Executive summary
Uruguay is one of the regional leaders in several key indicators, such as adult literacy, teledensity, and Internet penetration. It was able to weather the global financial crisis better than most other Latin American countries, and the downturn had little impact on its telecom market. The country’s future is promising. Uruguay is one of the safest nations in Latin America – peaceful, politically stable, free from corruption, and not prone to natural disasters. With a highly skilled workforce and one of the best infrastructures in Latin America, Uruguay enjoys an excellent reputation with international investors.
The state-owned incumbent, Antel, is the country’s exclusive local fixed-line operator, but competes with other companies in long distance telephony. Through its mobile subsidiary Ancel, it controls about 40% of the mobile market.
Despite being a monopoly, Uruguay’s local fixed line sector has achieved the second highest teledensity in Latin America after Costa Rica (bar a few of the wealthier Caribbean islands). Since 2006, however, Uruguay’s fixed line market has been on a slippery slope, shrinking by a small percentage every year.
After lagging behind the rest of the region for many years, Uruguay’s mobile market has experienced a prodigious growth since it was opened to competition. Services improved and prices dropped, lifting Uruguay’s mobile penetration to one of the highest in Latin America. With the country’s low level of poverty, almost all of the population can afford a mobile phone, and many Uruguayans own two handsets. Mobile penetration passed the 100% mark in August 2008 but continues to grow.
Nevertheless, while market maturity is helping to push up ARPU levels, future revenue boosts for operators are likely to come from value added services, 3G, mobile broadband, and other new technologies, rather than from an increase in the subscriber base.
Uruguay was one of the first countries in Latin America to launch 3G networks and achieve nationwide UMTS coverage. All three mobile operators (state-owned Ancel, Telefónica’s Movistar, and América Móvil’s Claro) offer mobile broadband as well as 3G services. An estimated 3% of the population have opted for mobile broadband, and the number of subscribers is soaring.
The fixed broadband market is heavily dominated by Antel, which has a 94% market share. Only one company – fixed wireless operator Dedicado – offers any meaningful competition, with about 6% of the market. All the remaining providers have, together, less than 1% market share.
Fixed broadband has enormous growth potential, but ADSL speeds are low and prices are high. While Antel has performed well as a state monopoly in the infrastructure-intensive fixed-line sector, it has not been so successful in the broadband market. In terms of broadband penetration, Uruguay ranks third in Latin America after Argentina and Chile. But the high broadband penetration figures hide a less glowing picture. Uruguay’s broadband connections are much slower than the rest of Latin America, with most connections still below 512Kb/s. At speeds above 3Mb/s, Antel’s ADSL service is about three times as expensive as similar services in neighbouring Brazil, Argentina, and Chile.
Market highlights:
- Following the success of the Ceibal Plan, in which all primary schoolchildren in the country were given their own laptop with Internet access, the government announced it would extend the scheme to secondary education. Organisers of the Ceibal Plan have set up a consultancy in order to advise other countries wishing to replicate the Uruguayan experience.
- Uruguay is one of the few countries in the world where broadband access via cable modem is prohibited. There has been talk of regulatory changes to legalise cable broadband, as it would foster competition in the broadband market.
- A new fibre-optic submarine cable between Uruguay and Argentina, scheduled to become operational by end-2010, is expected to increase Internet bandwidth in Uruguay fivefold or more. This should help boost broadband speeds and reduce prices.
- Uruguay is rolling out digital terrestrial TV using the European DVB standard, which the government adopted because of it being more suitable for software and local content development.