2007 Latin American Mobile Communications and Mobile Data Market

This Latin American market report covers the mobile telephony and mobile data markets in each of the following economies: Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Suriname, Uruguay, Venezuela, and the smaller Caribbean island nations. The region's major mobile markets include:

Argentina

Argentina has one of the fastest-growing mobile markets in Latin America, with a penetration of around 75% in early 2007 - a figure that is well above the Latin American average, trailing only Chile and a few Caribbean islands (note: the figures published by Argentina's regulator INDEC, giving a penetration of 82% at end-2006, appear to have been overstated). Three operators, Movistar, CTI Mvil, and Telecom Personal, run a close competition for market share. All three are planning network upgrades in 2007 to prepare for the launch of UMTS 3G technology. After absorbing Movicom BellSouth in January 2005, Movistar accumulated surplus spectrum that it must relinquish in stages. Companies vying for Movistar's returned spectrum include cooperative start-up Comarcoop, CTI Mvil, and Hutchison.

Brazil

In terms of subscribers, Brazil's mobile market is the fifth largest in the world, behind China, the USA, Japan, and Russia. Yet, although Brazil holds more than one third of all the mobile users in Latin America, its mobile penetration (53% in early 2007) is about average for Latin America, trailing Chile, Argentina, and several other countries. GSM is Brazil's preferred technology, and is gradually taking over the mobile market. There is considerable room for growth in mobile data services. Although the share of operators' revenue from VAS is small compared with other countries, it is on the rise. A 3G auction is expected in mid or late 2007, despite some uncertainty as to the prospects of 3G in Brazil.

Although Brazil's mobile phone industry is highly competitive and dynamic, there are concerns about its future, especially considering Brazil's sluggish GDP growth and the low average income among workers, which could lead to early market saturation. The country has four major mobile operators (Vivo, TIM, Claro, and Oi) that hold 91% of the market. There are also another five smaller mobile companies. In January 2007, US investment bank Merrill Lynch was appointed to coordinate the sale of Amaznia Celular and Telemig Celular, which between them hold a 5% share of the mobile market. Claro and Vivo are considered the most likely buyers.

Chile

At around 81% in early 2007, Chile's mobile penetration is second only to a few Caribbean islands. Mobile subscribers outnumber fixed-line connections by almost four to one. Mobile competition is fierce, with four mobile service providers fighting over market share: Telefnica's Movistar Chile, Entel PCS, Amrica Mvil's Claro, and trunking operator Nextel Chile. The latter finally launched iDEN services in December 2006 after six years of legal battles over interconnection. In 2007, the government may be launching a 3G auction, which would be open to both new and existing players.

Mobile subscriber growth in Chile can be attributed to the following factors:

• solid performance of the Chilean economy;
• the success of prepaid calling card plans;
• the introduction of PCS services and calling party pays policies;
• reduced cost of handsets due to competition.

Colombia

Colombia's mobile market is one of the country's most dynamic businesses. Despite being among the poorer Latin American countries in terms of GDP per capita, mobile penetration (68% in early 2007) is considerably higher than the Latin American average. Amrica Mvil's Comcel is the leading mobile operator, followed by Telefnica's Movistar. Millicom International acquired control of the third mobile company, Colombia Mvil (previously branded Ola), and relaunched it in November 2006 with the brand name Tigo. Avantel is the fourth officially recognised mobile company. Avantel uses iDEN technology; Comcel uses TDMA and GSM; Movistar uses TDMA, CDMA, and GSM; and Colombia Mvil uses only GSM.

Mexico

Driven by a booming GSM market, Mexico's mobile industry is growing at a yearly rate of around 22%, reaching 53% penetration in early 2007. There are four mobile operators: Amrica Mvil's Telcel and Telefnica's Movistar offer GSM services, while Iusacell and Unefn use CDMA technology. A fifth operator, Nextel de Mxico, operates a mobile trunking system using the iDEN mobile communications standard. Despite increased competition since 2000, Telcel still dominates the mobile market, with about 76% market share. Movistar is Telcel's main competitor, with 15% market share. The much smaller Iusacell and Unefn are expected to merge around mid-2007. Between 2003 and 2006, Mexican mobile operators have been upgrading their networks to offer high-capacity and high-speed data services, such as EDGE, 1xRTT, and 1x EV-DO.

Peru

At 31% in early 2007, mobile penetration in Peru is considerably lower than the Latin American average. Mobile subscribers, however, are growing at an annual rate of 57%. Three companies compete in the Peruvian mobile market: Telefnica's Movistar is the leader, with around 60% market share; Amrica Mvil, in second place, has 38% and is fast gaining ground; Nextel Per, primarily catering to corporate customers, has only 4% of the market but has the best ARPU. The government has approved the auctioning of BellSouth's returned licence, and has published the bidding rules. Movistar and Claro are precluded from bidding, leaving only Nextel or a new entrant as possible candidates.

Venezuela

Mobile telephony in Venezuela has been far more dynamic than the fixed-line market, so much so that mobile phones outnumber fixed lines in service by more than four to one. Mobile penetration reached 72% in early 2007. In 2006, the mobile scenario was transformed when Venezuelan businessman Oswaldo Cisneros acquired regional operator Digitel from Telecom Italia, and then merged three regional companies Digitel, Digicel, and Infonet into a single nationwide operator capable of competing with the two market leaders Movistar and Movilnet. Another radical change occurred in February 2007, when the Venezuelan government agreed to buy a controlling stake in Movilnet's parent company, fixed line incumbent CANTV.

For those needing high level strategic information and objective analysis on the mobile telephony and mobile data markets in Latin America, this report is essential reading and gives further information on:

• Mobile market forces and developments;
• Mobile operators - acquisitions, mergers, and competition;
• Past and planned spectrum auctions;
• Technological developments in the mobile telephony and mobile data markets.