News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide
Showing posts with label Central America. Show all posts
Showing posts with label Central America. Show all posts

Friday, 11 December 2009

Memories of Paraguay

In April 2008, your humble scribe had the very great pleasure of visiting four South American countries on behalf of events and business information company Informa Telecoms & Media. The purpose of the trip was to drum up additional support for the Americas Com conference and exhibition, held annually, and usually attracting a few hundred telecoms sector execs from around the Western Hemisphere.

While exhibitors, sponsors, delegates and supporting industry associations seemed to be broadly happy, it was beyond dispute that assembling a crowd which really represented the majority of the countries to the south of the USA was a challenging task. Various venues had been tried over the years - and each time, the location had a significant bearing on the size and diversity of the crowd. Mexican venues made for a group of participants drawn largely from that country, from the Caribbean islands and from some Central American markets. To host the event in Buenos Aires was to ensure that the group would consist largely of Argentineans and others from the Conosur region, the most prosperous segment of the South American continent. In both of these scenarios, delegates from the less affluent Andean countries would be rather more thin on the ground.

South America's largest and most populous country by far is, of course, Brazil. Iterations of Americas Com held in that country's most amazingly attractive conference location, Rio de Janeiro, did very well in terms of delegate numbers. Brazilian delegates - who quite rarely seemed inclined to travel in good numbers to venues outside their home country - were so numerous in Rio that a particular difficulty arose, however.

It was perfectly possible to lure a decent contingent of influential delegates from Spanish speaking countries to a conference and exhibition in Rio. For exhibitors and sponsors, however, picking them out from among the massively larger group of Brazilians could be challenging. It was tough, then, to create the perception of having assembled a genuinely multinational delegate audience.

It was with this in mind, and with the 2008 version of Americas Com scheduled once again for Rio, that a two-man delegation set out in April that year for meetings with a varied group of telecoms operators around South America. The week-long tour took in Venezuela, Bolivia, Paraguay and Argentina. Only the last of these had ever really been a source of significant numbers of senior delegates prepared to travel to our event when it was held outside their own country.

For someone who whose previous trips to South America had all been to Brazil, I found this to be a fascinating opportunity. In many ways, it felt as if the only thing these four very different countries have in common is that the official language is Spanish. Walking the streets and having meetings in Buenos Aires struck me as being a very similar experience to what one might expect in a southern European country - Spain, Portugal or perhaps Italy. Venezuela and Bolivia were strikingly different places - the people, the climate, the infrastructure: a different world.

Paraguay was, to me at least, the really unknown quantity - a country of which I knew very little aside from recollecting the name of its erstwhile dictator, Alfredo Stroessner and a those of a couple of its notable footballers, Messrs. Santa Cruz and Chilavert.

My colleague (translator/interpreter/fixer) and I did the rounds of the mobile operator HQ buildings in Asuncion. These varied a bit in terms of how expensively they were decorated, but the offices were not vastly different in arrangement or atmosphere to ones you might visit almost anywhere in the world. We were, however, on the way to airport, to visit an HQ which looked and felt rather different.

LATAM07
Vox HQ, Asuncion, Paraguay

On our travels around the seemingly quite sleepy Paraguayan capital, it became clear that the local telecoms scene was a close-knit community. Having already been shown around town by a helpful local driver who seemed to know personally everyone with whom we had a scheduled meeting, we had a nice piece of luck on our visit to one of the MNOs. The gentleman with whom we met was able to open doors at one of the organisations where we did not have an appointment fixed up. This introduction, then, led to a meeting with the Gerente Comercial of COPACO (Corporación Paraguaya de Comunicaciones), the state-owned incumbent wireline operator.

Informa's Americas region event had only recently expanded its remit from a gathering purely of GSM mobile operators. Part of our task was to increase the diversity of the audience not only in terms of countries represented but also in terms of aiming for a much broader range of telecoms businesses attending the show - fixed/mobile; state sector/private sector; involving delegates from the cable sector.

