Wireless Federation

According to the company’s head of the region Jose Maria Alvarez-Pallete, Telefonica has reached the mark of 150 million subscribers in the Latin America.
Telefonica has forecasted 150 million subscribers by the end of 2009, but due to strong growth in the region, the target ha been reached early.
The main factor that fueled Telefonica’s growth was the regions high- growth markets.

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According to new figures from the industry analyst, the number of mobile connections in Latin America exceeded 400 million in the first half of this year. Mobile penetration rate is 72%. Also operators  are now turning to data services boost revenues. It is also forecasted that mobile connections in the Americas will reach 550 million by 2010, while penetration at the same date will stand at 93%. Top five penetration markets, Brazil, Mexico, Argentina, Colombia, and Venezuela have 76% of the region’s mobile subscribers, or 312 million connections.

Analyst also made reference to Spain’s Telefonica, the second-largest telecoms group in Latin America after America Movil, which in June announced plans to create a mobile advertising alliance across its operations in Europe and Latin America. Statistics reveals that Telefonica had just under 104.5 million mobile customers in Latin America at the end of the first quarter, or 70 million excluding Vivo, in which it holds a 50% stake only. The Spanish telco is still dwarfed by Carlos Slim’s America Movil, which claimed 146.3 million at the same date. Telecom Italia comes in a distant third with 48.4 million, followed by Millicom International Group with 16.2 million and Telecom Argentina with 12.6 million.

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Argentina’s mobile market is the third largest in Latin America, after Brazil and Mexico and in terms of penetration, Argentina is the regional leader. The telecom sector has been growing rapidly, with a penetration of 75% mobile telephony. The three operators, Movistar, Claro, and Telecom Personal, run a close competition for market share. Besides the three main cellular providers, Nextel operates an iDEN network with a small but profitable slice of the market. GSM is the main technology in Argentina, with TDMA and CDMA slated to disappear after June 2008.
All three companies launched 3G services over HSDPA networks in 2007. Approximately 136,000 subscribers use 3G services in Argentina.

Country                       No. of 3G Users
Telecom Personal             75,000
Claro                              50,500
Movistar                         10,500

*Total subscribers in Argentina will increase from 38.03 million in 2007 to 44 million in 2010.
* The two largest operators - Movistar Argentina and CTI - will continue to have very similar market shares (by subscribers). It is forecasted that Movistar will increase its current market share from a projected 35.6% in 2007 to 36.8% in 2010 while CTI’s market share will drop slightly to 32.8% in 2010.
* Telecom Argentina will continue to suffer from the highest churn rate in the country at 3% monthly churn rate from 2007 to 2010.
*It is forecasted that Movistar Argentina will have the lowest EBITDA margin of 30.4% in 2010 in Argentina. On the other hand, Telecom Argentina, CTI, and Nextel will enjoy higher EBITDA margins at around 35% - 40% in 2010.
*In 2010 Nextel, will provide services to 2.9% of total subscribers, will receive the highest ARPU of $48.2 per month. It is noted that this is 3 times higher than the closest competitor, Telecom Argentina.

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Ericsson wins a contract, to provide business consulting and systems integration services for Telefónica’s mobile and fixed operations across Latin America. Under the agreement, Ericsson will provide business consulting services including financial-risk evaluation and revenue assurance life-cycle management, supported by technical analysis.

Ericsson will also provide systems integration services such as design, adaptation and integration of customized Revenue Assurance solutions for Telefónica’s Latin American operations.

Ericsson has carried out more than 700 business consulting projects around the world. Projects range from single-solution integration projects to end-to-end solution transformation projects.

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Ericsson has won a prime integrator revenue assurance contract with Telefonica across Latin America. Ericsson will now provide business consulting and system integraion services for Telefonica’s mobile and fixed operations in the region, including financial risk evaluation and revenue assurance life-cycle management, supported by technical analysis. Ericsson will also offer systems integration services including design, adaption and integration of customized revenue assurance services for Telefonica’s Latin American operations. The operator plans to use Ericsson’s technology to enhance control of its operations and prevent the recurrence of inconsistencies that negatively impact its revenue.

