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Intense Competition Drives Growth in the Argentinean Market

This research service covers the Argentinean total telecommunications market and examines key drivers and restraints for growth, market trends, and forecasts. The total market is composed of: fixed telephony services, mobile telephony services, fixed broadband services, pay TV services, and fixed VoIP services. In addition, revenue segmentation by geography is provided considering the concession areas of the regulatory authority CNC, as well as customer type segmentation considering residential, small and medium businesses, and corporate customers. An in-depth analysis of the competitive landscape, including operator market shares and profiles, is also provided. The base year is 2012, and forecasts run through 2018.

Executive Summary

• In terms of revenue, the Argentinean telecommunications services market reached $X billion in 2012, with a decreasing trend at X%.
• In terms of lines in service (LIS), the Argentinean telecommunications services market grew X% in 2012, reaching X million.
• The main trends impacting the market are companies investing to expand mobile networks and offering bundles with fixed and mobile telephony, broadband, and pay TV services.
• The main drivers for growth are bundled offers, intensifying competition, and competitors’ investments to expand coverage.
• Important drivers in the mobile services segment are the implementation and expansion of 3G networks. However, spectrum limitations, lack of competition in remote areas, number portability, and market saturation are relevant restraints.
• Among main regulatory issues, the restriction for telecommunications service providers to enter the pay TV markets directly also restrains market competition.
• In order to circumvent this restriction, Telecom and Telefonica have forged alliances with DIRECTV and launched Video on Demand (VoD) offers.
• Lack of spectrum is a major restriction for mobile carriers. This restriction is forcing additional investments in order to cope with increasing demand.
• Meanwhile, state-owned ARSAT announced plans to act as a wholesaler with regards to the X% of the spectrum it holds, but no further implementations have followed this statement.
• The pay TV segment and media as a whole are anxiously awaiting a definition concerning the new Media Law, which is being analyzed by the Supreme Court.
• The competitive structure of the market is consolidating into six major groups: Telefónica de Argentina S.A., Telecom, Claro, Cablevision/Fibertel, DIRECTV, and Nextel, totaling close to X% of the market.
• There are also relevant niche participants with competitive offerings, especially for the attractive business segment. In addition, Nextel is up for sale, since NII Holdings, its mother company, announced plans to focus on Brazil and Mexico.
• The X largest groups—Telefónica de Argentina S.A., Telecom Italia, and Claro—have a strong presence in most residential, small and medium business (SMB), and corporate segments.

CEO’s Perspective

1. Operators offering bundles and investing in coverage expansion resulted in a market increase.
2. 3G services that are driving mobile service growth and infrastructure investments are the main focus of operators.
3. 26.522 Media Law continues to create uncertainty for the main operators in Argentina.
4. DTH is the main technology driving growth in pay TV.
5. The SMB segment is likely to drive the growth of data communications services and fixed-VoIP services.

Market Overview—Definitions

Revenue: Revenue presented in this research service refers to net revenue obtained either directly from service providers’ financial reports or from primary interviews with service providers conducted while gathering information.

Exchange Rates: The US dollar is the official currency used for this study when measuring revenue.

Forecasts: Revenue, LIS, and number of subscribers, among other metrics, are given from base year to the end of the forecast period, or 2012 through 2018. Revenue forecasts use base year 2012 exchange rates.

Research Methodology: Frost & Sullivan conducted primary interviews with key executives from different areas—such as marketing, strategic planning, market intelligence, and product and services—that work for the most important service providers in Argentina. Extensive secondary research was conducted using Frost & Sullivan’s internal database and other public information sources, such as financial reports, industry associations, statistic agencies, and specialized Web sites.

Geographic Segmentation: The revenue breakdown presented in this research study follows the geographic segmentation used for the fixed telephony concession areas of the Argentinean national telecommunications regulator, the National Commission of Communications (CNC). This segmentation is widely known in the Argentinean market, and interviewees were aware of such breakdowns during interviews. Segmentation is as follows:
• North: Telecom fixed telephony concession area is comprised of the provinces of Northern Argentina and part of the center provinces.
• South: The telefonica fixed telephony concession area is comprised of the provinces of Southern Argentina and part of the center provinces.
• AMBA: The Metropolitan area or Buenos Aires. This region includes the Federal District. CNC used an even balance of the gross domestic product (GDP) within these 2 concession areas as the criteria for regional divisions when privatizing this sector in 1990. In 2000, the exclusive period was finished. Argentina has a new regulatory framework with incumbent prehistoric operators, such us Telefonica and Telecom, as well as independent operators and incoming operators.