So it was wonderful to have the opportunity to visit companies in these target segments and something of an eye-opener to have conversations with the leaders of public sector operators (we also visited CANTV in Venezuela) and telecoms cooperatives, of which we managed to visit two in Bolivia.

What was novel for us was discussing the proposed themes of presentations these companies might offer at our event and hearing of topics quite different from the ones we had heard discussed by private sector GSM operators in previous iterations of the conference.

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COPACO HQ, Asuncion.

COPACO, which we managed to visit just ahead of our flight to the next stop on the tour, was no exception. Our host, who was exceptionally generous with him time, was most animated when talking about how his organisation was striving to extend the availability of services to under-connected settlements. During this conversation, I couldn't help being struck by how this gentleman's language varied from what I was used to hearing at such meetings and at conferences. I don't recall hearing the terms 'EBITDA', 'shareholder value', 'market share', 'ARPU' or their Spanish equivalents during our chat. Our surroundings, too, were different. COPACO HQ lacked expensively designed marketing materials and branding. We entered through a hall in which customers could make payments. The scene there, to me at least, was somewhat reminiscent of a local government office in the UK - but before our local authorities were made to organise their activities along more commercial lines.

With this memorable discussion in mind, then, it was interesting for me to learn this week, via TeleGeography, that Millicom Cellular International-owned Tigo Paraguay has been awarded a contract to deploy mobile services in four under-served departments of the country, helping CONATEL, the national telecoms regulatory agency, achieve its universal service targets. Under the deal, Tigo will roll out networks to 35 municipalities where cellular services are currently unavailable and the Government will provide funding of around USD1.04 million to support the network deployment. In total, according to the TeleGeography item, the project is expected to cost around USD1.6 million and benefit around 20,000 Paraguayans in remote areas. The private sector, then, has a role to play in meeting some of the challenges discussed by my host on our visit to COPACO HQ last year.

COPACO itself, meanwhile, continues to harbour ambitions of entering the mobile services market. At present, according to the World Cellular Information Service, that market (the mobile penetration rate of which is 85.45%) is split as follows:
According to a recent TeleGeography story, COPACO expects to join this list by mid-2010. With my visit to the company's HQ in mind, I'll be interested to see how their mobile offering fares in competition with the existing cellcos.
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Tuesday, 30 June 2009

News from islands large and small

More than once, reference has been made here to the idea that some developing countries may well be set to experience consolidation of the mobile sector in the near future. I've quoted luminaries from emerging markets players such as MTN and Zain who contend that in Africa, for example, there currently exists a larger number of mobile operators than the continent's markets should really be able to support. With this in mind, I have often turned the baleful gaze of DevelopingTelecomsWatch towards the hopes and struggles of smaller cellcos competing for a slice of often quite small markets in the face of competition from multinational telecoms groups with far more formidable assets.

This week, however, I've found my thoughts turning to the the prospect of market consolidation much closer to home because here in Britain, Vodafone has declined to comment on a report that it is considering buying the UK operation of T-Mobile International.

For me, this is very close to home. I've been a T-Mobile UK subscriber a number of years. Also, a number of people I know socially make the very short journey every day from St Albans to their jobs at the operator's HQ a few miles away.

I don't know how likely this deal really is. Local reports have made much of whether the UK authorities would welcome the creation of an operator with a market share of 40%. Press articles here have also featured questions about why Deutsche Telekom would offload such a significant asset at the bottom of the market, why Vodafone would take on extra operational costs during a recession and how such a deal would affect 3 UK, with which T-Mobile UK has a network sharing arrangement.

The same reports, however, do remind us that earlier this year, Vodafone CEO Vittorio Colao said that his company was prepared to play an active role in consolidation between operators and that this has already happened in Australia. There, in February, Vodafone and rival cellco 3 Australia announced their merger.

The good people of my home town here in the commuter belt to the north of London will certainly watch this with interest. This is a relatively prosperous place, even by UK standards, but we have certainly not escaped the effects of the recession. A growing amount of retail space stands empty and, albeit from a low base, we have seen a recent surge in the number of people who are unemployed. The T-Mobile campus in nearby Hatfield is one of the larger office complexes in the area and must be one of the more significant providers of decent jobs that do not involve taking the train into Central London. I am therefore struggling to think of how the prospect of a Vodafone-T-Mobile merger could be viewed with anything but apprehension in my neck of the woods.

