Millicom: a DIFERENT approach to DIFFERENTIATION

We recently posted about Millicom's success in Latin America, where it is positioned as a reliable operator with strong customer loyalty.

The Latin American market continues to grow and Millicom is benefitting from this, but it has also managed to gain market share from the two giants in the region, America Movil and Telefonica Movistar. The question is how is Millicom doing this?

Both heavyweights have consolidated their leadership in Latin America; they compete head to head in most of the region (America Movil operates in 16 countries, Telefonica Movistar in 13) and both surpassed the 100 million mark a couple of years ago.

Both operators seem intent to compete by continually trying to differentiate themselves with new products and services. However, in most cases, it only takes a few months for the other to catch up. Most recently, both operators were ready to kill each other over the iPhone. America Movil got a headstart but in the end, Telefonica was able to mitigate any possible advantage America Movil might have gained (with the exception of Mexico, where America Movil/Telcel secured exclusivity at until 2009).

It seems, however, that America Movil and Telefonica Movistar have forgotten the basics, which is where Millicom is very good at. Millicom has effectively been able to differentiate itself from the two heavyweights and is now positioned as market leader in most of the countries it operates: in Guatemala, where it competes with both America Movil and Telefonica Movistar, it became the market leader early this year; in Honduras, where it competes with America Movil, Millicom has 74% market share (Pyramid Research, Honduras Mobile Demand, March 2008).

Millicom has positioned itself as a player in developing markets with a simple strategy which is to provide basic services at affordable prices. This has allowed them to become market leaders not only in the mass market, but also in the business/corporate segment, showing that a back to basics approach can work better than trying to keep up with the latest fad.