Telecom Service Resale in Brazil

Most telecommunication services in Brazil are sold through resellers of the large telecom operators. In this article we will have a look at the structures and legal disputes for each of the largest mobile operators in Brazil.

Operator Resell Business

The four main Brazilian mobile telecom operators channel most of their sales through resellers. This can be anything from individual sales representatives to operator branded stores with exclusive agreements similar to those found in traditional franchising businesses.

Sales channels are used to reach private customers, small businesses and large corporations. The national association for telecom resellers claim to have generated close to 90% of all revenue from these operators in recent years. Although difficult to asses, the number seems plausible based on the number of telecom resellers. A good illustration is TIM’s retail network. They own around 130 of their approximately 1500 point of sales in Brazil, a market penetration strategy shared by most of it’s competitors.

Data from telecom reseller sales are not widely published by operators, but recent numbers seem to indicate the size of these sectors. In 2012, Claro announced that BRL 555 million was paid out in reseller commision, while Oi announced that BRL 345 million was paid out to resellers, of their total BRL 28 billion revenue from the same year.

Operator Partnership Categories

Each of Brazil’s largest mobile telecom operators - Vivo, Claro, Tim and Oi, offer tiers for vendors and businesses interested in partnering with them as channel partners, which can range from serving as outlets for SIM cards and prepaid plan recharges to fully branded stores that provide a variety of products and services to clients.

Vivo

The mobile operator with the most subscribers in Brazil offers five tiers of reseller agreements:

• Vivo Store: Retail outlet equipped to trade Vivo’s main services and devices, where customers are able to interact with their products
• Vivo Reseller: Targeting small and medium businesses focused mainly on Vivo’s own products and services
• Mobile Data Distributor: Electronics and IT retailers and distributors that choose to offer Vivo’s data services
• Corporate Sales Partner: Resellers that target enterprise clients and offer Vivo’s corporate-focused services
• Pre-paid Credit Resellers: Any business that wish to provide recharges for Vivo’s prepaid plans

Claro

Mobile arm of telecom giant América Móvil has three tiers of reseller agreements:

• Private Customer Sales Partners: Claro-branded stores and sales points that offers a retail experience for Claro’s telecom and TV services
• Corporate Sales Partners: Partners focused on the distribution of Claro’s corporate telecom services to business clients
• Pre-paid Credit Sellers: Any business that wish to provide recharges for Claro’s prepaid plans

TIM

Italian-Brazilian mobile operator with the second largest client base in the country has four tiers of reseller agreements:

• TIM Stores: Branded stores that offer TIM’s products and services to private customers
• Corporate Sales Partners: Resellers that offer TIM’s corporate services to small and medium sized businesses
• Senior Account Executive: Individuals who act as a direct contact with TIM’s corporate client base and can prospect potential new customers
• Pre-paid Credit Sellers: Any business that wish to provide recharges for TIM’s prepaid plans

Oi

Brazilian founded operator has five tiers of reseller agreements:

• Oi Stores: Branded retailers that provide an outlet for Oi’s main services, mobile devices, data plans and TV subscriptions
• Oi Representative: Sales partner individuals and brand evangelists which directly interact with the operator and their private and corporate customers
• Big Retailers: Established retails which opt to resell Oi’s services, devices, data plans and prepaid credit inside their existing retail infrastructure
• Small Retailers: Established retailers that offer a limited number of Oi’s products, often just SIM cards and prepaid credit
• Corporate Sales Partner: Representatives focused on offering Oi’s enterprise solutions

Partnership options are negotiated with the mobile operators and the terms vary largely depending on the level of engagement required and the existing relationship with the operator.

Legal Disputes

The reseller model for mobile operators has led to a number of legal disputes relating to commision payments during recent years. As resellers have commision on sold services as their primary source of income, mobile operators are subject to multiple accusations of declining payment or severe reductions.

As of 2013, the three main operators in Brazil - Vivo, Claro and Tim, were in disputes with dozens of sale representatives with combined claims exceeding BRL 500 million. Oi is also known for imposing large deductions on sales commission to their partners, and is the only operator with a partner store association devoted to defending the interest of resellers.

The number of legal disputes led to the creation of various associations specializing in representing sales partners and franchisers. Abratelecom, or the Brazilian Mobile, Fixed and TV Telecom Market Partners and Agents and Accredited Third-Parties Association, for example, represents over 600 clients of the total 20 thousand resellers estimated in the country .