It's much easier to write dispassionately and remain cool about the human impact of M&A activity when the action is a long way from home. So perhaps it's best if I stick to the emerging markets/developing countries brief of this blog and turn my gaze to distant shores. This will be a far more comfortable expercise than trying to avoid becoming maudlin about friends and neighbours employed by T-Mobile worrying about their jobs.

So I'll pick a really distant shore - about as far from home as I can possibly find. How about Nauru, a tiny island in the Micronesian South Pacific? According to Cellular News, the world's smallest independent republic is finally joining the mobile revolution.

With no existing mobile operator and a population of just 10,000 to serve, you might think that the Nauru might not need a Minister of Telecommunications. Such a post does exist, however, although I get the impression from telecoms research consultancy BuddeComm that the performance of past Ministers has been somewhat underwhelming. The synopsis of the BuddeComm Nauru market profile indicates that up to now the Government has been both regulator and the sole provider of all telecoms services. According to BuddeComm, "the state of telecommunications in Nauru resembles the country’s own economic chaos". Their Nauru profile notes that in 2003 the telephone system collapsed due to equipment failure leaving the island cut off from the rest of the world and that the Government could not afford to have the necessary repairs made. In 2004, apparently, satellite communications were to be shut down for non-payment of subscription fees.

All this looks set to change rather dramatically - the current Minister, Sprent Dabwido announced this week that Government of Nauru has awarded Digicel a license to operate a GSM network.

Can any company make a profit from operating in such a tiny market? Well, while Nauru might be an extreme case, Digicel does have a track record of establishing operations in very small territories and is therefore probably better suited than any other company to a challenge of this kind. Digicel provides mobile services in 26 countries and territories throughout the Caribbean, Central America and the South Pacific. In the latter region, operations have been set up in markets including Vanuatu (pop. 216,000) Samoa (pop. 189,000), Tonga (pop 112,000). Small territories, then, seem to hold no fear for Digicel.

The company will presumably have been buoyed by being able to report its first net profit since its launch in 2001. According to a TeleGeography report earlier this month, Digicel recorded a net profit of USD 41 million in the twelve months to 31 March 2009, compared to a loss of USD 74 million in the previous year. EBITDA reached USD 680 million, a 34% increase year-on-year. Revenues rose by 11% to USD 1.73 billion, while the company's subscriber base was up 34% to 9.2 million. The company’s net debt at the end of March was USD 2.7 billion.

Digicel said that the subscriber growth in subscribers was helped by successful rollouts in El Salvador (where it now has about a million customers), Trinidad & Tobago and Suriname. Other new additions to the footprint are Honduras and Panama, both added in late 2008. According to Digicel, 1.1 million new subscribers were signed up across these two new operations in their first five months of operation. According to a Cellular News article the month, the operator is now planning to extend its reach to Costa Rica, breaking the monopoly currently enjoyed by that country's incumbent telco Instituto Costarricense de Electricidad (ICE).

Meanwhile, across the sun-drenched Caribbean islands where Digicel first established operations (before expanding into Central America and the Pacific), the company faces a potentially interesting new competitor.

According to a TeleGeography report, Lycamobile is looking to make the transition from its prepaid MVNO model to becoming a full MNO in the Caribbean, starting in St Kitts and Nevis and following on across six other islands. Since 2006 Lycamobile has launched its prepaid brand in eight European countries, where it offers very low tariffs and claims to have around four million customers. My understanding is that the focus of its market efforts tends to be the diaspora populations of African and Asian countries who are working in Europe and looking for good deals on calls home:

Quite what has prompted the company to look to the Caribbean and to setting up physical networks I don't yet know, but given that we started with worries about job losses in the satellite towns around London, St Kitts and Nevis just seems like a pleasant place to end this meandering tour through the world's island markets large and small.

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