What to expect from the Latin American Mobile Market in 2009

As mobile operators finish completion of their budgets for 2009 and approach the holiday season, vendors anxiously await what will be one of the toughest years since the telecom downturn from the late 90's/2000.

An interesting insight into what to expect for 2009 comes from Marc Beuls, President and CEO of Millicom, who presented to investors at the Morgan Stanley 8th Annual Technology, Media and Telecoms Conference in Barcelona just a week ago. Mr Beuls’ presentation has been posted on Millicom’s website at www.millicom.com and includes updated information on expected capital expenditures, cashflow and margins (see press release here).

Millicom continues its impressive growth with outstanding results; it reports a 71% in Honduras from Q3 07, 39% in Guatemala and 29% in El Salvador. Millicom operates in Latin American markets that are still growing but has gained market share from its main competitors in Central America, America Movil and Telefonica Movistar. Millicom is now the market leader in most of the markets it operates in the Latin American region.

However, as relevant as these figures are, it should be noted that Mr. Beuls placed emphasis on the fact that Millicom plans to invest less than 1.500 million dollars in 2009, and that CAPEX for 2009 will be “substantially lower” than in 2008. Millicom will also maintain its strict requirements for expected ROI on new investments.

I don't think that Mr. Beuls' statements are a result of the present financial crises but rather a consistent strategy that Millicom has played for several years; a strategy that I believe plays a huge part in their outstanding results. However, it will be interesting to see the statements from America Movil and Telefonica, the other two big players in the Latin American market. We will continue to analyze the market dynamics and possible scenarios for 2009 in future posts.