Latin Finance - May/June 2011 - 37

centam telecom

Giants in the Playhouse
by Adam Williams he sight of indigenous women carrying cell phones is becoming increasingly common in parts of Central America. In the last five years, the number of cell phone users there has risen from around 12 million to over 39 million, an increase of over 225%, according to telecommunications market research firm Pyramid Research. The total regional population of the six Spanish-speaking nations (excluding Belize) is around 41 million, meaning there are now almost as many cell phones as people in Central America. According to José Magaña, a telecommunications analyst specializing in Central America at Pyramid Research, the boom in cell phone use in the region has been the result of market privatization. During the last 15 years, each Spanishspeaking Central American country has shed state-run monopolies to allow private telecommunications corporations to enter national markets. Three private companies - Mexico’s América Móvil, Luxembourg-based Millicom, and Spain’s Telefónica – entered the region and quickly found success by making the purchase of a cell phone as easy as buying a loaf of bread. In place of buying a fixed plan that requires payment at the end of each month, the key to market penetration has been the option of using pre-paid plans, Carlos García Moreno, CFO of América Móvil tells LatinFinance. With a pre-paid plan, clients put a certain amount of money into their phone account prior to using it. When they have used their pre-paid credit, they simply re-charge the plan by depositing more money. Regional pre-paid accounts can be recharged at banks, in corner stores, online, or on the phones themselves. Over 95% of all cell phone users in the region receive service through pre-paid plans.

Three major telecom companies are slugging it out in Central America. With growth starting to plateau, the player with the best technology may prove the winner.
like getting behind on phone payments.” América Móvil, which operates under the Claro brand in the region, is LatAm’s biggest cellular and fixed line provider, with over 276 million customers in 18 countries. The company, owned by billionaire Carlos Slim, finished 2010 with revenues exceeding $48 billion, a 6% increase from 2009. In Central America, Claro claims to provide cellular service to over 10 million clients. In September, Claro will enter the Costa Rican market, where excessive government bureaucracy has slowed the liberalization process, according to George Miley, the former president of the Costa Almost as many cell phones as people in Central America. Rican telecommunications superintendence SUTEL. The opening of Costa Rica’s market was “Without question the use of prealso delayed by the nation’s reluctance to paid plans has been a key in promoting ratify the Central American Free-Trade penetration into the Central American Agreement with the US (CAFTA). Costa market,” García says. “Pre-paid plans give Rica was the last nation in the region to users control over their own usage and allows them flexibility that post-paid plans ratify the agreement, which it officially do not. If there is an unexpected change in adopted on January 1, 2009. Claro’s entrance into the Costa Rican income, or with a job, or within a family, market, where it currently has a market people don’t have to worry about things

We Three Kings

May/June 2011

LatinFinance 37

Latin Finance - May/June 2011

Table of Contents for the Digital Edition of Latin Finance - May/June 2011