

Ag

eH

ired

Pla

n

Yes, I accessed the Internet f rom my cell phone No, I don't accessed the Internet f rom my cell phone

40%

21%

21%

21%

16%

18%

9%

11%

6%

30%

25%

23%

18%

14%

13%

12%

11%

10%

0% 20% 40% 60% 80% 100%

Because I do not need it

Because surf ing the Web on the cell phone is too slow

Because I f ind it expensive in relation to the service I am rendered in exchange

Because I f ind my cell phone really uneasy to access the Internet

Because I do not know for sure how much I will end up paying per month/I guess it might be expensive

Because I imagine that it must be expensive

Because I can’t af ford it

Because I tried the service and it was a poor-quality service

Because the service is not reliable

Percentage of cases

2Q2011

4Q2011

There is a reduction in the number of

people not needing

network access

Between 12% and 23% of cases mention reasons related to service cost

| 45 |

4.4. Social Networks

55% of users accessed social networks in the last quarter of 2011. The percentage of social network users almost

doubled between the first and third quarters and we expect this trend to remain positive throughout 2012.

Chart 47

Social network access. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases; 1Q 2011: 1,494 cases)

Access to social networks is relatively higher among people with post-paid plans (51%), men (49%), people

between 18 and 24 (52%) and people in social classes A1 and A2 (56%).

Chart 48

Social network access by age, gender, socioeconomic profile and contract plan. Base: total sample

(1,493 cases)

29%

40%

45%

0%

20%

40%

60%

80%

100%

1Q 2011 2Q 2011 4Q 2011

Perc

en

tag

e o

f cases

There is continuous growth of social network

access via mobile phones

56%

43%

45%

49%

41%

44%

52%

49%

29%

43%

51%

44%

57%

55%

51%

60%

56%

48%

51%

71%

57%

49%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A

B

C

Men

Women

17 years old or less



35 years old or more

Pre-Paid

Post-Paid

So

cio

-E

co

no

mic

Level

Gend

er

Ag

eH

ired

P

lan

Yes, I have accessed a Social Network f rom my mobile phone

No, I haven't accessed a Social Network f rom my mobile phone

| 46 |

The social network with the most visits was Facebook (91%), followed by Orkut (49%) and Twitter (43%). The

figures reveal a trend noted by MAVAM in previous editions, reflecting the fact Facebook is progressing faster than

Orkut.

Access frequency varies by social network. 43% of Facebook users visit the social network daily, compared with

just 29% of Orkut users. 33% of Twitter users access the service daily.

Other social networks mentioned by users (11%) include Google+, Foursquare and StumbleUpon.

Chart 49

Social network access. Base: Social network users (1Q 2011: 439 cases; 2Q 2011: 628 cases; 4Q 2011: 663 cases). Multiple

responses.

75%

82%

57%

12%

0%

46%

90%

65%

60%

10%

4%

13%

91%

49%

43%

4% 4%

11%

0%

20%

40%

60%

80%

100%

Facebook Orkut Twitter LinkedIn Myspace Others

Perc

en

tag

e o

f cases

1Q 2011

2Q 2011

4Q 2011

| 47 |

4.5. Mobile Marketing

80% of interviewees received a text message (SMS) or multimedia message (MMS) containing advertising

messages on their mobile phone during the last quarter of 2011. This figures show an 8 percentage point drop for

these types of messages compared with previous editions of MAVAM. At present, this drop cannot mean to be a

trend.

Chart 50

Receiving advertising messages. Base: total sample (1,493 cases)

16% of people receiving these messages said they arrived daily, while 45% said they receive one to three

messages a week.

Chart 51

Frequency advertising messages are received. Base: users receiving this type of message (1,192 cases)

80%

20%

Yes, I received I never received these kind of messages

16%

23%

22%

7%

7%

9%

16%

0% 5% 10% 15% 20% 25%

Daily

2-3 times a week

Weekly

Each 10 days

Each 15 days

Once a month

Occasionally

Percentage of cases

| 48 |

The operator from which the user has contracted their service continues to be the biggest sender of these

messages (85%).

