New telecoms data in Brazil confirms substantial ‘special M2M’ growth

Author: Marc Schryer
Published: 2015-08-11

Since TechPolis’ recently-published research note, How to Grow M2M in Brazil, new data on M2M connections in the country has become available from Brazilian telecoms regulator, Anatel. The statistical update, the first since January 2015, was released on July 17, 2015 and provides a full year of M2M data with breakdowns by tax classification.

In September 2014, when federal activation taxes on selected M2M SIMs were reduced by 80%, two classifications of M2M services emerged:

• Special (Especial) M2M refers to pure machine-to-machine services with no human involvement. These types of services are covered by the tax break on activation (TFI) and operation (TFF) fees included in Fistel, Brazil’s SIM-card activation tax.
• Standard (Padrão) M2M refers to those services Anatel believes are not pure M2M, such as PoS (point-of-sale) terminals, where a human must initiate the transaction. Standard M2M connections are not covered by the break.

M2M connections 4

Our analysis of the new dataset supports our previous findings and predictions. Highlights from the new data, with information up to May 2015, include:

• Total M2M Connections number 10.6 million. There are now 1.8 million special M2M connections benefiting from the tax break while there remain 8.8 million standard M2M connections.
• M2M share of total mobile connections is now 3.72%.
• Special M2M’s share of total M2M connections has increased from 3.1% in June 2014 to 20.2% in May 2015.
• Special M2M CAGR from June 2014 to May 2015 is 535%.
• Standard M2M CAGR from June 2014 to May 2015 is -0.37%.

One small issue with the new data released is the omission of numbers from MVNO Porto Seguro, which Anatel says it will be releasing soon. As a result M2M totals are slightly off, but by less than 3%. In January 2015, Porto Seguro had 254,325 M2M connections which, according to our projections, should now have grown to about 294,000.

On a regional basis, the states with the fastest growing number of standard M2M connections are São Paulo and Amazonas, with 163,400 and 82,500 added between January and May 2015 respectively. Paraná experienced the largest net decrease in standard M2M connections, losing nearly 48,000 connections over this period.

Statistics for the month of May, 2015 show Brasília added the most standard connections, 14,300 in total, followed by Amazonas with nearly 10,800 added. The State of São Paulo lost 81,000 standard M2M connections in contrast with the 114,500 special M2M connections added. It is not clear if the discrepancy was the result of standard connections being reclassified as special, or simply being disconnected.

The inconsistencies in Anatel’s reporting of numbers of M2M connections means consolidation in reporting is required. The difficulty in classifying M2M connections, whether with or without human interaction, might be behind the month-to-month reclassifications between special and standard, affecting large numbers of SIMs.

Since those reclassifications will soon mean savings of hundreds of millions of Brazilian reais, we believe Anatel should allocate more human and material resources to monitor M2M connections and manage the M2M database—a database that has significant tax and financial implications.

TechPolis advocates the tax break should cover all M2M connections, which would make things a lot simpler for all involved—while boosting the take-up of IoT in Brazil.

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