Argentina Telecommunications Report Q2 2008

Argentina's mobile market looks set to be the first in the region to pass the 100% penetration mark as operators have continued to see strong growth despite the maturity of the market. Argentina has already overtaken Chile in terms of penetration in Q207 and looks set to keep Chile in second place in our regional rankings for the mobile market. The market is all the more remarkable given the high number of postpaid subscribers, certainly higher levels than seen elsewhere in Latin America. Although both Movistar and Telecom Personal, the two operators with the highest shares of postpaid subscribers have reported these shares to have fallen quarter-on-quarter (q-o-q) while CTI Mvil has seen a small increase.

All three operators have now launched 3G services with Telecom Personal the first to launch in May 2007 in Buenos Aires, only to be followed two months later by Movistar. CTI Mvil held off until early November 2007, launching in three cities and then expanding its coverage to cities in the Buenos Aires region and coastal cities. BMI believes this was a strategic decision intended to see how the market took to 3G services but was quickly followed by Telecom Personal increasing its 3G coverage.

Fixed-line incumbents TASA and Telecom Argentina reported strong additions to their broadband subscriber bases and the market appears to be growing in line with BMI forecasts. Telecom Argentina currently offers the fastest broadband rate (20Mbps download) which could easily see it overtake Cablevision and TASA to become the market leader. Attractive offers have helped growth in the market and competition in the form of DirecTV Argentina should see the market continue to exhibit strong growth. Telmex Argentina has announced it will launch WiMAX services to the residential market as soon as it receives final regulatory approval following its acquisition of Ertach in June 2007.

TASA parent Telefnica has acquired an indirect stake in Telecom Italia, one of the controlling shareholders of Telecom Argentina. The government appointed two independent observers into Telecom Argentina to assess the impact. The investigation was ongoing at the time of writing, having been extended by a further two months in December 2007.

Our Q208 report includes an additional section looking at the regulatory environment in Argentina and includes a breakdown of the responsibilities of the regulatory bodies and an overview of significant events and regulations in Argentina. We have also updated our Business Environment Rankings which saw Argentina move upwards owing to the relatively young population living in urban areas and the strong growth seen overall in its mobile market. Forecast scenarios have been extended to 2012 when we forecast the mobile market will reach 120% penetration and broadband penetration will be 14%.