The number of messages sent by consumer product companies has risen by five percentage points. Growth

between the first quarter of 2011 (15%) and the third quarter of 2011 (22%) is seven percentage points. This series

helps ensure that there is a positive trend for adopting mobile telephones as a channel for advertisers to reach their

clients.

Chart 52

Sending advertising messages. Base: Users receiving these messages (4Q 2011: 1,192 cases; 2Q 2011: 1,381 cases; 1Q

2011: 1,363 cases). Multiple responses.

55% of people receiving advertising messages said they read them closely (similar to the 51% figure reported in

the second quarter). People with pre-paid contracts (57%) or limited access post-paid contracts (54%) said they

read them more closely than people with unlimited post-paid contracts (45%).

Of those reading these messages carefully, 23% said the message offered SMS, data and weekend calling

packages. Around 12% said they were promotions to extend the number of minutes or SMS, such as “refill and

win” packages. Another 15% said the messages were linked to plan changes, promotions or charge reductions.

83%

5%

4%

3%

12%

15%

4%

15%

84%

7%

4%

2%

13%

18%

5%

7%

85%

10%

7%

4%

16%

22%

6%

6%

5%

0% 20% 40% 60% 80% 100%

From the operator/the company I receive the service

From a dif ferent Mobile Phone service company that is not mine

From a politician/political propaganda

From Provincial, Municipal or Federal Government Authorities

From a service rendering company

From a consumer goods company

From a dif ferent company

From a car dealership

I do not remember

Percentage of cases

1Q 2011

2Q 2011

4Q 2011

| 49 |

4.6. Cash and mobile banking

Cell phone usage as a payment method or to access banking services has remained similar to the last three

quarters. The most popular function is consulting the bank balance or bank statement (13%). Access a bank’s

website for any other type of transaction comes in second place (9%).

Chart 53

Cash and mobile banking. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases; 1Q 2011: 1,494 cases)

4%

7%

5%

7%

5%4%

15%

5%

10%

8%

5%

13%

4%

9%8%

0%

5%

10%

15%

20%

25%

Pay bills via users cell phones

Check balances and account statements

Make bank transfers

User accessed the Bank's site to use

some service

Other transactions

Perc

en

tag

e o

f cases

1Q2011

2Q2011

4Q2011Balance or statement consultation

still the most f requent transaction (13%)

| 50 |

4.7. GPS and maps

23% of participants said they have downloaded maps on their cell phone. And 21% said they have used some sort

of geolocation service in the last three months.

In the MAVAM sample, map usage on cell phones almost doubled this quarter. Possible reasons include the rising

number of smartphone users among interviewees.

As the survey is conducted over the Internet and interviewees are more familiar with these technologies, we cannot

project that 23% of mobile telephone subscribers in Brazil use maps services and that adoption of this type of

service has double nationwide. On the other hand, these data are valid if we want to draw a correlation between

the increasing number of smartphones and map and geolocation service usage.

Chart 54

GPS usage on cell phones. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)

86%

11%

4%

11%

78%

21%

1%

23%

0%

20%

40%

60%

80%

100%

My cell phone doesn't has GPS technology

integrated

I use localization service/GPS

I didn't use location service/GPS

I have maps for GPS in my cell phone

Perc

en

tag

e o

f cases

2Q 2011

4Q 2011

Of all users, 23% had maps on their devices

in 4Q2011

In the 4th quarter, 22% of users said their cell phones of fered

geolocation services

| 51 |

5. Conclusions

Between July and September 2011, sales per value added services (VAS) posted R$ 2,601 billion, 36% more than

in the same period the previous year. VAS income accounts for 19.83% of the sales of Brazilian mobile operators.

Sales volume of SMS in Brazil during the third quarter of the year was of 964 million reales (37.1% of the VAS);

sales growth represented 14% in comparison with 2010.

