BuddeBlog

Market Highlights

• In 2013, Argentina’s fastest growing telecom segment is likely to be 3G, both for mobile broadband and for phone-based internet browsing. The country’s smartphone market is expected to outperform all other markets in the region.
• In partnership with Brazil, Argentina is developing the local link of a new submarine cable network, the Atlantic Cable System (ACSea);
• Argentina is the world’s most engaged social networking market in terms of time spent on social media websites. The country’s Facebook user base is the twelfth largest globally, and about 15% of the population use Twitter.
• The bitter fight between Cristina Kirchner and Grupo Clarín continues. The survival of the pay TV and broadband operator remains uncertain. The Audiovisual Law is, in the eyes of Clarín, nothing but an act of revenge on the part of a president unwilling to accept criticism. Kirchner, for her part, accuses Grupo Clarín of using its media outlets to try to topple her administration.
• Having been awarded about 25% of Argentina’s mobile spectrum in September 2012, state-owned Arsat is preparing to provide wholesale mobile services under the brand name Libre.ar, but the project may take some time to implement.

Key developments:

TASA’s and Telecom’s fixed-line revenues increase by 12% and 13% respectively; state-owned Arsat is building three new satellites (Arsat-1, Arsat-2, and Arsat-3); Argentina Conectada will require an investment of AR$8 million (about US$1.8 million); more than 30 telecom cooperatives have been awarded pay TV licences; Argentina’s three top mobile operators launch handsets with built-in free-to-air digital terrestrial TV reception; a new decree has been passed to regulate Mobile Virtual Network Operators.

Argentina’s fixed-line, broadband, and mobile statistics – 2011 – 2013

(Source: BuddeComm based on industry data)

BuddeComm’s yearly update of Argentina – Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Argentina, including the regulator’s statistics, company data, and other industry indicators to the end of 2012, as well as estimates for 2013 and expected market developments in the coming years.

This report is essential reading for those needing high-level strategic information and objective analysis on the telecom sector in Argentina. It provides further information on:

• Regulatory environment;
• Economic trend and its impact on telecommunications;
• Analyses of Argentina’s telecom sectors;
• Telecoms operators – consolidations, acquisitions, new licences;
• Company performances and ARPU statistics;
• Spectrum auctions and regulatory issues;
• 3G and mobile broadband developments;
• Historical and current subscriber statistics and forecasts.

For detailed information, table of contents and pricing see:

Argentina – Telecoms, Mobile, Broadband and Forecasts

Economic climate

For Argentina, 2012 was a disappointing year, with GDP growth well below market forecasts. The outlook remains uncertain; economists’ projections vary between 1.8% and 4.6% GDP growth for 2013. Inflation remains a serious problem. Other macroeconomic, legal, and regulatory challenges include nationalisation risks, tight import controls, and restrictions on currency exchange.

Telecom revenues

Telecom revenues are expected to reach more than US$17 billion in 2013. Mobile revenues account for more than two thirds of total telecom revenues, and this proportion continues to rise at the expense of fixed-line sales. Considering both mobile and fixed-line revenues, Spain’s Telefónica/Movistar and Italy’s Telecom Argentina are the largest telecom operators, with consolidated revenues of US$4.92 billion and US$4.87 billion respectively in 2012. Mexico’s Claro is in third place, with US$3.22 billion, and Argentina’s Grupo Clarín occupies a distant fourth place, with US$1.68 billion.

Competition

The country’s regulatory framework encourages competition and supports smaller telecom players. Argentina has adopted a single licence system (Licencia Única), which telecom companies must obtain regardless of the services they wish to provide. When operators apply for a licence, they must list which services they wish to offer, but can at any time register for additional ones. However, broadband competition is weak, and the wholesale market is poorly regulated.

Fixed-line market

Argentina’s teledensity is the fourth highest in South America after Uruguay, Chile, and Brazil – having been overtaken by the latter in 2012. As in other countries, fixed-to-mobile substitution has adversely affected the Argentinean fixed-line market. In fact, since peaking at 24.5% in 2005, the country’s teledensity has shrunk by 2.5 percentage points.

