Rethinking Opportunities for the Latin American Mobile Market in 2009

During the last quarter of 2008, as they finalized budgets and CAPEX allocation for the coming year, operators around the world were forced to take a second look at their growth expectations and make drastic changes to their 2009 plans. Operators are preparing to face the economic downturn with layoffs and by reducing CAPEX and OPEX and vendors are reacting to these measures and to the economic environment in a similar way.
The question that needs to be asked, however, is how will operators and vendors rethink opportunities for 2009?
The economic downturn will force operators to be even more cautious with service rollouts and new investments (see Millicom, Telefonica). There is no question that their priorities this year will focus on:

1. Improving productivity
2. Reducing OPEX
3. Rollout of new services with minimal CAPEX and faster ROI.

These guidelines provide a framework for rethinking VAS strategies and opportunities for 2009:

1. Increasing voice revenues - Even if the economic downturn affects subscribers' usage, there are still plenty of opportunities to increase voice revenue. Call completion for mobile operators in Latin America is on average 70%; each call attempt utilizes network resources, but because of industry regulation, most of the them do not generate revenue. Operators can improve network productivity and increase voice revenues by focusing on call completion services such as voice to text, visual voice mail and "A" party notification.
2. Introducing new messaging services - SMS represents more than 80% of data revenues in the region; this highlights the fact that operators need to focus on other services. The fact that SMS usage in countries such as Argentina, Venezuela and Ecuador is unusually high, indicates that subscribers are using SMS as an Instant Messaging tool; therefore the potential for Portal IM, Personal IM and SMS 2.0. is very high.
3. Leveraging 3G infrastructure - Operators in the region hurried to deploy 3G networks during 2007-2008 but so far, this has not made a significant impact in terms of service offering and ARPU. Huge investments were made in good times; the opportunity is there now to utilize this infrastructure in difficult times.

We will continue to address this topic in additional posts and focus on specific opportunities for 2009-2010. Even though the outlook is difficult, this can be an opportunity for operators in Latin America to rethink their VAS strategy and improve their service offering and business operations.