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Telefónica says that it is to launch a new mobile banking (m-banking) initiative, targeting the 175 million people in the Latin Amercia region who have mobile phones but do not currently have banking access, will be delivered in partnership with the Inter-American Development Bank (IADB). The project will launch from July 2008 and be rolled out across the region.

This announcement was made by Matthew Key, CEO of Telefónica Europe, as he joined other global industry leaders, senior figures from the United Nations and international politicians at the UN Millennium Development Goals Business ‘Call to Action’ event in London. Mr Key also signed the Business Call to Action Declaration on behalf of Telefónica, which endorses the company as a supporter of the Development Goals and commits it to tangible development action alongside governments and other organisations.

“Building on a number of other major Telefónica initiatives aimed at reducing social and economic exclusion, the project’s principal aim is to improve financial access in Latin American markets by providing an m-banking solution to some of the most vulnerable in society - those groups that do not currently have access to banks or financial services,” said Matthew Key.

Telefónica executive chairman, César Alierta, stated: “At Telefónica, we believe it is essential that our activities have a positive social and economic impact on communities where we are present. We are passionately committed to ensuring that everyone can enjoy the benefits of information and communication technology. Our goal is to break down barriers that may block access to ICT - be they economic, geographic or because of disability.”

Telefónica currently offers mobile communications to more that 86% of the population in 13 Latin American countries and has driven mobile penetration in the region over the last few years. Part of its commercial strategy has been to encourage take-up amongst lower socio-economic groups. Proactively decreasing access impediments and entry barriers amongst excluded groups, particularly in rural communities, has been a key element of Telefónica’s approach - with the result that mobile penetration is now around 70% in the Latin American countries where Telefónica operates, as compared to rates of only 45% two years ago.

For Best Practices/ Case Studies on Mobile Money - Banking, Remittances, Commerce & Payments. Please contact Christina@WirelessFederation.com 

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Worldwide sales of mobile phones to end users in Q2 2007 increased 17.4 percent to 270.9 million units compared to Q2 2006, according to Gartner. Gartner predicts worldwide mobile phone sales will reach 1.13 billion units in 2007. Nokia’s sales into the channel increased 29 percent to reach 99.9 million units from 77.7 million to grab a market share of 36.9 percent. Motorola sales dropped 22 percent to nearly 39.5 million units while its market share dropped 7.3 percentage points. Samsung, Sony Ericsson and LG brought up the third, fourth and fifth places in worldwide sales. Emerging markets in Africa, Latin America and Asia Pacific continued to fuel the industry’s growth while more mature markets such as those in Western Europe and North America picked up after the expected slowdown in the first quarter. In Asia Pacific, mobile handset sales rose to 95.5 million units, up 40.7 percent from the second quarter of 2006. Sales in China continued to grow rapidly, but India was affected by seasonal factors and its typically slower period. Sales of mobile phones in Eastern Europe, the Middle East and Africa reached 46 million units, up 5 percent while sales of mobile handsets to end users in Latin America reached 30.5 million units, an increase of 24 percent from the same period last year. The North American handset market continued to exhibit strong growth and sales to end users reached 41.4 million units, up 7 percent. Despite a slowdown in new connections compared to the first quarter of 2007, sales of mobile phones in Western Europe reached 45.4 million units, an 11 percent increase year-on-year.

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Worldwide sales of mobile phones to end users in the second quarter of 2007 reached 270.9 million units, a 17.4 percent increase from the same period last year, according to Gartner. Although Motorola faced some ongoing difficulties with its product portfolio, the company maintained its second position worldwide by sustaining an aggressive price strategy, which resulted in better sales to end-users than sales into the channel.

Gartner predicts worldwide mobile phone sales will reach 1.13 billion units in 2007.

“Emerging markets in Africa, Latin America and Asia/Pacific continued to fuel the industry’s growth,” said Carolina Milanesi, research director for mobile devices research at Gartner, based in Egham, UK. “More mature markets, such as those in Western Europe and North America, picked up after the expected slowdown in the first quarter.”

“Apple stole the limelight in the quarter with the introduction of its iPhone in North America in the last two days of the quarter,” Ms. Milanesi said. “But we will only be able to better assess the impact the phone has had in the North America market in the quarters to come.”

