Latin American operators look to Cash in on Mobile Remittances, Pyramid Finds
As mobile penetration in Latin America nears 100 percent, mobile remittance solutions represent a large opportunity for mobile operators in Latin America to generate incremental revenues and reduce churn, according to a new report from Pyramid Research (www.pyr.com).
Mobile Remittances: Network Operators Look to Cash In On a $60 Billion Market highlights why remittances represent a large opportunity for mobile operators, but require a significant paradigm shift in order to be fully realized. It also reviews the features that a mobile remittance service must include to be competitive, the current competition and why it will be a steep challenge to overcome, and the additional benefits of having such an offering in the marketplace.
Due to the significant immigration to the US and Europe over the last 20 years, Latin America depends on family remittances to sustain local consumption. This has created a virtual bridge of capital from the host countries to Latin America, and in some cases the flows exceed 10 percent of nominal GDP. The flow of remittances has dramatically changed the economic structure of certain countries that rely heavily on the capital sent by these workers,” says Jose Magana, Senior Analyst at Pyramid.
Pan-regional operator Telefonica utilized remittances as a growth engine to help the company quickly recover from the global economic slowdown. “Mobile operators are well-positioned to benefit from any service that requires access to users, since almost 100 percent of the population is covered by mobile networks,” notes Magana.
“With an average banking penetration of 50 percent, and the advantage of an already-developed infrastructure, it is obvious that mobile players have first mover advantage over any other industry to provide a variety of additional services, including mobile remittances,” indicates Magana. In addition, slowness in response from operators risks them being left out of the value chain or playing a low-value role in the equation, similar to what appears to be happening in the content and mobile advertising businesses.
Guatemala Telecom market expected to reach $2.8 billion by 2015
The recent report by Pyramid Research reveals that the Guatemalan telecom market is expected to reach $2.8 billion by 2015 growing at a CAGR of 4.8%. The drivers behind this rapid expansion will be a 16-point advance in mobile penetration, as well as increases in data services and growth in pay-TV household penetration.
Guatemala is the largest market in Central America, and competition in the mobile segment has caused voice tariffs to drop to regional lows.
According to Jose Magana, analyst at Pyramid, despite this competitive scenario, Pyramid sees interesting opportunities in mobile data services where messaging, mobile Internet, and mobile broadband could close the gap in communications that fixed services could not. Mobile data revenue will expand at a CAGR of 11.8% over the next five years. Though messaging will remain the main source of revenue, connectivity will go from 6% to 28% in total revenues between 2010 and 2015. Also, mobile services, such as mobile banking and mobile advertising, could find fertile ground in Guatemala.
Magana noted that in the fixed line sector, the market will remain largely under-penetrated, and fixed broadband for the mass market has a chance to succeed. Also, initiatives, such as prepaid TV, prepaid broadband, and equipment bundling, are the right types of offerings for a market with this GDP per capita.
To keep up with the changing landscape, regional operator Claro has launched quadruple-play services to take advantage of the low penetration levels in broadband and pay-TV.
According to Mercado, Guatemala has witnessed important convergence moves, like bundled services offered by operators, as Claro and its Turbonett service attempt to become the first quadruple-play operator in the country. Pyramid expects both fixed-mobile convergence and triple-play bundles to have a significant impact in the foreseeable future.
Israel sees growth with 4G and Multiplay Services
As the Israeli telecom market is more mature than other AME countries, growth will rely heavily on a combination of new services and new networks rather than on increasing penetration as growth slightly increases from $6.9 billion in 2010 to $7.1 billion in 2015, according to a new report from Pyramid Research.
According to Kerem Arsal, Analyst at Pyramid Research, over the next five years, the majority of growth in the Israeli telecom market will arise from fixed and mobile broadband, VoIP, and pay-TV. As the ability to offer multiplay services becomes more important in the Israeli market, operators look for mergers or partnerships that will allow them to expand their product ranges. Differentiation through discounted bundles and value-added services becomes vital.
Arsal indicates that with 85% of households having fixed broadband access and the proliferation of 3G networks by all mobile players, the market is ripe with opportunities for convergence and multiplay offers. As data usage gains increased importance and the IP-based networks roll out, the opportunities for convergence will be rich.
He added that recent announcements for upcoming 4G and LTE networks will provide numerous opportunities (expecting LTE subscriptions to reach around 12% in 2015). In Israel’s highly competitive market, vendors will also find lucrative opportunities to help operators who are currently considering and/or delivering attractive content, particularly multiplay offerings. New and soon-to-be-licensed MVNOs provide further opportunities to virtual network enablers. Finally, when the MoC issues mobile WiMax licenses, vendors can look forward to new WiMax rollouts.
Latin America’s MVNO Market brings Opportunity for established Operators
According to a new report from Pyramid Research, as mobile penetration peaks and regulators look for ways to increase competition in Latin America, there will be a gradual movement toward the introduction of MVNOs, putting pressure on Mobile Network Operators (MNOs) to share their infrastructure,
As per reports, with more than 11% of the world’s mobile subscriptions, Latin America represents less than 1% of the global MVNO subscriber base. MVNO subscriptions in the region will grow at a 27% CAGR between 2010 and 2015 to reach more than 1 million subscribers, with Mexico, Brazil, Chile, and Colombia being the first markets to pick up the growth.
