CANTO Weekly Newsletter – BNamericas 06/03/16

Key strategies for attacking the LatAm MVNO market – Regional

Ericsson ups LatAm mobile data projection – Regional

Over half of LatAm handsets are smartphones – Regional

Racsa sees surge in operating income – Costa Rica

Caribbean telco Cable & Wireless Communications (CWC) is renaming its Advanced Video Services product as Horizon from Flow.

The TV service has already been rebranded in Jamaica and the change will be applied in all other Caribbean markets over the coming months, CWC said.

The news comes after Liberty Global closed its acquisition of CWC for US$7.4bn.

Horizon from Flow is aimed at giving customers greater control when accessing video content.

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Chinese telecom equipment supplier Huawei will provide Curacao-based telco United Telecommunications Services (UTS) its Cloud BB Solution to help the telco build an LTE-Advanced network, according to a statement.

The Cloud BB solution supports CloudRAN networks and will enable Gbps rate speeds. UTS operates in Curacao and Saint Martin.

Huawei said the resource coordination function of the solution can significantly increase the cell-edge throughput in areas with increased customer traffic like tourists hubs such as beaches and city centers.

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Jamaican mobile newcomer Caricel has contracted core network and IT software solutions provider Alepo and advanced communication solutions provider Comtech Telecommunications Corp to help in its build out of an LTE network.

Earlier this month Caricel became the first fully Jamaican-owned telecom company to be granted a local mobile spectrum license (in the 700MHz band).

Caricel, which is owned by Symbiote Investments Ltd, is vying to beat competitors Digicel and LIME to roll out LTE in Jamaica.

As part of the project, Alepo will deploy its complete LTE monetization solution, including its advanced policy and charging control (PCRF), convergent charging and billing (OCS), CRM, and home subscriber server (HSS) products.

Alepo has worked with Digicel Jamaica on multiple projects since 2009.

Key strategies for attacking the LatAm MVNO market – Regional

In the fast-paced world of telecommunications, consumer demands and rapid advances in technology are pushing telcos to develop new business strategies to remain relevant in the market.

Globally, mobile virtual network operators (MVNOs) have been carving out their own niche in the market for some time, reaching an average worldwide subscriber base of around 3% of the market. In developed countries this figure is even higher, such as the UK with 12%, or Holland and Belgium where MVNO’s market share exceeds 20%.

MVNOs survive in mature markets because there is significantly more competition, so more companies are trying to offer niche experiences to their customer base, but what about developing markets?

In Latin America, the countries that stand out as emerging markets for MVNOs are Colombia with 6% market penetration, Chile with 2% and Mexico with 1% of all mobile subscribers, but the rest of the region has not yet seen major developments. Brazil, for example is barely hitting the 0.2% mark.

Telecoms analysis firm Ovum estimates the MVNO market in Latin America will reach approximately US$1.5bn by 2020, pointing out that, while some criticize the low growth of MVNOs in the region, they are still capable of making around US$10mn per year when handled correctly.

The above figures highlight that, even within a niche sector, MVNOs can make a reasonable impact in the industry, potentially generating more competition and creating dynamism in the market. But how should MVNOs be attacking developing countries in Latin America if they are to reach the same levels of market share, and what challenges do they face along the way?

“The ability to develop alliances and incorporate technology into business strategies are two of the key aspects of a successful company in the new digital economy,” Sonia Agnese, Ovum’s senior analyst for Latin America, told BNamericas at the annual MVNO Summit in Mexico City.

In perusing these goals, MVNOs face certain challenges when rolling out services in a new market, such as limited timeframes, aggressive competition, demanding customers and limited knowledge of the mobile market.

Originally, MVNOs were launched by mobile network operators (MNOs) to stimulate specific niches. MNOs could do this because they owned the core networks, but as regulations are beginning to break down that barrier, any agency or industry can launch an MVNO for a low up-front investment.

Carlos Villanueva, senior market intelligence manager of BICS, a global voice carrier and provider of mobile data services, revealed some key strategies that new MVNOs should be adopting in the Latin American market.

“A successful MVNO must have a simple, transparent, competitive and clear service offering, with scalability and flexibility,” he said. “In terms of customer experience, MVNOs have to guarantee that the local offering is the same internationally. Companies need to go beyond connectivity, as it’s through added-value services that they will achieve success.”

The omni-channel approach is one way to add value, as it provide a means of offering a consistent service experience to customers across mobile, PC, tablet, call centers and even social media.

Furthermore, real-time systems allow MVNOs to offer a certain product at a certain point in time, creating more valuable opportunities for upselling. For example, if data is running low as a customer is streaming a movie, a real-time system can offer them a chance to purchase more data at that precise moment.

Innovation can also come from MVNOs giving up control to users. Public Mobile is a Canadian MVNO that is targeting the life hacker niche. The company has given customers full power to choose their own service, as well as implementing a community support forum that incentivizes users to help each other through additional minutes or data.

