Mobile Penetration Levels Minimize New Operator Potential in Colombia, Mexico and Venezuela

Signals Telecom Consulting has published a report into the MVNO market in Latin and Southern America, which notes that in markets such as those of Colombia, Mexico and Venezuela, high levels of mobile penetration make it unlikely that a company with no presence in the market would decide to enter to compete as an established mobile operator with nationwide coverage, deploying infrastructure.

"Costs in terms of infrastructure, telephones, advertising and logistics to be borne by any new operator would be heavy, with the likelihood of achieving a positive return on the investment very far in the future. It is possible that operators such as Inter in Venezuela, Televisa in Mexico or DirecTV could be interested in selling mobile services adopting an MVNO model," explained Elías Vicente, Signals Telecom Consulting analyst and author of the report.

The report stresses that the launch of MVNOs will depend mainly on the spectrum options that they will be able to obtain from established mobile operators (MNO). "In general terms, these opportunities will not be provided spontaneously by the MNOs, as they will be made available only in so far as there is a regulatory authority that requires MNOs to lease the spectrum. Colombia is an example of this, as MNOs are highly reluctant to provide access to their spectrum. MNOs will use shortage of spectrum capacity as the main argument against the entry of new competitors," added Vicente.

The report highlights that the proliferation of convergent offers by fixed line operators and CATV companies increases the pressure for the inclusion of mobile telephone services that would allow them to offer "quadruple-play" services. "The need for replicability in incumbent operator offer forces operators such as Cablevisión Argentina, GVT in Brazil and Axtel in Mexico to explore the possibility of offering mobile services, which in addition to providing a new source of revenue would help them to reduce the rate of customer loss. This strategy has been seen in the case of Mexican operator Maxcom, and we expect it will be copied by VTR Globalcom in Chile, which already has a license to offer mobile services as an MVNO," concluded Vicente.

Posted to the site on 2nd April 2009