MVNOs hit the road in Latin America - Prepaid MVNO

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FEATURE REPORT Brazil’s outlook Although MVNOs have existed in the region since 2008, they have become hot topics again, as Brazil regulated MVNOs in 2010. As Latin America’s biggest country with 255 million mobile subscribers, Brazil is expected to boost the MVNO market. However operations have yet to launch. The first Brazilian company to announce plans to enter the MVNO market, the insurance firm Porto Seguro, is set to launch wireless services during the second half of 2012, according to general manager Tiago Galli. The launch process is taking a long time. The insurance company partnered with mobile virtual network enabler Datora Telecom in 2010, which also became a shareholder of the new subsidiary, dubbed Porto Seguro Telecom. TIM Brasil was chosen as the network partner, and management services will be provided by Ericsson. “It has not started yet due to the licensing process,” Galli explained. Trials began on February 24. Galli did not disclose the amount invested to launch the MVNO, but he did note the company will use the investments to promote customer loyalty and improve customer service. Porto Seguro already offers credit cards, with new products such as location and m-payment also potentially in the pipeline. “We aim to be a niche operator to aggregate value to our current customers. We won’t fight for costs or to become a mass operator,” Galli said. In addition, the MVNO will help to optimize internal costs, for instance, by reducing telecommunication expenses. The delay in launching MVNOs in Brazil is due to the bureaucracy around getting approvals, according to some sources, but the country is still very attractive. Companies that are evaluating the Brazilian market include MTV Networks, which has deployed % of respondents 100 80 60 40 20 0 Strongly agree (18.6% / 17.5%) Somewhat agree (41.2% / 46.0%) Note: n=263 Telecom operators (mobile, fixed, integrated) Source: Informa-SAP M2M Communications Survey, 2012 MVNOs in six European countries, and Cemig, a holding company composed of 58 companies and 10 consortia with assets and businesses in 19 Brazilian states and Chile. MTV Networks’ product manager Bas de Kuiper said the company has been in the mobile business for seven years and has plans to move forward into Latin America and Asia. “MTV has been very active throughout the region, and we are open to doing business here, though we do not have any proposals yet,” he said. Cemig is also eyeing the MVNO business in Brazil, though there is nothing concrete yet. Aline Carvalho, senior lawyer at Cemig Telecom, said the interest in launching an MVNO followed an Accenture research report that showed energy customers would be willing to pay more for energy if they received additional services. The company has set up an All survey respondents Somewhat disagree (24.5% / 27.0%) Strongly disagree (15.7% / 9.5%) internal group to study the MVNO business with the support of consultants. “We aim to launch, but cannot say when,” Carvalho said. Cemig has not yet acquired licenses from the Brazilian telecom regulator Anatel. German-based Tyntec is also set to launch services in Brazil. The company is a mobile interaction specialist that provides solutions designed to enable enterprises to integrate mobile telecom services. Business development director Sven Dirschauer said Tyntec is in talks with a network partner and a law firm. It is also waiting for a MVNO license. Dirschauer believes that services could be launched this year targeting Brazilian enterprises, including Internet firms, to provide messaging services (integrating global inbound and outbound messaging into any application); outgoing, inexpensive international calling; and services to
FEATURE REPORT development firms. “We are an aggregator, and we will also provide virtual numbers,” said Dirschauer. Actually, the company already offers some products to Brazilian customers, such as messaging services for several applications, including marketing. Brazil is often a landing country in Latin America. Everis’ Tello said that Brazilian MVNOs could garner market share between 5% to 10% over the next five years, counting about 15 million customers by 2015. Brazilian telecom regulator agency, Anatel, forecasts that MVNOs could reach a 5% market share, since they play an important role in specific markets for improving the quality of customer service. M2M as an alternative In addition to the usual applications of voice and data, several companies are seeking MVNOs to launch machine-to-machine services. A service such as providing embedded connectivity could be a prime opportunity. Indeed, MVNOs can bring differentiation through certain value-added services. “While some M2M applications don’t always pan out in Latin America, others like fleet tracking can be interesting. This is similar to what Kore Telematics does in the United States,” said Quijada of Altman Vilandrie & Company. In May 2011, Brazilian business-tobusiness communication service provider TESA Telecom announced it had requested an MVNO license from government regulators as it looks to launch M2M services. The M2M project includes partnerships with Algar Telecom as a network partner, Transtelco as an MVNE and Bichara Tecnologia, which provides IT infrastructure. “We are building our business plan,” said TESA President Roberto Miranda, adding that the company’s “value proposal is based on customization, customer service and agility.” Currently, the company is testing a pilot solution to track vehicles. Miranda said that the goal is to remain focused on the B2B market with niche offers for at least two more years. “We could, for example, provide a solution focused on logistics under which we could integrate the M2M platform with corporate IT systems, adding telemetry,” Miranda explained. The company’s road map calls for finishing the business plan within 90 days after obtaining the MVNO license. “We are deeply discussing the business model, because technology is the easiest part. The question is how to make money and expand our offer,” Miranda said. Osvaldo Cesar Carrijo, sales director at TESA’s network partner Algar Telecom, noted that the TESA agreement is the first and, to date, only MVNO contract the wireless company has signed. With a strong focus on M2M opportunities in Latin America, Brazil’s Datora Telecom is also seeking a big share of the M2M market. The company launched a mobile unit dubbed Datora Mobile, focused on the M2M vertical, with the goal of achieving a 15% share of the country’s M2M market over the next five years. It is a big gamble as M2M services are just beginning in Brazil. Datora owns operations in the United States, Portugal, Spain and Guatemala. With its Datora Mobile unit the company is starting to look into other Latin American markets, and has opened an office in Santiago, Chile, to explore potential partnership opportunities, including one for roaming. Datora Mobile’s service is in the final trial stages. “The basic structure of our M2M operation is established, and we can now devote ourselves to enriching the system to allow the most varied solutions for customers,” said Wilson Otero, Datora Telecom’s CEO, in a statement. Stakeholders’ ecosystem MVNO vendors range from traditional equipment and software manufacturers offering services such as billing and customer analytics, to less traditional MVNEs providing services such as procurement, distribution and payment processing. The ecosystem is complex as it includes many different players – especially if the MVNO is from a different sector and as consequence, does not have telecom experience. Bichara Tecnologia, a technology provider supporting the Brazilian telecommunications market, and Interop Technologies, a provider of core wireless solutions for messaging, device management and connectivity gateways, partnered to provide messaging and wireless application protocol solutions to MVNOs in Brazil. The agreement enabled Bichara to deliver wireless services to MVNOs in Brazil, and its executive director Daniel Bichara expects more launches, especially supporting voice services. Another vendor, Redknee Solutions, which provides billing and charging solutions, signed a $5 million, four-year agreement to support the launch of an unnamed Latin American MVNO. “We keep an eye on key countries and regulations as well. Success for a lot of companies like us depends on finding out the cost of operations,” said Namit Garg, Redknee’s director in charge of MNVx solutions at Redknee. “For MVNOs, it’s critical that they understand the differences between their usual business and this new telecommunication service; on this point, MVNEs can be very helpful,” said Daniel Tibor Fuchs, Datora’s founder and chief innovation officer. Quijada added that MVNEs that can provide billing, procurement, inventory, customer services and other operational support, playing a key role in enabling success
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MVNOs hit the road in Latin America - Prepaid MVNO

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