Latin American Analysis

Syndicate 6
Systems and Finance
Overall economy of the region
• From 2007, the region has experienced
great economic development
• Agriculture and manufacturing are the
major economic activities
• Brazil, Mexico and Argentina the top 3
economies by GDP (PPP) as of 2010
• Latin America’s economy grew 6.6% in
2010
• Paraguay’s economy grew by 9.7%,
followed by Uruguay with 9%, Peru with
8.6% and Argentina with 8.4% in 2010
• Region increased exports by 29% in 2010,
reaching 853 billion USD, completely
reverting the 23% drop in 2009

Source: http://peopledaily.com Source: http://oecd.com

 Telecom ecosystem of Latin America
Technological share of the Latin American market (2009)

• Top 5 markets by telecom service revenues

are Brazil, Mexico, Argentina, Venezuela
and Colombia in 2010
• Current mobile penetration ~ 88-90%
• Brazil is the largest telecom market in Latin
America with 41.5 million fixed subscribers,
174.0 million mobile subscribers by Q4,
2009
• Subscriber growth > 6.7% for Mexico’s
wireless market, reaching ~ 90%
penetration in Q4, 2009
• Argentina’s wireless telecom market grew Source: http://www.4gamericas.org/
by 10.2% with 48.2mn subscribers by Q4, Latin America – Top Internet countries (mn users)
2009
• Latin America has around 34.8% internet
penetration with Brazil and Mexico leading
the way

Source: http://www.prlog.org Source: http://www.internetworldstats.com/

http://www.lightreading.com
 Key Players (Region wise)

Mexico
• Vivo (Telefonica) •Teléfonos de México (TelMex)
•Claro (America Movil) •Iusacell (Vodafone)
•Tim (Telecom Italia) •TelCel (America Movil)
•Oi (Telemar) •Unefon

Major Latin American

Major Latin American
Telecom Players
Telecom Players Argentina
Brazil ►America Movil
►America Movil
►Telefonica •Claro (America Movil)
►Telefonica •Movistar (Telefonica)
►Global Crossing
►Global Crossing •Telecom Personal
(Telecom Argentina)
•TASA

Colombia
•Movilnet (CanTV)
•Movistar(Telefonica)
•Digitel
Major events in the last 2 decades
Opening up of the telecom market in mid 1980s

Moving from central monopolistic control to a market based

economy in early 1990s
Major telecom players from America entered the markets in
mid 1990s
Telecom equipment production got a boost post regulatory
reforms from mid-end 1990s
Fixed line growth start declining in 2002-03, market for
fixed line privatized and opened for competition
1980s-2010
Number of mobile subscribers surpass fixed-line subscribers 1980s-2010
in 2003
Number of GSM subscribers overtake the number of CDMA
subscribers in 2003-04
3G services launched amongst falling voice revenues in 2008
across Latin American countries
WiMAX deployed in 2008-09, MNP launched in 2009-10,
LTE trials begin in early 2010 in Brazil and Mexico
Latin American markets crossed half billion mark in mobile
subscriber base in 2010
Source: http://www.internetworldstats.com
https://www.budde.com.au
Consumer Preferences in Latin American
markets
Mobile TV
Mobile TV
► Instantly engaging music videos widely popular as
people tend to only watch for a few minutes at a
time
► Predominantly male users now, although women are
increasingly using mobile TV
► Demographic constantly becoming younger with
handset advancement
► Operators will need to combine the right services at
the right price containing the right content.
► 3 out of 5 internet users in Latin America visit retail
sites each month
► 79% of males reported making an online purchase,
while 88% of females reported doing so
► Brazil showed the highest percentage conversion of
online e-commerce site visitors to purchasers
► 94% of visitors in Brazil making an online purchase,
Argentina followed at 89%, Colombia stood at 84%  posting new content on a daily basis
eCommerce
eCommerce
SMS
SMS
► Latin Americans have adopted text messaging as
their go-to form of communication with people
sending roughly 250 billion SMSs in 2009, a number
likely to increase to > 400 billion by 2014
► SMS based short codes creating new bonds between
the consumers and brands
► Consumers are much more likely to respond to a
short code campaign than an email campaign,
indicating a clear preference for this medium
► People in Latin American countries prefer social
networking sites to email
► They are more likely to post blogs, photos/videos or
tweet online, they value Internet access far highly
than people in more developed countries
► Brazilians apparently have the most Facebook
friends, with an average of 231
► More than half of Brazilian and Mexican users are
Social Media
Social Media
Source: http://www.newmediatrendwatch.com/
http://www.comscore.com
 Regulations in the Latin American region
Privatized/ Triple M- Number Mobile
Country Regulating Body Liberalized 3G WiMax Play VOIP Commerce MVNO Portability TV
Argentina Secretaria de 1990 UMTS 3.5GHz Yes Allowed No Full MVNO Allowed No
Comunicaciones 850/1900 2004 2009 2010

