Latin America: Opportunities and challenges

A new feature on this year's Congress agenda focused on operator strategies in the high-growth Latin American markets. José María Álvarez-Pallete López, chairman and CEO of Telefónica Latinoamerica, spoke about the rapid growth of mobile broadband in the region and predicted that subscriptions will increase by a factor of five in the next four years and that all operators will face pressure on bandwidth to keep up with "exploding data demand." He also confirmed that Telefónica is actively considering its options for expanding into Colombia.

João Silveira, director of marketing at Brazilian operator Oi, revealed some insights for relative late comers entering new markets, highlighting how Oi has achieved a 31 percent revenue share despite being the fourth market entrant. He outlined how Oi focused on simplicity by having a single brand and SIM-only strategy as opposed to the handset subsidies offered by rivals. He also extolled the virtues of triple-play offerings being key in attracting and retaining customers from established competitors.

On a similar theme, Greg Santoro, chief marketing and strategy officer at NII Holdings, indicated that the benefits they expected from the deal, confirmed during the Congress, to sell a 30 percent stake in Nextel Mexico to Televisa (subject to successfully acquiring a 3G licence) would be access to content for mobile broadband offerings. Despite the focus on mobile broadband, Rogerio Takayanagi, chief marketing officer at TIM Brasil, predicted that voice still has 2-3 years before being overtaken by data in driving revenue growth in the region.

Marco Quatorze of Telcel (America Movil) also sounded a note of caution that they had underestimated the demand for mobile broadband services and they found that they had priced the services too low, forcing them to pull back from marketing the services. He also cautioned that ROI for data was lower than for voice. The operators also warned that taxes which "take up to 50 percent of revenues" present barriers for growth of application stores in the region. The 12 month limit on mobile contracts in Brazil was also highlighted as an issue holding back the growth of subsidised data capable handsets.

(This article is part of a series of follow-ups on Mobile World Congress 2010 from the GSMA Intelligence team.)