Fixed-line operators

The local fixed-line market is made up of the following: the incumbents Telecom Argentina (Telecom) and Telefónica de Argentina (TASA); some 400 small telecom operators, mostly cooperatives; a number of cable TV companies that offer fixed telephony over their networks as part of triple play bundles. TASA and Telecom own respectively 52% and 45% of the country’s fixed lines in service. Unlike other countries where triple play has helped boost the flagging fixed-line sector, the only company that could have made a difference – Grupo Clarín – has not been allowed to offer telephony services.

Broadband market

In terms of broadband penetration, Argentina ranks third in Latin America after Uruguay and Chile. But economic and political difficulties have had a negative impact on investments, and the high broadband penetration figures hide a less glowing picture: in terms of mean download speed, Argentina ranks 11^th in Latin America.

Broadband players

The two fixed-line incumbents Telefónica de Argentina and Telecom Argentina dominate the ADSL market, offering similar services and together controlling about 68% of all broadband in the country. The only meaningful competition is cable modem, offered by Grupo Clarín, but political interference has put the company at risk.

National broadband plan

A national connectivity plan, dubbed ‘Argentina Conectada’, involves the deployment of broadband services and free-to-air digital TV to underserved parts of the country. The plan, launched by the government in October 2010, is to be implemented over five years. State-owned satellite company Arsat is responsible for the project.

Pay TV market

Argentina’s pay television market is the most mature in Latin America. In fact, Argentina is a world leader in terms of pay TV penetration, with about two homes out of three subscribing to pay TV services. Pay TV households are evenly distributed, with penetration in the major cities only slightly higher than in the rest of the country.

Pay TV companies

Grupo Clarín’s Cablevisión is the country’s leading pay TV operator with about 36% of the market; DirecTV is the second largest player, with a 20% share; Supercanal, Telecentro, and Red Intercable have approximately 6% to 7% each; the remaining 25% of the market is shared among small local companies and cooperatives.

Mobile market

Argentina is one of the most dynamic mobile markets and the third largest in Latin America, after Brazil and Mexico. Mobile penetration looks set to reach approximately 147% by end-2013, with the number of subscribers increasing by 3% annually. Many Argentineans own multiple SIM cards, some having different phones for work and personal calls, some having a phone for each mobile company to take advantage of special offers, and some requiring an additional SIM card for mobile broadband.

Mobile operators

Three mobile companies compete neck-and-neck, each one controlling about one third of the country’s mobile market. América Móvil’s Claro is the market leader, followed by Telecom Personal (the mobile unit of Telecom Argentina, controlled by Telecom Italia). Telefónica’s Movistar is in third place. Nextel has but a small 3% market share, and Fecosur, an association of fixed-line telecom cooperatives, offers Mobile Virtual Network Operator (MVNO) services branded Nuestro.

Smartphones

Argentina’s smartphone penetration is well above the estimated world average; at end-2012, about 24% of Argentineans owned a smartphone, compared with an estimated 15% world penetration. In 2013, Argentina’s smartphone market is expected to outperform all other markets in the region.

BuddeComm’s yearly update of Argentina – Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Argentina, including the regulator’s statistics, company data, and other industry indicators to the end of 2012, as well as estimates for 2013 and expected market developments in the coming years.

For detailed information, table of contents and pricing see:

Argentina – Telecoms, Mobile, Broadband and Forecasts

Economic climate

For Brazil, 2012 was a disappointing year, with GDP growth well below expectations. The sluggish result has been blamed on the unfavourable global environment. The only sector that grew in 2012 was services; industrial and agricultural activities both shrank. Investments in 2012 were down 3.6% – and yet, paradoxically, domestic consumption rose by 3.1%, buoyed by a general sense of optimism. To revive the economy, President Dilma Rousseff adopted a series of measures to help spur much needed investment.

Investment opportunities

With the upcoming 2014 FIFA World Cup and 2016 Olympic Games being held in Brazil, operators are rushing to roll out new technology such as LTE and FttH networks. The Brazilian government has issued a law offering tax breaks for new telecom investments in networks that support access to fixed or mobile broadband. Companies wishing to secure the tax breaks must submit their network projects to the Communications Ministry by 30 June 2013.

Competition

The asymmetric measures introduced by the General Competition Plan in November 2012 are a significant step in the Brazilian telecom environment. The regulation of network unbundling and controlled wholesale prices should pave the way for a more competitive broadband market. The General Competition Plan requires operators with Significant Market Power (SMP) to share their networks and infrastructure with small or new service providers, at reference prices approved by Anatel.

