The battle for mobile customers in Latin America is hotting up as 319 million Latin Americans or 56% of the population already own a mobile phone. Telefonica of Spain and America Movil controlled by Mexican businessman Carlos Slim are going head-to-head to expand their market-share in South America and are increasingly targeting the “bottom of the pyramid.”
The Race for Numero Uno in Latin Wireless (Businessweek November 27, 2006):
More than 80% of Brazil’s mobile-telephone customers use prepaid service—buying cards to recharge their phones—rather than signing monthly contracts. América Móvil’s average client uses just 71 minutes of airtime each month, spending around $12.50. Although such revenue can add up, signing up all those customers has an impact on profits as well. “The two big operators have had to become more competitive in pricing to win customers,” he says. “They’re trying to build economies of scale to decrease their costs, but even as they’re doing that, their revenue per subscriber is decreasing.”
As América Móvil and Telefónica battle it out, the big winners are Latin American consumers, who have seen the cost of handsets and airtime drop significantly over the past five years. Wireless technology has made it possible for consumers to skip waiting lists for fixed-line installation and go directly to mobile or fixed-wireless phones. “Mobile telephones were considered a luxury, but today, the ice cream salesman on the street has his own cellular phone,” says Telefónica’s Zaldivar.