Latin American MVNO clients seen reaching 40mn in 5 years

By Pedro Ozores / Business News Americas

Mobile virtual network operators (MVNOs) are expected to reach 30mn-40mn clients in Latin America in five years, according to Brazilian telecoms operator Vivo's division manager, Reginaldo Vidal Canova.

But for such numbers to be attainable, regulators across the region need to facilitate legal and regulatory elements to enable the model's development. Potential MVNOs, in turn, need to have a clear business model outlined and a strategic market niche to focus on, Canova added.

The executive said that Vivo has a department specifically dedicated to the MVNO issue and that the company "firmly believes in the model's success in the country."

He also said MVNO's are strategic for Vivo's owner, Spanish telco Telefónica (NYSE: TEF) - in its home market and Argentina as well.

Canova took part in a panel on MVNOs during TM Forum's Latin America Summit 2012 in São Paulo. The Telefónica group has some 30 MVNO partnerships worldwide.

MARKETING TOOL

According to Datora Telecom's technology VP, Daniel Fuchs, the MVNO model has great niche opportunities for interested companies in Latin America, as operators across the region are struggling to serve a great and increasing number of clients at the same time.

But he believes that for it to succeed, the MVNO should be seen above all as a marketing tool and a complementary revenue source, particularly in areas such as services billing and M2M services.

Datora is partnering in Brazil with Porto Seguro Telecom, the MVNO branch created by local insurance group Porto Seguro. The company also just recently associated with Virgin Mobile Latin America (VMLA). In both cases, the company acts as a MVNO aggregator (or MVNE, mobile virtual network enabler).

According to Fuchs, the next step for VMLA's MVNO is to choose a mobile operator as network partner and to select a platform. In Porto Seguro Telecom's case, the MVNO has selected TIM as the mobile operator partner and Ericsson as the platform provider.

Virgin is launching MVNO operations in several countries across Latin America, with a plan to invest US$300mn in the region. The company expects to reach US$1bn in regional revenues by 2016.

VMLA is scheduled to launch in Chile in March, followed by Colombia in the second half of 2012, when it also expects to receive regulatory approval in Mexico and Peru.