BUENOS AIRES, Argentina-Most foreign investment in the wireless market in South America has been directed at Brazil, Argentina and Chile in recent years based on their high wireless demand. However, several other countries in the region are experiencing strong wireless user numbers as well.
Paraguay, Uruguay and Bolivia during 1999 have seen growth rates of more than 100 percent. These countries share several characteristics. Their populations are about 5 million each, and although fixed telephony is still a monopoly, cellular operates under a regime of competition.
While Brazil, Argentina and Chile may get the most international attention regarding South American wireless trends, Paraguay, Uruguay and Bolivia show that interesting growth patterns are possible in small countries. In addition, the unexpected often occurs in these types of markets.
Paraguay
Paraguay offers an exceptional case for study because in the last few months, the number of total cellular subscribers has surpassed those of the wireline system.
Three companies currently offer PCS in the country, and two of those companies also offer traditional cellular service. Telecel, Personal and Vox clients total 372,000, compared with the 290,000 wireline subscribers served by Antelco, the state-owned fixed-telephony company. Three additional companies have PCS licenses, one (Copesa) of which is scheduled to begin offering service before the end of January 2000.
Miguel Guanes, assistant marketing manager for Telecel, explained that “cellular services attract more clients because Antelco’s services fail to satisfy the market’s expectations.”
As the oldest cellular player in the country, Telecel has been operating since 1992 and owns the largest market share with 281,000 cellular and 5,000 PCS subscribers.
New operator Hola Paraguay, which has offered PCS services since May, has contributed another weighty reason for the tremendous take-up of wireless services. Since May, the carrier has attracted 6,000 PCS users.
“Antelco charges US$600 for each line and takes between six months and two years to install it, while Vox (the brand used by Hola Paraguay) charges US$18 for each line, offers concession equipment and is ready to use in two days,” explained Sergio Vel zquez, assistant marketing manager for Hola Paraguay.
The other cellular company, Personal, has also experienced significant growth and “achieved 80,000 clients in only 15 months of activity,” from June 1998 to September 1999, according to Personal Marketing Manager Manuel Correa Cuenca.
This new scene has forced Antelco to plan a reorganization of its business. The first step will be to begin offering PCS in 2000 in association with a private company. Next, Antelco will be partially privatized.
Furthermore, Copesa, which was re-issued its PCS license under the condition it would begin offering service before 31 January, 2000, will soon enter the game.
And it is possible another company will launch its PCS service next year. Siemens won the sixth license granted by the government and currently is searching for a partner.
Uruguay
The situation in Uruguay is quite peculiar. Although it is experiencing important growth in cellular, it is the only country in the region in which the fixed-telephony company offers good service at a reasonable price-in spite of the fact it is a state-owned monopoly.
Antel has a penetration of almost 20 percent and serves-along with its cellular subsidiary Ancel-90 percent of the total telephony users. In addition, Ancel also performs excellently in competition with Movicom BellSouth, the only private company operating in the wireless sector.
There was a time when privatizing Antel and Ancel was considered an option, but a national vote on the issue in the early 1990s determined that the company would continue to be state-owned.
Fernando Lorenzo, Ancel’s commercial manager, said, “In Uruguay, there is no competition between fixed and cellular telephony because there is no unsatisfied demand for fixed phone lines.”
Ancel subscribers grew 165 percent between September 1998 and September 1999, compared with 9-percent growth for Antel subscribers.
Movicom BellSouth has seen similar growth, having doubled its client base from 54,000 users to 110,000 subscribers during the same period.
With regard to PCS services, no licenses have been granted, and the government has not made a formal announcement on the subject.
Bolivia
In Bolivia, local fixed telephony services are offered under a monopoly situation by 16 regional cooperatives that have a total of 500,000 fixed subscribers, compared with 330,000 total for cellular operators Entel M