“Nokia’s devices business seems to be doing everything right at the moment,” she added. Nokia’ sales into the channel once again exceeded the 100-million mark in the second quarter of 2007. It sold slightly fewer than that to end users, due to little stock accumulated in Western Europe and Asia/Pacific and gained 3.2 percentage points compared with the same period last year. Nokia increased its market share both on a quarterly and annual basis, as it accounted for 36.9 per cent of worldwide sales in the second quarter of 2007. The company experienced strong sales of high-end phones, and the introduction of the N95 meant the average selling price of Nokia phones was on the rise. Nokia’s strong performance will continue in the second half of the year as the company grows its share of sales in emerging markets as well as in mature ones like Western Europe.

Motorola suffered from weak demand from its rather dated portfolio, and its attempts to reduce stock translated into poor sales into distribution channels. However, aggressive pricing allowed it to reduce inventory in key regions such as Western Europe, selling nearly 39.5 million units worldwide in the second quarter of 2007. Motorola’s market share dropped 7.3 percentage points from the second quarter of 2006. Gartner does not expect the company’s market share will return to close to 20 per cent until substantial changes are made to its product portfolio.

Samsung’s sales into the channel were strong in the second quarter of 2007, which saw the vendor take the second position from Motorola. However, with some inventory overhang from the first quarter of 2007, Samsung was only able to sell 36.2 million units, which was not enough to secure the second place in terms of sales to end users. Samsung’s growth was boosted by the Ultra ll family of products. While the latest version of the Ultra family focuses on specific applications such as music and video, Gartner analysts said more differentiation is needed from a design point of view to prevent the products in this family from blending into one model: a black, thin phone.

Sony Ericsson’s continued success in the second quarter of 2007 saw it consolidate its fourth place, with sales reaching 24.3 million units. Its portfolio now includes several successful products at the high-end and the mid-tier markets. The improvement in Sony Ericsson’s performance in Latin America in the second quarter was a sign that its mid-tier products are proving successful in emerging markets, and it will need to ensure sales of mid- and higher-tier phones stay strong, so that its average selling price and margins remain healthy.

LG sold 18.4 million units in the second quarter of 2007 and reached a market share of 6.8 per cent. New variants of the Chocolate phone, now at a very competitive price, as well as the popularity of the Shine in Western Europe and Asia/Pacific helped the company’s performance. The company’s recent launch of its “3G for all” phone, the KU250, in some markets in Western Europe and emerging markets in Asia/Pacific might help increase its market share, but the company is likely to pay the price in terms of a lower average selling price and thinner margins in the quarters to come.

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Global Crossing has launched a new, expanded range of services in Latin America following its acquisition of Impsat Fiber Networks. The new service portfolio will be marketed under the Global Crossing brand, as the company begins to officially retire the Impsat brand. The combined companies’ nearly 100 products are now organised under eight targeted solution areas. Global Crossing’s new service suites have been designed to address companies’ critical needs by offering accessibility, security, continuity, productivity and collaboration. The new capabilities include Global Crossing IP Solutions, Global Crossing Data Transport Solutions, Global Crossing Security Solutions, Global Crossing Continuity Solutions, Global Crossing On Demand
Solutions, Global Crossing Voice Solutions, Global Crossing Collaboration Solutions and Global Crossing Consulting Services. The transition from Impsat to Global Crossing will be introduced at local customer events through mid-August.

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Avaya reported net profit for the fiscal third quarter of USD 55 million, up from USD 44 million a year earlier. Revenues fell 1.6 percent from a year earlier to USD 1.276 billion. Sales of products declined 1.6 percent, rental and managed services revenues fell 7.1 percent, and services revenues were flat. US revenues declined 8 percent, while sales in the EMEA region were relatively flat, with growth outside of Germany offset by declines within Germany. Asia Pacific revenues grew by 33 percent, and revenues in the Americas, excluding the US, grew by 11 percent, driven by performance in Latin America. Operating profit improved to USD 70 million from USD 28 million, driven by lower costs. During the quarter Avaya shipped over 1 million IP lines for the fifth consecutive quarter. IP product sales increased 10 percent from a year earlier and now account for 69 percent of group sales.

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