During 2011, Brazilian operators launched aggressive SMS packages to highlight the importance of the service,

which is broadly used in the rest of Latin America but has low penetration in the Brazilian market. Subscribers have

responded positively to better pricing alternatives; and this has resulted in higher consumption of SMS increasing in

traffic of operators by up to 4 times, depending on the operator.

The base numbers of mobile subscribers using SMS remained stable throughout 2011, with almost 90% of

subscribers using the service.

The big change of the year was the average number of SMS deliveries as a consequence of better offers; for

example, MAVAM indicates that the average number of SMSs per month per user was 48 in the fourth quarter of

2010, and by September 2011 had almost doubled, reaching an average of 81 SMSs per month per user.

Looking at additional SMS services, the report showed an acceptance higher than 50%; with the three mostly

required services being: acknowledgement of receipt (86%); Multiple SIM (85%) and reminders (82%). Willingness

to pay for additional services varies between 27% for the alias functionality and 44% for the reminder functionality.

For these new messaging services, users are willing to pay between R$3.1 and R$ 5.1 per month depending on

the functionality.

The use of MMS sees no changes. In the quarter, only 12% of users stated having sent at least one MMS during

the week. The MMS subscribers’ base could grow if the price of the service is reduced, as 41% of surveyed

considered that they would use the service if price is reduced.

Use of instant messaging climbs to 44% of those surveyed, and it rises up to 56% when considering new devices

(being at least 6 month old).

Facebook chat application is the mostly used (29% of instant messaging users), and Twitter is ranked second. This

would fall in line with global trends, which are seeing an increase in the usage of IP based over-the-top ‘OTT’

services. However, while usage is increasing, global text messaging volumes are still expected to continue to grow

this year, from the 4.2 billion SMS users today to over 5 billion users globally and 8 trillion messages. This growth

will be driven by new innovations in trusted messaging applications, personalized messaging and rich

communication services – some of which are tracked in by MAVAM. (Sourse: Teletime)

| 52 |

6. Glossary

The description of the services presented in this report is presented in the following sections.

Messages

The services in this category can be defined as:

Answering Machine or Voice Messaging: gives access to the

automatic messages recording service offered by the carrier, in case

of receiving calls that can’t be answered.

E-mail: receives or sends emails via cell phone. Receiving or sending

can be done manually, in other words by user’s initiative, or can be

activated through the push mechanism, which periodically and

automatically receives and sends mail.

Instant Messages: service which permits access to instant messaging

systems like MSN or Yahoo.

MMS (Multimedia Message Service): sends short text messages with

image, photo, or video.

SMS (Short Message Services): sends short text messages.

| 53 |

Entertainment


Games: service which provides the download of games to be played

on the cell phone, individually, or through internet or Bluetooth

connections, in groups. The cell phone must be able to run the games

available in the device and also the downloaded ones, and

additionally provide Bluetooth or data connectivity for internet access

(e.g.: EDGE, EVDO, or 3G).

Images: service which provides the download of images and photos to

be displayed on the cell phone. The handset must be able to display

several formats of pictures and images such as JPEG, GIF, among

others.

Music: service which provides the download of songs to be played in

the cell phone. The handset must be able to play several music

formats such as MP3, AAC, MP4, WAV, among others.

Open TV: This feature is present in some cell phones and permits

user to watch free TV programs with the handset acting as an

analogue or digital TV receptor and capturing contents through the

same signals (frequencies) received by traditional TV’s at home.

Ringtones: service which provides the download of ringtones to be

used in the handset. The cell phone must be able to play multiple

formats of ringtones, such as MIDI, AAC, MP3, MP4, WAV, among

others.

Video: service which provides the download of videos or video

streaming to be played on cell phone. The handset must be able to

play downloaded videos or received video streaming. The cell phone

must be able to play videos in 3GP, MP4, WMV, AVI, among others.

| 54 |

Internet and Location


Internet Access: service which provides broadband access to the

Internet via cell phone or modem. In both cases users must have a

data plan contract with the mobile operator.

