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Historically, the Latin American mobile telephony market has been dominated by a handful of powerful telecoms players. But in the last decade, government regulations designed to open up the market have presented MVNOs with new opportunities.
April 17, 2018
With many operators looking at the emerging mobile markets as the new El Dorado, the MVNOs Series team commissioned an exclusive report on the Latam region. ‘Shaping the Latin American MVNO Market’ analysis how the region, which is primed for growth, offers many opportunities and challenges for MVNOs.
Historically, the Latin American mobile telephony market has been dominated by a handful of powerful telecoms players. But in the last decade, government regulations designed to open up the market have presented MVNOs with new opportunities. The result of this has been a flurry of MVNO activity in markets including Mexico, Brazil, Argentina, Colombia and Chile. And, while it is early days, there are also signs that the MVNO revolution will be coming soon to Peru, Venezuela and Ecuador.
That said, the growth of the Latam MVNO sector is not happening as quickly as many expected. In 2016, for example, Mexican business newspaper El Financiero was forecasting that MVNOs would have secured a 2% share of the Mexican mobile market by the end of the year – thanks to the arrival of several new players. However, by mid-2017, a report from The Competitive Intelligence Unit pegged MVNO penetration in Mexico at just 1.1% (equivalent to 1.2 million active MVNO SIMS). Further underlining the slow pace of change, the CIU added that this group accounted for just 0.3% of the market’s revenues – suggesting the sector is currently prioritising aggressive pricing.
So probably the best way to characterise the LatAm MVNO market is as a significant opportunity that is yet to be effectively realised. This assessment chimes with the findings of a September 2017 report from GlobalData, which puts the share of MVNOs across Latin America at 1.3%. While this is low, the potential for growth is clear when you consider that MVNO share is 13.7% in Western Europe and 8.5% in North America. GlobalData’s view is that LatAm MVNOs will achieve CAGR of 18% between now and 2022, leading to 21.1m subscriptions.
In terms of pan-regional factors that have limited MVNO expansion until now, it’s clear that the resilience of legacy operators has been one of the biggest challenges – notwithstanding pro-MVNO regulation. While vulnerable to the high turnover of subscriptions that characterises the mobile market, and sometimes criticised for poor customer service, incumbents are often available at low price points (because of their existing competitors) and can offer consumers triple-play or quad-play service bundles – which gives them an edge over a lot of MVNO challengers. There’s also an impression that some of them have not made it easy for MVNOs to secure capacity at competitive prices. And where MVNOs do get capacity, incumbents employ aggressive tactics to win customers back.
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