2009 Argentina - Telecoms, Mobile, Broadband and Forecasts

Argentina’s telecom market is one of the most advanced in Latin America. Despite the economic slowdown, telecom revenues are expected to continue growing in 2009, albeit at a reduced pace, driven by mobile telephony and broadband.

The country has a number of regulatory projects in the pipeline: measures to encourage market competition, regulations on number portability, the selection of a digital terrestrial TV standard, and the implementation of a Universal Service Fund. The government has agreed to a 15% increase in telephone rates, frozen since the 2002 economic meltdown.

Argentina’s fixed-line teledensity is one of the highest in Latin America. Two regional incumbents, Telefónica de Argentina and Telecom Argentina, dominate the local fixed line market despite liberalisation, but the long distance market is highly competitive and VoIP is well developed.

In terms of mobile penetration, Argentina is the leader in South and Central America. Three operators, Movistar, Claro, and Telecom Personal, run a close competition for market share. Despite having reached maturity and passed the 100% penetration threshold, the Argentine mobile market still has potential for growth once the financial crisis lifts.

Argentina’s broadband market is one of the most developed in South America, with penetration only second to Chile’s. The market is divided fairly equally between three players: Telefónica de Argentina, Telecom Argentina, and Grupo Clarín. Competition has driven prices down so that broadband is cheaper in Argentina than in most other Latin American countries. Broadband subscribers are likely to grow even during the global economic downturn, albeit at a much slower rate than previous years.

Media convergence suffers from regulatory battles involving the government, cable TV companies, and telecom operators. Argentina’s pay television market is the most mature in Latin America. In fact, Argentina is a world leader in terms of cable TV penetration, with more than one home out of two being subscribed to cable TV services. The economic downturn, however, does not bode well for the pay television market in 2009.

Key highlights:

·         An ad hoc commission has been given the task of drafting regulations to implement number portability. Although Argentina’s laws recognise consumers’ right to both mobile and fixed-line number portability, there has been no regulation to enforce it.

·         Telecom Argentina is under cross-holding scrutiny since rival operator Telefónica acquired a stake in its parent Telecom Italia. A congressional telecoms committee has ruled that Telefónica’s stake violates Argentinean anti-trust laws, and Telecom Italia’s shareholding has been frozen until a final verdict can be reached.

·         All three mobile operators in Argentina offer 3G services over HSDPA networks. UMTS coverage has been extended to all of Argentina’s 23 provinces.

·         Mobile auctions are expected in 2009 to reallocate Movistar’s 42.5MHz of returned spectrum. Parties Interested in the tender include cooperative associations Fecotel and Fecosur, Claro, and Hutchison.

·         The Argentinean government has announced that it favours the Brazilian version ISDB-T as the digital TV standard to be adopted in Argentina.

Argentina Internet, broadband and telecoms statistics – 2005 – 2008

(Source: BuddeComm based on industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

For those needing an objective and high-level strategic analysis on Argentina, this report is essential reading and gives further information on:

·         Telecom Argentina’s shareholder structure and cross-ownership issues.

·         Mobile market outlook and developments, including company performance, ARPU, spectrum awards, and mobile data services.

·         The roll-out and uptake of 3G UMTS services in Argentina.

·         Broadband market status, including ADSL, cable modem, WiFi, WiMAX, mobile broadband, and Broadband Powerline (BPL).

·         Convergence, triple play models, IPTV plans, and the regulatory issues involved.

·         How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the ten years to 2018.