This service has the following characteristics:

Cell phone or Mobile Phone: the internet access from cell phone can

be done in the following ways:

1) Using a browser to access the same websites accessed by fixed

internet through a computer. Examples of browsers: the ones

offered by the cell phone or smartphone (Internet Explorer Mobile,

for Windows Mobile), or alternative browsers such as Skyfire or

Opera.

2) Accessing the WAP websites inside the Carrier network through

WAP browser.

3) Through specific programs installed in the handset (Widget, Web-

App) provided by companies like Yahoo Mobile.

4) Modem: devices which can be connected to desktop computers or

notebooks. Provides Internet broadband connection using a

computer browser (Internet Explorer, Firefox, and others).

Location Based Services: service which provides users’ geographic

location. These services have the following characteristics:

Location: can be provided as the following:

1) Through a process of triangulation using information from cell sites

and application systems provided by the operator for this purpose;

2) Through the GPS installed in the cell phone.

| 55 |

Offered Services:

1) Location: service usually offered by the mobile operator which

allows informing the geographic location of a particular subscriber.

E.g.: service hired by parents to monitor their children’s habits, or

with the purpose of promoting safety.

2) Maps: service offered by other companies providing maps on cell

phones, usually to locate addresses, and also permits to locate

users in the map if their handsets have a built-in GPS.

3) Contextual Filter: permits the mobile operator, or other service

providers, to offer addresses or other types of promotions at

stores, restaurants, movies, among others, based on the instant

location of users.

Payments and Banking: usually offered by banks or other credit

institutions, which allows the access to users accounts in these

institutions. These services can range from simple balance consults to

the payment of bills or conclusion of investment transactions.

Social Networks: service which includes all the necessary elements to

provide access to social networks such as Orkut, Twitter, Facebook,

and others. This access can be done through browser and internet

access, both present on cell phones, or through a specific application

provided by mobile operators or other companies.

Mobile Marketing The services in this category can be defined as:

Mobile Advertising: similar to Mobile Marketing, Mobile Advertising is

also an advertising service implemented by mobile operators or other

companies. If the subscribers agree to receive it they can participate

of promotions such as free minutes, free SMS packages, and others,

as a reward for receiving advertisements.

Mobile Marketing: these services are implemented by mobile

operators, to advertise the operator itself or other companies for the

subscriber base. Usually these ads are sent via SMS. The

advertisements can also be sent directly by competitor carriers or

other companies, again using SMS messages.

| 56 |

7. Technical File

Universe Cell phone users who also access the Internet

Techniques CAWI (Computer-assisted web interviewing) CATI (Computer-assisted telephone interviewing)

Instrument 15-minute semi structured questionnaire

Sample 1,493 cases (193 CATI + 1,300 CAWI)

Statistical Error Margin ± 2.5 p.p. with 95% statistical confidence

Market Brazil

Date of the Survey December 5th through December 15th, 2011 (CATI) December 5th through December 16th, 2011 (CAWI)

Gender

Sample

Male 710 47.6%

Female 783 52.4%

Age

Sample

From 14 to 17 years old 34 2.3%





From 55 to 65 years old 60 4%

Residence

Sample

North 44 2.9%

North-East 266 17.8%

South-East 840 56.3%

South 256 17.1%

Center-West 87 5.8%

Socioeconomic Status

Sample

C2 135 9%

C1 342 22.9%

B2 521 34.9%

B1 337 22.6%

A2 148 9.9%

| 57 |

Operator

Sample

Claro 301 20.2%

Oi 361 24.2%

Tim 449 30.1%

Vivo 340 22.8%

CTBC 4 0.3%

Nextel 35 2.3%

Embratel (Livre) 3 0.2%

Hired Plan

Sample

Prepaid 1,090 73.0%

Post-paid. Not subject to any restrictions on consumption

237 15.9%

Post-paid + control 166 11.1%

mavam brasil 10th edition - messaging

Business

ip messaging services

usersuse messaging services

mobile messaging

group messaging

use of messaging

personalised messaging

consumption of sms

new innovative services