2011 Argentina - Telecoms, Mobile, Broadband and Forecasts

Social networks drive mobile broadband and smart phone growth in Argentina

Argentina's economy has been expanding at a much faster pace than expected, and the economic boom has yet to peak. The telecom market grew by 18% in 2010, and sales are expected to reach more than AR$44 billion (US$10.6 billion) in 2011.

As in other Latin American countries, fixed-line revenues account for a decreasing portion of total telecom revenues, while the share of mobile and data/internet revenues continues to rise. The fastest growing telecom services in 2011 are likely to be mobile broadband and smart phones, which took off in 2010. The increased popularity of smart phones is largely due to the explosion of Twitter and the growth of social networks – especially Facebook.

The country’s regulatory framework encourages competition and supports smaller telecom players. Argentina has adopted a single licence system (Licencia Única), which telecom companies must obtain regardless of the services they wish to provide. Operators must list in their licence applications which services they wish to offer, but can at any time register for additional ones.

Argentina has one of the most solid state-of-the-art telecom infrastructures in Latin America. At 23%, fixed-line teledensity is among the highest in the region. Due to fixed-mobile substitution, however, the number of fixed lines is increasing at a rate that is barely sufficient to keep up with population growth.

The two incumbents, Telefónica de Argentina and Telecom Argentina, dominate the local fixed-line market, but a large number of smaller companies – mostly cooperatives – are also operating, especially in rural areas. The long distance market is highly competitive, and VoIP is well developed.

Argentina is one of the most dynamic mobile markets in Latin America, with penetration rates upwards of 130%. More and more users are signing up for multiple mobile accounts; most Argentineans have prepaid plans rather than contracts, therefore owning two mobile telephones is not a lot more expensive than owning one. Moreover, with the growing popularity of mobile broadband, an increasing number of users require an additional SIM card for their USB modem.

Three mobile operators, Movistar, Claro, and Telecom Personal, run a close competition for market share, each one controlling about one third of the country’s mobile market. All three mobile companies offer 3G services nationwide.

Argentina’s internet penetration is twice as high as the world average and close to that found in European countries. Its fixed broadband penetration on the other hand is less than half of Europe’s, although it is – on a par with Chile’s – the highest in the region. Demand for broadband should remain strong; this market has much potential for growth.

The fixed broadband market is divided fairly evenly between Telefónica de Argentina, Telecom Argentina, and Grupo Clarín. ADSL is the main technology, but cable modem occupies a significant place with about one-fourth of the subscriber base.

Argentina’s pay television market is the most mature in Latin America. In fact, Argentina is a world leader in terms of pay TV penetration, with about three homes out of four subscribing to pay TV services. A controversial Audio-Visual Communications Law limits the number of television licences one company can own and allows telephone cooperatives into the pay TV sector.

Cablevisión, controlled by Grupo Clarín, is Argentina’s pay TV market leader and one of the largest cable operators in Latin America. Grupo Clarín has been locked for the past couple of years in a legal battle with the Argentinean government.

Market highlights:

• Both fixed and mobile number portability are scheduled for implementation in December 2011.
• Argentina’s telecom law establishes that dominant operators must provide access to the local loop, but local loop unbundling was never properly regulated and implemented.
• Argentina is one of the largest markets for satellite services in South America. Two national satellites, Arsat-1 and Arsat-2, are scheduled for launch, in 2012 and 2013.
• Mobile spectrum auctions are expected to take place before the end of 2011, both to reallocate Movistar’s returned spectrum and to offer licences for 3G and 4G (LTE) services. The regulator plans to offer 30MHz of radio spectrum in the 1900 frequency band, 7.5 MHz in the 850 band, and 90MHz in the 1710MHz-1755MHz and 2110MHz-2155MHz bands.
• Both Telefónica de Argentina and Telecom Argentina undertook LTE tests in 2010 – Telefónica de Argentina in partnership with NEC Corporation, and Telecom Argentina with Ericsson and Huawei.
• Argentina’s associations of telecom cooperatives, Fecotel and Fecosur, were awarded mobile licences, which Fecosur used to launch MVNO services in July 2010 under the brand name Nuestro.
• The third largest cable TV company, Telecentro, received a mobile network operator licence in January 2011, with which it can participate in the next spectrum auction. Thus, Telecentro could become the first provider of quadruple play services in Argentina.
• Social networking sites are extremely popular in Argentina, particularly Facebook. In fact, Argentina ranks 13th in the world in terms of Facebook penetration.

Argentina fixed-line, broadband, and mobile statistics – 2009 - 2011

(Source: BuddeComm based on industry data)

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

• The development of Argentina’s fixed-line, mobile, broadband, and pay TV sectors together with industry outlook and forecasts.
• Company performance, ARPU, and spectrum awards.
• Regulatory hurdles and controversies.
• An analysis of Argentina’s broadband sector.
• The development and expansion of mobile broadband and 3G services in Argentina.
• How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the ten years to 2020.

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