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.
Nextel’s strategy is to migrate its Latin American operations from iDEN to 3G to become more competitive. Apart from Argentina, the operator has acquired 3G spectrum in all the countries where it operates, investing over $750 million in Brazil, Chile, Mexico and Peru. However, Nextel took more than two years to deploy the new technology after making huge investments in spectrum and infrastructure, retarding monetization of the 3G network.
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The operator has presented disastrous financial results, and the process of luring new clients has been very slow. With the development of 3G and now “4G,” other services have emerged, gaining traction, and Nextel’s strategy of focusing on unlimited mobile usage among its users lost appeal. There is an array of options for instant messaging, such as BBM and WhatsApp, that can replace the operator’s push-to-talk function.
Nextel, which has focused its offers on PTT services for small and medium-sized enterprises, will have to broaden its strategy to reach the consumer market. Niche markets will still be a key growth driver for the operator, but it will also have to target consumer markets along with its traditional SMEs segment.
Nextel can target the consumer market without changing its focus or damaging its brand image. This can be achieved by creating a second brand or offering networking infrastructure for mobile virtual network operators, focused on the consumer market. This would enable Nextel to use its 3G network capacity more efficiently, helping to monetize the network more quickly.
Meanwhile, in the enterprise market, the operator has to offer services more focused on the segment, such as machine-to-machine applications and cloud services. One way to do this is by developing partnerships with companies that already have the know-how in this segment.
Opposed to its rivals, Nextel does not have any loyalty program to attract or retain higher-value customers, increasing subscription acquisition cost. Instead of focusing only on handsets as the biggest part of such programs, Nextel could create one with a different value proposition by adding non-telcom services. It could also segment the program based on monthly expenditure and the length of the relationship it has with customers.
Another fact that reduces Nextel’s attractiveness is its limited portfolio of smartphones, which are fundamental if it still wants to target higher-value costumers. The operator lacks high-end devices and the most popular brands, such as Samsung, Apple and Nokia.
Nextel is a late entrant in the 3G market. If it wants to succeed, it has to offer a range of innovative services and a larger portfolio of devices to attract high-end users and corporate clients.
Be sure not to miss:
- Nextel to focus on Mexico, Brazil; look for options in Peru, Chile, Argentina
- Nextel quietly launches 3G data plans in Brazil
- NII Holdings taps Shindler to replace Dussek as interim CEO
- Nextel identifies revenue sharing difficulties in the B2B2C model
- NII Holdings dismisses Brazil unit president
Marceli Passoni is a research analyst at Informa Telecoms & Media.