Brazil ANATEL 1996 UMTS 3.5GHz Yes Allowed M-Cash Full MVNO Allowed 2010
850/2100 as VAS 2010 2009
services
Chile Subsecretaria de 1988 UMTS 3.5GHz Yes Allowed Yes Full MVNO Allowed 2009
Telecommunicaca 850/1900 2004 2008 2009
iones
Colombia Comisión de 2006 UMTS Not Yet Yes Allowed, No Partial Allowed 2010
Regulación de 850/1900 Launch Need MVNO 2008
Telecomunicacion ed telecom
es license
Mexico Coftel 1990 UMTS 3.5GHz Yes Allowed Pag-Movil Full MVNO Allowed No
850 without a 2010 2010
license

Uruguay Unidad Yes UMTS Not Yet Yes Allowed No Not Not 2010
Reguladora de 850/1900 Launch without a Allowed Allowed
Servicios de /2100 ed license
Telecomunicacion
es
Venezuela Comisión 1991 UMTS 2.5GHz Yes Allowed, No Not Not 2010
Nacional de 850 Need Allowed Allowed
Telecomunicacion telecom
es (CONATEL) license
 Mergers and Acquisitions
Deal Size (in $
Country Target Company Acquirer millions) Remarks
Oi (then known as Telemar) was formed as Tele Norte Leste to
Oi Telemar Norte Leste 1,607.70 merge sixteen state-owned incumbent local exchange carriers
  (ILECs), during the privatization of Brazilian
  Brasil Telecom Oi NA
In 2008, Oi announced it would purchase Brasil Telecom, creating
a major Brazilian telecommunications company, already
Brazil nicknamed "Supertele" or "SuperOi"

  BCP America Movil 625 In 2003, America Movil announced the purchase of BCP for US$
625 million
  Tele Centro Oeste Celular Telesp Celular Participacoes 438  

  BSE Telecom Americas 180 The acquisition BSE, also known as BCP Nordeste, became part
of America Movil's Brazilian subsidiary Telecom Americas
  Telpart Participacoes
Highlake International
70
  Canbras Participacoes
Business
Horizon Cablevision do Brasil 32.6
 
 
MetroRED Telecomunicacoes Brasil Telecom 17  

In January 2010 America Movil the largest mobile phone company

Telmex
 
  Telereunion
Delta Comunicaciones Diginales
Mexico
  Televisa(NII Holdings)
 
Motorola Chihuahua factory
America Movil Take Over
Lambco Telecommunications
NII Holdings
Nextel
Hon Hai Precision Industry
in Latin America made an offer to buy Telmex and Telmex
International in order to better compete against Spain's
2380 Telefonica, the acquisition was approved by the CFC (Comisión
Federal de Competencia) Antitrust Office in Mexico on February
11, 2010. America Movil was once the mobile arm of Telmex, but
since 2001 America Movil was split off and grew bigger than the
former parent company.
18.8  
39.3  
In February 2010, NII Holdings and Grupo Televisa signed a
1440
definitive agreement under which Televisa acquired an equity
stake in Nextel Mexico. Under the agreement, Televisa invested
$1.44 billion in cash for an initial 30% equity stake in Nextel
Mexico
On Oct. 17 2003, Motorola sold a cell-phone factory in
Chihuahua, Mexico, to Taiwan's Hon Hai Precision Industry Co. Ltd
18 Under the deal, Hon Hai was to continue to produce handsets for
Motorola at the Chihuahua factory under a multi-year
manufacturing agreement.
Telecom Trends in the region
• Launch of 3G services is the region have seen a lot of success. Almost all countries have 3G services
launched. Around 2009, in less than a year, 25 operators in 14 countries launched 3G in the region with
1 211,000 Customers

• Most of the countries have Wimax launched with a few having planned launches in 2011. Latin America
recorded 35 WiMax deployments across 14 countries and 261,000 subscribers at the end of 1Q08
2

• MNP has been launched, off late in 2009-10 in most of the countries, Brazil leading the pack with most ports
3

• The industry seems ripe for consolidation and a lot M&A activity is on the cards. One of the biggest deals
being the consolidation of América Móvil, Carso Global and Telmex Internacional, worth $23.8 billion
4

• The growth of mobile broadband in Latin America has been nothing short of spectacular with a total of 15
million connections till 2010
5

• Mobile TV has been launched in most of the countries with ISDB-T being the chosen technology
6
Telecom Ecosystem
Network
Equipment
Vendors
ZTE, NSN,
Ericsson, Huawei

Network
Handset Provider
Manufacturer America Movil,
s Nokia, Telefonica
Motorola, control almost
Sony Ericsson 62% of the
market
Customer

Service
Provider/MVNOs VAS Providers
America Movil, Gemalto, IMI
Telefonica , Telecom mobile
Argentina
What Next for Latin American markets?

Emergence of
The Launch of Launch of Video
The launch and Internet Based
4G HSDPA and on Demand by
adoption of LTE Mobile VAS and
Next Generation most service
networks explosive growth
IP networks providers
in app stores
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