Fixed/mobile consolidation

Fixed/mobile consolidation is reshaping Brazil’s telecom industry. Telefónica operates through Telefônica Brasil, which has integrated its fixed-line and mobile services under the brand name Vivo, previously only used for its mobile business. The América Móvil group in Brazil comprises long-distance incumbent Embratel, mobile operator Claro, and cable TV provider Net Serviços. The group has started to integrate its fixed and mobile services under the brand name Claro – which likewise was previously used solely for mobile services. Oi offers all fixed line and mobile services under the Oi brand name.

Fixed-line market

Brazil’s fixed-line teledensity is slightly higher than average for South America, and the number of fixed lines continues to grow – but ever so slowly; teledensity has gone up by only one percentage point in six years. The two regional incumbents Oi and Vivo control 43% and 24% respectively of the country’s fixed lines in service, but they mostly keep to their own regions of operations despite the lifting of geographical restrictions. While their basic telephony services have been losing customers, the Claro/Embratel/Net group and GVT have been steadily increasing their local market share (respectively to 22% and 8%). GVT is the country’s most successful alternative network provider, offering fixed-line services only.

Mobile market

Brazil is home to more than one third of all mobile users in Latin America and the Caribbean. Mobile penetration is upward of 132% and still growing. Thanks to the rules attached to the 3G licences auctioned in December 2007, which required operators to extend services to all towns and municipalities with no mobile coverage, Brazil managed to achieve mobile coverage of all its 5,565 municipalities in December 2012. Four companies dominate the country’s mobile telecom market: Vivo, Claro, Oi, and Telecom Italia’s TIM Brasil. Together, these four operators control 97% of the country’s mobile subscriber base. Vivo is the leader, TIM Brasil and Claro compete neck-and-neck for second place, and Oi is fourth.

Broadband market

In preparation for the FIFA World Cup and Olympic Games, substantial investments and regulatory reforms are being implemented to boost Brazil’s broadband development – such as the General Competition Plan and the National Broadband Plan. Also, the Atlantic Cable System (ACSea), when completed, should substantially increase bandwidth and reduce broadband prices. Oi is Brazil’s leading broadband network operator, closely followed by Net; Vivo is in third place, and GVT is fourth. Oi and Vivo, which use mainly ADSL technology, have been losing market share to Net and GVT, which offer faster connections – the first over HFC cable, and the second over a NGN network with a Fibre-to-the-Cabinet architecture.

Broadcasting

Since 1996, Brazil’s pay TV market has experienced sustained growth, not even slowing down during the global credit crunch of 2008/09. Although Brazil has the largest number of pay TV subscribers in Latin America, its pay TV penetration lags behind other major countries such as Argentina, Chile, Venezuela, Mexico, and Colombia. There is therefore ample room for growth, and investors have been eager to gain a foothold in the market, especially since the pay TV law of 2011 removed restrictions on foreign investment and on telcos being able to provide pay TV services.

Market highlights:

• To tackle the problem of insufficient bandwidth, the Brazilian government has entrusted state-owned Telebrás with the construction of a new submarine cable network – the Atlantic Cable System (ACSea) – linking Brazil with the USA, Europe, Africa, and several Latin American countries. The ACSea submarine cable will increase bandwidth and reduce broadband prices for all of Latin America.
• Brazil’s incipient MVNO market has attracted a great deal of interest from national and international investors. The most significant MVNO operator with plans to enter Brazil is Virgin Mobile, but its service launch, scheduled for the second half of 2013, may be delayed due to bureaucratic complications and difficulties in reaching MVNO agreements with mobile network operators.
• Vivo, Claro, TIM Brasil, and Oi have won 4G licences and are deploying LTE networks. The government is keen for Brazil to have LTE services available for the FIFA World Cup. Claro was the first of the mobile operators to launch commercial LTE services, in December 2012.
• Smartphone penetration in Brazil is slightly lower than the estimated world average, but sales are expected to soar in 2013, partly thanks to a tax break introduced by the government at the start of the year, which should help lower the average selling price of smartphone handsets.
• In preparation for the World Cup, Hispasat has launched Amazonas-3, a satellite equipped with 33 Ku-band and 19 C-band transponders, as well as nine Ka-band spot beams. Amazonas-3 has been built to transport higher capacity telecom data than any other satellite in the region.
• Although GVT has garnered an excellent reputation and has been performing extremely well financially and operationally, its parent company Vivendi has been trying to sell it – and GVT’s future will depend on the outcome of the sale – if it materialises.

