ANINTERNATIONALBUSINESSEXPANSION

BrazilJA

SMIN

A ROSSEEL

LARRY MAIO

LO

MONTEIZ

FRAGER

FEBRUARY 28, 2011

INTRODUCTION

WHAT?

WHERE?

HOW?

WHY?

Mobile end of the telecommunication market

Brazil

Take over Telefonica’s stake in VIVO

Because they are well positioned in the market

MOBILE PHONE MARKET IN BRAZIL

• It has been expanding steadily since 1998

• It has dominated the fixed line market due to the expensive expansion of fixed lines

• Strong growth potential reflects a growth and improvement of income levels.

• Expanding broad-ban width will help sell more high-end smart phones which will lead to raising profit margins

• Lots of pre-paid phone users

LOOKING FORWARD

• By 2020, the largest mobile market in Latin America will be Brazil with an estimated 260 million subscriptions.

• More people can now afford a cell phone since the medium income continues to grow.

• Many underdeveloped countries surrounded that we can target.

SWOT ANALYSIS

• Large amount of debt from VIVO

• Risks associated with taking on partners and sharing business

• Big gap between rich and poor

• Low market entry price due to debt levels

• Large untapped market

• Brazil is 5th largest mobile population

• Voice over Internet Protocol (VoIP) expected to grow 62% annually

• Up to 10% increase of subscriptions

• Stable government

• Strong market share (35%)

• Rising medium income level

• Telecommunication had increase of $35.6 Billion

STRENGTHS WEAKNESSES OPPORTUNITIES

• Strict regulations on pricing

• Large number of competitors

• Major infrastructure upgrades needed to expand broad ban capabilities

THREATS

MICRO CONSIDERATIONS

• Overall market: 93.8 cell phones per 100 people.

82.36% of which pre-paid and 17% under contract

• Expected growth of use of high-end smart phones

Has been growing 5% every year

• In Brazil, there is a large portion that doesn’t have access to internet

3G will solve this.

Internet vs. mobile phone service

MACRO CONSIDERATIONS

• Government is highly accommodating outside investment.

• Economic system in Brazil is a free market

• Continuously growth in GDP.

Avg. of 8% in last decade

• Gross National Income of 11,231.00 p.p.

• Relatively low unemployment rate (5.7%)

• Strict regulations regarding price caps

• Skilled labor, minimum wage of $555.00/month

ENTRY STRATEGY

• Partnership with Telecom, buy out Telecom’s current partner Telefonica VIVO

31% market share in Brazil

• We would aggressively advertise 3G broad ban

• Already expanded broad ban above competitors

• We will provide the best service possible trough superior technology and customer service

• We will try to get SMS more on the market

CONCLUSION

• Factors that come into play for expansion:

Cost associated with the acquisition of Telefonica’s stakeo Requires a substantial initial investment

Extensive growth of mobile service market and economy in Brazil

Low asking price because of debts

Opportunities to expand other telecommunicationso 3G, broad ban

QUESTIONS? WE HAVE ANSWERS.

THANK YOU.

JASM

INA R

OSSEEL

LARRY MAIO

LO

MONTEIZ

FRAGER

INTERNATIONAL COMMUNICATIONS, INC.