According to Juliana Gomez, analyst for Pyramid Research, based on the market’s potential, operators are still in subscriber-acquisition mode, which implies that they would oppose the introduction of MVNOs into their markets.
In most Latin American markets, operators are still building capacity to meet demand. Indeed, the spectrum allocated to each operator in some Latin American markets is unable to satisfy data services demand.
MVNOs can be beneficial for MNOs, regulators, and other companies alike, but their introduction in the Latin American market won’t drastically change the market structure, explains Gomez. With the surge of regulations promoting MVNOs in the region, Pyramid expects to see the birth of mass-market MVNOs in the region.
Gomez recommended that regulators will force MVNO regulation into the market, so operators should not waste energy opposing the measure; instead, they should start thinking about possible ways to take advantage of MVNOs, but they should act fast to achieve first-mover advantage. MVNOs are an opportunity for telecom and cable providers to expand their portfolio and increase client loyalty.
Orange employs 3G services in Tunisia
According to a new report from Pyramid Research, an exclusive license to offer 3G services is enabling mobile giant Orange to gain a strong foothold in Tunisia’s mobile telecom market, and the operator is likely to continue to build market share even after competitive 3G services begin launching next year.
According to Mehdi Ben Said, Senior Analyst at Pyramid, in May 2010, Orange Tunisie started operating in the country as its third mobile operator and first 3G player. The universal license awarded to Orange Tunisie is expected not only to disrupt the mobile market because of 3G, but Pyramid expects it to leverage the power of its brand to offer real converging services. Orange Tunisie has 3G exclusivity until February 2011, and is expected to capture 22.4% market share and 16.9% revenue share by year-end 2015.
Ben added that on the fixed side, Tunisie Telecom still monopolizes the market. However, the entry of Orange Tunisie as a new fixed-mobile operator is expected to bring much-needed competition into the fixed segment and bring broadband access prices down. Waiting to deploy its own wired network and for the LLU to be acted, Orange Tunisie is already creating market disruptions by positioning itself in the segment with FWA technology over 3G, thereby making service convergence a reality.
Ben noted that a second 3G license has been announced in late September 2010, but no new fixed license will be awarded until January 2013. The upcoming 3G liberalization also offers opportunities for ultra-low-cost 3G handset manufacturers; this is a market that will become more and more addicted to usage but can’t afford high-end handsets.
Poland’s Mobile Market expects growth with new MNOs
According to a new report from Pyramid Research, LTE is expected to gain 11% of total subscriptions in 2015, while 3G will make up 69% of subscriptions in 2015, boosted by mobile player investment into HSPA+ networks.
Pyramid expects that the Polish market to grow at a CAGR of 1.7% in local currency terms in the forecast period, reaching US$14.7 billion by 2015, making it the second largest in Central and Eastern Europe, after Russia.
According to Sylwia Boguszewska, Analyst for Pyramid, this growth is driven by the proliferation of fixed broadband and related services, stemming from more intense competition, as well as mobile data, bundled with smartphones and computing devices.
As per Boguszewska, the Polish mobile market is almost evenly divided between the three largest MNOs – PTC, Orange, and Polkomtel. In 2009, two MNOs owned by Aero 2, CenterNet, and Mobyland entered the market. In September 2010, these latest entrants announced the launch of a LTE network, which is set to have a commercial debut towards year-end 2010. Aero 2 is also in possession of a LTE license, and a tender for more LTE spectrum is set to take place in 2011.
Pyramid expects that the mobile arm of the incumbent (Orange) will recover its leadership position. The other operators (Aero 2, Mobyland, and CenterNet) will hold a combined market share of 4% by the end of the forecast period, their competitive advantage being their first mover strategy in the LTE space.
Although CenterNet and Mobyland will provide wholesale services, there are already several players, including the leading DTH operator Cyfrowy Polsat, that are interested in reselling 4G Internet services.
3G Services Promise Growth for Mobile Operators in Bolivia
As per the reports from Pyramid Research, the arrival of 3G services in Bolivia will be a catalyst for data services growth, a promising development for operators as voice revenue comes under pressure. Bolivia is one of the least penetrated mobile markets in Latin America, with a penetration rate of 60% at year-end 2009, below the regional average of 90%. However, Bolivia’s mobile revenue will grow from $632 million in 2010 to $916 million in 2015 when it will represent 74 percent of the communications market.
According to Juliana Gomez, Analyst for Pyramid, the expansion of the mobile subscriber base will be the main driver for growth, fueling increased competition that will put downward pressure on prices. Bolivian operators have reduced investments and network expansion as a consequence of uncertainty and regulatory pressure to reduce prices. Mobile ARPS will continue to lower gradually as service penetrates low and middle income segments. The expected rise of data ARPS as a percentage of total ARPS from 10% in 2010 to 23% in 2015 will mitigate the overall downward trend of total ARPS. The increase in data ARPS will be driven by the commercial offer of 3G services such as mobile broadband and mobile TV.
She further noted that there is still some TDMA in Bolivia, but they expect it to phase out completely by year-end 2011 and believe that 3G subscriptions will grow gradually from 0.237 million at year-end 2009 to almost 4 million at year-end 2015, representing 36% of the total market. 3G services adoption will drive data services going forward in Bolivia.