BuddeComm’s yearly update of Brazil – Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Brazil, including the regulator’s statistics, company data, and other industry indicators to end-2012, as well as estimates for 2013 and expected market developments in the coming years.

For detailed information, table of contents and pricing see: Brazil – Telecoms Mobile Broadband and Forecasts

Convergence and competition

In Latin America, convergence has become a popular solution not only for companies, as a way to attract more customers, but also for regulators, as a way to promote competition. In most countries, the incumbents continue to dominate the fixed-line sector, with Local Loop Unbundling being rare in this region and wholesale activity not very well developed. In the broadband sector, most incumbents have secured a virtual monopoly in the delivery of ADSL access, and the only meaningful competition is across technologies, from cable modem and mobile broadband services.

The concern many governments face is the shortage of fixed line infrastructure, tied to the fear that operators will cease to invest in their network if they are forced to unbundle their local loop or lower wholesale prices. Of course, telecom companies have done their best to encourage this fear.

Regulators hoped alternative operators would build their own infrastructure to reach unserviced areas, thus increasing teledensity. New entrants have usually used fixed-wireless technologies such as WiMAX to offer broadband, telephony, and sometimes pay TV services, but their market share has remained small.

Triple play

Cable TV companies, meanwhile, have jumped onto the bandwagon, flaunting their ability to offer both broadband and telephony over hybrid fibre-coaxial (HFC) or fibre optic networks, thus being able to increase the country’s teledensity and broadband penetration, and create a more competitive environment thanks to their triple play solutions.

The incumbents, for their part, not to be outdone by any competitor, have launched their own triple play services, sometimes by acquiring existing cable TV operators, and sometimes by resorting to satellite TV or IPTV technology.

Triple play models in Latin America normally combine voice (traditional fixed-line telephony or VoIP), broadband (ADSL, cable, wireless technologies, or satellite), and pay TV (cable or satellite TV). One of the consequences of triple play is the start of competition between cable TV and telecom operators. This is, of course, beneficial for customers, who have a greater choice between service providers. But in many countries, issues of market balance and fear of losing market share to competition have led to lengthy regulatory battles, involving cable TV companies, telecom operators, and regulatory authorities.

The result of these battles has normally favoured triple play, and this has led to an increase in the number of cable modem connections. Between 2001 and 2007, ADSL was gobbling up most of the broadband market, but since 2008, cable modem has been regaining some of its lost ground.

Cable TV

Although some companies still offer analogue cable TV services, digital cable is becoming the norm in Latin America. Endemic cable TV piracy has been a powerful driver for the move to digital cable. Besides providing advanced services, the digital platform enables providers to prevent signal theft, forcing households to become paying subscribers if they wish to continue viewing cable TV.

Satellite TV

Latin America’s satellite TV sector was dominated for many years by DirecTV/Sky TV. Since around 2006, however, fixed-line incumbents and other new market entrants have been launching Direct-to-Home (DTH) services in several countries. The increased competition has driven significant growth in the satellite TV market.

Pay TV market growth

Thus, thanks to the success of triple play and satellite TV competition, the Latin American pay TV market has been performing remarkably well, not even slowing down during the recent global credit crunch – unlike the economic slump of 2001/02, which brought cable TV to its knees throughout the region. In fact, in most Latin American countries, pay TV has become the fastest growing telecom sector after mobile broadband.

Online video viewing

Online video viewing is also showing remarkable growth. According to ComScore, in 2011 consumption of online video grew faster in Latin America than in any other region worldwide. Reportedly, Brazilians watched 4.7 billion online videos in 2011, up 74% year-on-year. Mexico came second, with 3 billion videos viewed. Argentina occupied a distant third place, with 1.5 billion videos, and Chile was fourth, with 1 billion. Predictably, online video viewing in Latin America is driven by the youth market, with 15-24 year-olds accounting for 28% and 25-34 year-olds accounting for 30% of all online video consumption. Despite these strong growth figures, however, Latin America still only represents 9% of global online video consumption – a long way behind the leader, Asia, with 41.3%.

