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April 1, 2010
Telefónica is growing again in Central America. In Q4 2009, it added 151,000 mobile customers, the largest net gain since Q2 2008. Its quarterly results also show that 12% of those new subscriptions were postpaid – a positive development for the operator considering the challenging economic environment (see exhibit). Telefónica effectively reversed the net decline it had seen in the region earlier in 2009. We believe that most of the gains came in Nicaragua and Panama, leaving some work to do in Guatemala and El Salvador.
Telefónica has been struggling to retain its market share in Central America over the past few quarters. Tigo has been very strong in defending its leadership, while Digicel has captured a sizeable portion of the low-end subscriber base. Nevertheless, Telefónica has been successful in improving profitability despite churn, deteriorating operational figures and harsh economic conditions: its EBITDA margin for 2009 in Central America rose to 42.6%, compared with 38.2% in 2008. Revenue was volatile during the year and the year was down 5.49% – US$785m in 2009 versus US$831m in 2008. Total traffic fell 4.25% over the same period (6,868m minutes in 2009 versus 7,174m in 2009). Clearly, fewer minutes means less revenue, so boosting usage is a must for the operator.
Quarterly mobile subscriptions of Telefónica in Central America per type, 2008 and 2009
Source: Telefónica
Going forward, the battle for the Central American mobile market will remain tough for Telefónica. As described in our El Salvador Country Intelligence Report, the region as a whole is approaching 100% penetration of the population, with markets like El Salvador and Panama already well above that level. Higher penetration levels mean that the fight will switch from voice services to data – mobile Internet access and content. We believe that during 2009 Telefónica was falling behind Tigo and Claro in deploying 3G networks in Guatemala and El Salvador, but its rising capex figures in Q3 and Q4 suggest that the operator is committed to catching up and thriving in the still nascent mobile data market; we therefore expect its revenue from the region to continue growing in 2010. Telefónica has what it takes in this battle: a strong brand, financial resources and the submarine network capacity, courtesy of sister company Emergia.
— Jose Magana, Senior Analyst
Related resources:
Communications Markets in El Salvador
Country Intelligence Report published May 2009
The telecommunications market in El Salvador will grow at a CAGR of 3% over the next five years, below the Latin American average of 4%, as the mobile market reaches saturation and the fixed voice market continues its downward revenue trend. Pyramid Research expects that the lines of business that will support growth will be mobile data services, fixed broadband and pay-TV, all of which are underpenetrated segments as of 2009. This Country Intelligence Report analyzes El Salvador’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.
Latin America Mobile Operator KPI Forecasts
Forecasts published quarterly
Our Mobile Operator Key Performance Indicators Forecast products provide a complete picture of wireline voice and data communications in each of 19 Latin American markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue — all broken down for the mobile operators in the respective markets. We believe our Mobile Operator KPI Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.
Prepaid Mobile Services: Using New Business Models to Boost Profits
Research report published March 2010
This report examines the success of prepaid operators in developing markets. It identifies the characteristics of successful prepaid players and suggests a number of core drivers for their profitability. The report makes a number of observations on the impact of ARPS on profitability in a competitive prepaid market context as well as on the core strategies successful prepaid operators rely on to boost revenue. It also looks at the dynamics of the cost base and trends emerging in the management of network opex. In terms of the next phase, selling mobile broadband, the report details trends in pricing schemes and discusses the challenges operators will face with subsidies. Finally, it examines in-depth the operator models of four prepaid players: MTS Russia, Safaricom Kenya, Turkcell Turkey and Grameenphone Bangladesh.
Honduras: Operators Pin Hopes on Broadband and Mobile Data Services
Country Intelligence Report published February 2010
Despite recent political problems in Honduras, the telecommunications market has continued its expansion fueled by advances in mobile penetration and broadband Internet. In 2009, the telecommunications market generated $658m and will expand at a CAGR of 5.8% over the next five years. We anticipate that the rapid shift from fixed telephony to mobile will continue since the state-owned fixed operator will still struggle to add lines. Mobile data will expand at a CAGR of 23.2% to generate $285m by 2014. This Country Intelligence Report analyzes Honduras’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.
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