“Innovation is key; you must understand your niche, focus on customer experience and use agile marketing to succeed,” said Dinesh Raveendran, product management director at Redknee, a Canadian telecommunications software provider.

“The entire MVNO space is going to start evolving towards Internet of Things [IoT] and machine-to-machine [M2M], so MVNOs must look at servicing customers across all vertical spaces, such as TV, cars, energy and connected homes, to name a few,” Raveendran continued.

So as consumer demand continues to metamorphose, the ability of MVNOs to create regional alliances, implement the right technologies, lock down a specific niche and innovate at a faster pace than the industry will determine their attractiveness in Latin America.

Ericsson ups LatAm mobile data projection – Regional

Ericsson has adjusted its estimate for average monthly data traffic per Latin American mobile user to 7GB for 2021, rather than the 6GB figure projected in November 2015.

The 2021 projection compares to average monthly data throughput of 1.2GB per Latin American user in 2015, as reported in Ericsson’s previous Mobility Report last November.

Latin Americans are thus on a par with users in the Middle East/Africa (1GB), Asia Pacific (1GB) and Central/Eastern Europe (1.4GB), while North Americans are the global leaders with monthly usage of 3.7GB.

The difference in usage between regions is expected to grow drastically by 2021, with North Americans consuming 22GB per month and Western Europeans 18GB, against the 7GB average consumption expected in Latin America.

Globally, Ericsson expects the number of smartphones in use to surpass the number of standard mobile phones during 3Q16. However, in Latin America smartphones already represented 50% of handsets in use by year-end 2015.

The 2016 Mobility Report also estimates that by year-end 2015 the number of 3G and 4G connections in Latin America had grown to roughly 51% of lines in service, up from 45% at year-end 2014.

The latest report adjusts the LTE/5G projection to 45% of Latin American lines in 2021, whereas the November 2015 report had put the figure at 40%.

Globally, for 2015-2021 the number of traditional communication devices connected to any kind of network will grow slowly, at 1% CAGR for computers and 3% CAGR for mobile phones, Ericsson estimates.

However, Internet of Things connections will grow at 27% CAGR for devices using mobile connectivity and 22% CAGR for devices using other networks.

This will lead to 28bn connected devices (including computers and phones) by 2021, compared to 15bn today. Of the 28bn total, 16bn will be IoT devices other than computers and phones, and most of them will connect using non-cellular means, such as WiFi, satellite and fixed lines.

Over half of LatAm handsets are smartphones – Regional

Smartphones represented 52.8% of handsets in use across Latin America by year-end 2015, while globally smartphones are not expected to surpass 50% of handsets until 3Q16, according to Ericsson.

The November 2015 edition of Ericsson’s global Mobility Report had estimated smartphones at 50% of handsets in Latin America, but penetration turns out to be higher because the overall number of mobile lines in service fell at the end of the year.

In the June 2016 Mobility Report Ericsson’s research division ConsumerLab adjusted the 2015 figure for total mobile lines in Latin America to 710mn, rather than 740mn as reported in November. On the other hand, Ericsson raised its estimate of smartphones in service at year-end to 375mn instead of 370mn.

The decrease in total lines was due to operators’ stricter criteria for counting prepaid lines as active; consumers’ decision to abandon multiple SIM cards – partly because of the increasing popularity of carrier-independent messaging apps; and the general macroeconomic situation, ConsumerLab Latin America director Diana Moya told BNamericas.

These effects were particularly strong in Latin America’s largest market, Brazil, Moya added.

For year-end 2016 Ericsson projects 407mn smartphones, 294mn feature phones and 21mn tablets/routers/PCs, in which case – taking just the handset numbers – smartphones will represent 58% of phones.

Ericsson also adjusted its projections for 2021, placing the total number of lines at 800mn instead of 850mn estimated in November, and brought down its estimate of smartphones in use to 580mn, rather than 640mn.

This brings estimated smartphone penetration to 72.5% in 2021, rather than 75% projected in November.

Racsa sees surge in operating income – Costa Rica

Costa Rican internet provider Racsa, a subsidiary of state telco ICE, reported 11.2% growth in operating income for 1Q16.

The company exceeded the projections outlined in its 2016 financial plan, citing innovation, new business opportunities and financial discipline as the main reasons for the upturn, according to a release from ICE.

“The financial picture for RACSA is now stable, thanks to the development of information technology and communication solutions, value creation and the promotion of productivity in the state and its institutions,” said Francisco Calvo, general manager of Racsa.

Racsa has been in trouble for several years and has been the subject of bankruptcy rumors for some time. The company accumulated losses of 56.5bn colones (US$105mn) over the last six years, which have been covered by loans and capital injections from ICE.

However, at the end of 2015, Racsa finally reported a profit for the first time in six years.

Last month, Racsa returned a block of idle radio frequencies in the 5,713MHz band, which are used for 5G mobile services, acknowledging that the return would result in a decrease in annual payments for radio spectrum.