Total Telecommunications Services Market: Geographic Segmentation of AMBA, Argentina, 2012

North AMBA (Metropolitan Area of Buenos Aires)
El Talar – Don Torcuato – San Isidro – Olivos - Boulogne – Ombu – Churruca – Villa Ballester – Caseros – Tigre – San Fernando – Martinez – Vicente Lopez – Munro – José Leon Suarez – Palomar – San Martin – Villa Santos Lugares

North CABA (City of Buenos Aires)
Villa Devoto – Luis Valle – Coghlan – Belgrano – Paternal – Golf – Costanera – Retiro – Pueyrredon – Gral. Urquiza –Nuñez – Alavez Thomas – Darwin – Palermo – Aguero

South AMBA
Los Polvorines – San Miguel – Bella Vista – Trujuy – Leloir –Hurlingam – Curie – Ituzaingo – Moron –Haedo – Ramos Mejia –Ciudadela – San Justo – Tablada – Mercado Ciudad Gral. Guemes – Isidro Casanova – Laferrere – Aeropuerto – Tristan – Suarez – Ezeiza – Monte Grande – Villa Cararza – Lavallol –Burzaco – Longchamps – Adrogue – Villa Calzada – Lomas de Zamora –Banfield – Lanus – Piñeyro – Aavellaneda – Sarandi – Monte Chingolo – Wilde – Bernal – Francisco Solano – Qulmes – Berazategui – Florencio Varela – Ranelagh

South CABA
Liniers – Alvarez Jonte – Nueva Chicago – Rodo – Floresta – Culpina – Flores – Villa lugano – Parque Almirante Brown – Corrales – Parral – Caballito – Vernet – Lezica – Mitre – Loria – Cuyo – Clinicas – Juncal – Suipacha – Republica – Avenida – Rivadavia – Talcahuano – Inclan – Buen Orden – Piedras – Barracas

Market Segmentation: Revenue presented in this research study also breaks down in a market segmentation commonly defined in Frost & Sullivan’s Latin America studies, and this is widely known in the Argentinean market; interviewees were aware of such breakdowns during interviews. This segmentation is as follows:
• Residential Segment: The residential segment consists of clients that are so-called “personas físicas” in Argentina. In other words, the residential segment consists of non-business clients.
• SMB Segment: The SMB segment consists of business clients with X to X employees. Business institutions are so-called “personas jurídicas” in Argentina.
• Corporate Segment: The corporate segment consists of business clients with more than X employees. Business institutions are so-called “personas jurídicas” in Argentina.

Market Penetration Data: Penetration data is based on services penetration within the population as well as the number of households and businesses in Argentina. Such population, household, and business data are based on official 2010 Argentinean government statistics provided by the CNC.

Key Questions This Study Will Answer

Is the market growing? How long will it continue to grow and at what rate?
Which telecommunications services present the highest growth opportunities from 2012 to 2018?
What are the trends in the market regarding technology, competition, consumer demands, and the economy?
What are the most important regulatory issues impacting telecommunications services in Argentina?
What are the main industry challenges that operators will face until 2018?
How are revenue and LIS divided among the residential, SMB, and corporate subsegments?

Table Of Contents

Analysis of the Argentinean Total Telecommunications Services Market
Table Of Contents

1. Executive Summary
2. Market Overview
3. Total Telecommunications Services Market
o Forecasts and Trends
o Market Share and Competitive Analysis
4. Fixed Telephony Services Segment
5. Mobile Telephony Services Segment
6. Fixed Broadband Services Segment
7. Pay TV Services Segment
8. Data Communications Services Segment
9. Fixed VoIP Services Segment
10. The Last Word
11. Appendix

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