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Analyst Angle: Mobile service trends in Argentina and the ARSAT case study

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.

The mobile market is expected to grow 9.9% annually in terms of revenue until 2017, driven by the revenue growth of mobile data services in the prepaid and postpaid segments, as well as the increase of residential and corporate customers’ telecom spending.

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The postpaid segment is strengthened by hybrid plans (which require prepaid credits after the monthly quota is reached), mobile broadband and machine-to-machine. Thus, mobile services such as M2M or geo-localization are the main drivers to mobile Internet connectivity. In the short term, it is expected that the number of mobile-connected devices will exceed the number of users. Telemetry and m-health services will also be important in the next few years, and indeed some mobile operators have announced them among their main initiatives in Argentina. In addition, the prepaid segment is expected to expand due to new products such as “my extra number” that include a prepaid additional line without the need to buy a new SIM card or terminal.

Mobile payment is likely to intensify its market penetration in the next few years. Some mobile operators have partnered with financial institutions to develop payment solutions through mobile devices. In 2012 Movistar launched its Wanda services in collaboration with MasterCard, which is an electronic purse for mobile users who do not have access to banking services. This platform allows users to make payments or transfers within the main Argentinean cities. Mobile payment is supposed to help many people to have access to financial services for the first time, creating further brand loyalty.

Although the government has not announced official dates for LTE spectrum auctions, the technology will probably be available in the next few years in Argentina and should help operators to provide advanced services and reduce the overload on 3G networks, which currently operate with limited spectrum.

The ARSAT Case:
ARSAT was created in 2006 as a public company to manage the Nahuel-sat company, which was in charge of national satellites. Because of its technology profile, the government has been launching new business units, such as fixed telephony services, broadband services (with 22,000 kilometers of fiber optic), digital TV and mobile telephony services.

ARSAT has a leading role in the telecommunications sector, as it has 60 transmitting plants already functioning that cover 75% of the country. It offers 20 signals and is available to more than 4 million Argentineans through encoders that are given by the government to the lower income population. This is also a consequence of the Media Law and of the President’s decision of assigning 25% of frequencies to mobile telephony.

The Argentinean government is planning to invest $1.341 billion dollars in the telecommunications sector in 2013 as part of the “Argentina Connected Program,” in free-to-air digital terrestrial TV and in the use of 3G frequencies. This amount represents 46.2% more than the $928.4 million that had been spent in 2012.

While the national government continues to promote the “Argentina Connected Program,” the three largest mobile telephony operators in the country, Claro, Movistar and Personal, still require spectrum to continue growing and innovating on services, such as the ones that are only possible with an LTE launch. The fourth player, Nextel, in the last months has lost market share due to the lack of spectrum to migrate from its legacy iDEN technology to UMTS/HSPA-based 3G services. This is taking place in a competitive scenario in which the government is asking operators to invest in infrastructure and R&D.

In this new scenario, the biggest fear for Movistar, Claro, Personal and Nextel is the delay in which they will have access to LTE, technology which will allow them to provide mobile data speeds of up to 10-times faster than what is available with current 3G technologies.

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