Research and Markets: Prepaid Mobile Broadband Presents a Big Opportunity for Latin American Operators says 2010 Report

DUBLIN--(BUSINESS WIRE)-- Research and Markets (http://www.researchandmarkets.com/research/0cba3a/latin_america_tele) has announced the addition of the "Latin America Telecom Insider / Vol. 2, No 3, Edition 7 - Prepaid Mobile Broadband Presents a Big Opportunity for Latin American Operators" report to their offering.

In Latin America, mobile broadband has shown significant growth in the last few years and is expected to keep growing at a fast pace, particularly prepaid mobile Internet. However, Mobile operators need to expand their target market in order to generate more service sales and, therefore, revenues, according to a new report.

Prepaid Mobile Broadband Presents a Big Opportunity for Latin American Operators analyzes the opportunity that mobile operators have to expand their target market to include the prepaid market to generate more revenue. It also examines how the low penetration rate of fixed and satellite broadband, due to the high costs and poor services from lack of availability in the region, creates an opening for 3G Internet to thrive.

Pyramid expects prepaid mobile Internet service to take off and attract a significant number of users in Latin America as it "will be used not only by customers without fixed Internet in their home or office, but it will also attract a high number of occasional users, especially those who do not require full-time mobility for their connections, says Vinicius Caetano, Senior Analyst at Pyramid, and author of this report. "This service will break the telecom industry myth that the prepaid service is not profitable," adds Caetano.

"The traditional mobile model, where operators mainly offer valued-added services to postpaid customers, neglects the mid-to-low-end of the population in emerging markets in its early stages," indicates Caetano. Up to half of the consumer spending in these countries is omitted due to the lower ARPU among low-end and prepaid customers. "In order to better address this overlooked market, operators will have to focus on services based on characteristics that are compatible with the majority of the population, including the prepaid model," recommends Caetano. Pyramid believes the business case for mobile data will follow the same concept as for voice: make it affordable, easy to use and flexible.

Key findings

• Operators have used prepaid voice platforms to expand the addressable market for their services, and now prepaid is the worlds dominant service model. We should expect the same trend when it comes to mobile data.
• Prepaid is more than a billing platform for low-income segments. It is the nexus of a lucrative business model capturing the world's mass-market consumer segments (4/5 of the population in Latin America).
• Prepaid mobile broadband is convenient, it minimizes billing surprises and it is the most appropriate choice when customers do not want a monthly subscription.
• Nearly all operators in emerging markets are predominantly prepaid operations. Most are highly profitable, and some boast some of the highest operating margins in the world. The total share of prepaid users in developed markets is also growing (e.g., Verizon acquired a prepaid MNO in the US).
• Operators are becoming more comfortable with selling mobile data. Many new offerings are seen every day around the world.

Executive Summary:

In developed markets, mobile broadband has been considered a problem for telecom operators, especially after the release of all you can eat data plans at very low prices and the rising adoption of data-intensive smartphones. This business model resulted in increasing investments in infrastructure that were not matched by a compensating return rate, which has led many operators, especially those outside the US, to abandon all you can eat plans for a tiered pricing model. Mobile operators in Latin America, however, see mobile broadband through different eyes. In developing countries, the preponderance of prepaid mobile services has an important impact on operators' ARPU and churn, which leads mobile operators to struggle for the highest possible number of clients. It also affects how operators sell, benefit and profit from each individual service.

At first, operators used mobile broadband as a tool to attract and keep clients, but more importantly to get them to pay a recurring fee every month, something that does not happen on the prepaid model. Many operators in the Latin American region also used 3G mobile data services to differentiate themselves from the competition and to increase their value-added services revenue, which has for a long time consisted almost exclusively of SMS revenue. However, as the market evolved and all companies started offering 3G data plans at fixed prices, the service stopped being a differentiator and became a must-have to all operators. The competition resulted in falling prices and therefore decreasing revenues, the same trend seen in developed countries.

The crucial difference between Latin America and developed countries is that the low penetration of the Internet in Latin American countries led to a massive adoption of 3G Internet. The increasing number of subscribers attracted and kept through the offer of 3G compensated for the declining prices for the service, which is now making companies look for a different market strategy that foresees not only the post-paid segment, but also the prepaid. Since the majority of clients in Latin America choose the prepaid model for their voice services, operators in these countries are now looking for a way to introduce mobile data plans for pay-as-you-go users. Many of them are, therefore, engaged in launching prepaid 3G data offerings by the end of this year.

Key Topics Covered:

• INTRODUCTION
• PREPAID MODEL IN LATIN AMERICA
• Operators need to broaden their target market
• There are few customer-friendly, alternative broadband offerings in many markets
• 3G broadband solutions are less cumbersome and more flexible than the wireline alternatives, such as cable and DSL
• MARKET DETAIL
• CASE STUDY: TIM Brazil
• CASE STUDY: Telcel, Mexico
• CASE STUDY: Telia Sonera
• CONCLUSIONS
• Key findings
• Recommendations
• RELATED RESOURCES
• Table of exhibits

Companies Mentioned:

• Telcel
• Telia Sonera
• TIM Brazil

For more information visit http://www.researchandmarkets.com/research/0cba3a/latin_america_tele.

Source: Pyramid Research, Inc.

CONTACT:

Research and Markets
Laura Wood, Senior Manager,
press@researchandmarkets.com
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716

KEYWORDS:   United States  North America  Central America  South America  New York

INDUSTRY KEYWORDS:   Technology  Internet  Networks  Telecommunications  Mobile/Wireless

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