MVNOs hit the road in Latin America - Prepaid MVNO

FEATURE REPORT
Triple-play driver
Of the companies that are already
participating in the Latin American MVNO
market, Colombia’s Uff Móvil has the
largest number of subscribers, according to
Informa Telecoms & Media. The company
ended 2011 with about 259,000 users or a
.7% share of the wireless market in that
country. This represents an expansive
growth compared to its .18% market share in
the second quarter of 2011 and considering
it was launched by the Colombian TV group
RCN in November 2010. Uff Móvil uses
Tigo’s network to offer inexpensive longdistance
calls to fixed and mobile numbers
in the countries where many Colombian
expats live.
Number portability, which began in Columbia
in July 2011, benefited the MVNO,
but it was not the only factor, according to
Uff Móvil’s CEO, Santiago Aldana. “People
understand what MVNOs are about, and
as more are launched, it becomes easier to
gain subscribers,” Aldana said.
In Colombia, MVNOs such as Uff Móvil
and Empresa de Telecomunicaciones de
Bogota compete with big players: América
Móvil’s Comcel, Teléfonica’s Movistar and
Tigo. But they have high goals. For instance,
ETB aims to reach 1 million subscribers
over the next five years. ETB is focused on
Bogotá, which is Columbia’s largest city
and represents 17% of the population, 26%
of Colombian GDP, 34% of total fixed lines
and 32% of total broadband subscribers.
ETB, which also uses Tigo’s network, earlier
this year added mobile voice to its data
MVNO service, expanding its convergent
services, which already has fixed lines and
wireless modems for mobile broadband under
an MVNO model.
According to Sérgio González, ETB’s
VP for strategic planning, the company
currently has approximately 15,000
customers – although this might not be the
most accurate number since ETB delivered
free SIM cards to current customers across
the country.
González said that to address future
challenges and in the context of consolidation
and potential new entrants, ETB
needs to strengthen its participation in
the Bogotá market; achieve fixed-mobile
convergence in positioning its MVNO offer;
upgrade its networks for the provision
of new services by deploying fiber-to-thehome;
consolidate its TV service; and migrate
to digital entertainment.
One of the first MVNOs to enter the market
– a status that remains important in
the Colombia telecom scene – UNE EPM
launched LTE services in Bogotá and Medellín
in June, with plans to expand the service
to Cali, Barranquilla, Cartagena and
Bucaramanga during the second half of this
year. The goal is to have up to 180,000 users
by the end of the year. UNE has invested
about $130 million to begin offering LTE
services. This is a huge step as until it had
built its own infrastructure, UNE EPM operated
as an MVNO using Tigo’s networks.
UNE EPM’s LTE journey began in
2010, when the carrier paid $40 million
for a 50 megahertz, 10-year license in the
2.5 GHz band.
While “triple play” services (TV, broadband
and phone) remains a major MVNO driver,
it is easy to find partnerships between ISPs
and cable companies. In 2007, the Mexican
fixed-line operator Maxcom won approval
from telecommunications regulator Cofetel
to become an MVNO, and it started operating
the following year. Maxcom was the
first company in the region that signed a
wholesale agreement with Telefónica and
one of the first MVNOs in Latin America.
Last year, Mexican cable operator Megacable
Holdings also launched its MVNO
service through an agreement with the local
unit of Telefónica. The move allowed
Megacable to have a “quad-play,” by offering
wireless services alongside its existing
package of television, Internet and fixedline
telephone. The MVNO service, which
was originally announced last year, will
operate under the Megacel brand.
For the foreseeable future, Informa Telecoms
& Media expects alternative ISPs, especially
in the most unbalanced fixed-line
markets, to retain a strong interest in the
MVNO model with the aim of increasing
customer loyalty and reinforcing their offerings
by bundling products.
Virgin Mobile’s impact
Certainly one of the biggest announcements
affecting the MVNO scene was the
arrival of Virgin Mobile Latin America.
In June 2011, the United Kingdom-based
Virgin Group announced plans to launch
operations in several markets, including
Chile, Colombia, Brazil, Peru and Mexico,
by packaging products specifically to meet
the needs of the youth market. Since then
the company has signed with Telefónica’s
Movistar to operate in Chile and Colombia,
and effectively, VMLA launched services in
Chile in April.
In Chile, Virgin Mobile offers prepaid
data, voice and messaging services, and it is
targeting the youth segment by offering additional
benefits, such as discounts on brand
products, and concert and event tickets.
VMLA also has license approvals to operate
in Mexico and Colombia. In May, Jeffery
Buckwalter, VMLA’s SVP for business
development, said the company expects to
launch MVNO services in Colombia and
Brazil over the next 18 months. Colombia is