Smart TV sales

Smart TV sales in the more advanced Latin American markets are expected to escalate in the near future, especially in Brazil, where the forthcoming FIFA World Cup and Olympic Games are expected to drive substantial growth in digital and smart television technologies.

Digital terrestrial TV

Most Latin American markets have deployed Digital terrestrial TV (DTT). In South America, the preferred standard is the Integrated System for Digital Broadcast, Terrestrial, Brazilian version (ISDB-Tb), based on Japan’s ISDB-T. All South American countries have adopted ISDB-Tb except for Colombia, which uses Europe’s Digital Video Broadcasting (DVB) standard. Mexico and Central America, instead, have chosen the US standard, developed by the Advanced Television Systems Committee (ATSC).

Market Highlights

• Brazil has removed limits on foreign ownership in the cable TV sector and has given the green light to all telcos to provide pay TV anywhere in Brazil.
• In the pay TV sector, Argentina is a world leader, with penetration in the major cities only slightly higher than in the rest of the country.
• In Mexico, cable operators report lower churn due to triple-play services.
• Despite delays in the deployment of DTTV, Brazil intends to complete the switchover from analogue to digital TV broadcasting in 2016.

A new BuddeComm market report provides a comprehensive overview of convergence, pay TV, and digital media across Latin America and the Caribbean. The countries covered in this report include: Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Uruguay, Venezuela and the small Caribbean island nations.

For detailed information, table of contents and pricing see:

Latin America – Digital Media and Pay TV Market

Mobile penetration

Consumers in Latin America and the Caribbean (LAC) are turning increasingly towards mobile solutions and away from the traditional telephone. In terms of usage, the region is well ahead of the world average, having reached an estimated 115% mobile penetration at end-2012 against a global rate of around 96%. However, over 80% of LAC’s mobile subscribers are on prepaid plans.

Mobile operators

Six major multinational operators serve roughly 80% of the region’s market: América Móvil, Telefónica, Telecom Italia, Millicom, and Digicel. América Móvil is the leader, followed by Telefónica. In fact, América Móvil and Telefónica compete against each other in most of Latin America’s major economies. Between them, they serve about 61% of the region’s mobile subscribers (down from 64% in 2008).

América Móvil, owned by Mexican tycoon Carlos Slim, operates in 16 LAC countries. In its home ground, Mexico, it uses the brand name Telcel. In all other countries, it provides mobile services under the unified name Claro. Spain’s Telefónica provides mobile services in 13 LAC countries, using the name Movistar in all markets except Brazil, where it operates under the brand name Vivo.

3G mobile networks

Almost all countries have operating UMTS networks with the exception of Belize, Cuba, Suriname, and a few Caribbean island nations. UMTS technologies in Latin America include HSPA, HSDPA, HSUPA, and HSPA+. Most operators use HSPDA to provide mobile broadband, multimedia downloads, mobile games, and video calling. Several companies also offer mobile TV.

Mobile broadband

Partly due to the inadequate fixed-line infrastructure, mobile broadband has become an important option for broadband services in the LAC region. The service is commonly used with either a USB modem that plugs into a computer, or with netbooks, notebooks, or laptops that have a built-in receiver.

Smartphones and social networks

The enormous popularity of social networks is driving sales in a booming smart phone market. Social phones, which bridge the gap between traditional phones and smartphones, are extremely popular, as they allow access to mail, Twitter, and Facebook. Seven Latin American countries are among the world’s top thirty in terms of Facebook users. Brazil has the highest number of active users in the region, while Chile has the highest ratio of users per capita. With penetration upward of 52%, more than one out of every two Chileans is, in fact, an active Facebook user.

Conclusion

In general terms the mobile sector, largely buttressed by mobile data services, dominates the overall telecoms market in the region, a legacy of inadequate fixed-line infrastructure which has made mobile voice and broadband services a preferred option for many customers. As such, mobile comms is likely to be the focus for most operator capex during the next two years, incorporating network upgrades as well as the acquisition of spectrum.

A new BuddeComm report provides 198 tables and 43 charts illustrating the mobile statistics for Latin America and the Caribbean (LAC), both for individual countries and the region as a whole. Very brief summaries are given in some chapters, but the original documents should be accessed for full descriptions and commentary.

For detailed information, table of contents and pricing see:

Latin America – Mobile Communications Statistics (tables only)