LatAm’s biggest players win spectrum in much-delayed auction

17 May 2004

The Uruguayan mobile duopoly is finally set to be broken following the sale of five new wireless licences to two of Latin America’s largest mobile groups. Regulator Unidad Reguladora de los Servicios de Comunicaciones (URSEC) beat its own expectations by raising USD30.12 million from the sale of three licences to Mexican-based América Móvil and two concessions to Spain’s Telefónica Móviles (TEM). Four of the licences were for 1900MHz spectrum, with TEM also obtaining a block in the 1800MHz frequency. One further licence was unsold.

Uruguay has long been a target for América Móvil as one of the few Latin American wireless markets where it does not have a presence. The group, owned by Mexican mogul Carlos Slim, has operations in Argentina, Brazil, Colombia, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua and the US, and will build out its Uruguayan network to complete a southern cone corridor between its Brazilian cellco Claro and Argentinian operator CTI Móvil.

TEM also has a foothold in the majority of the region’s biggest mobile markets and is set to significantly expand its presence following the completion of the purchase of ten operators from US-based BellSouth, including Uruguayan operator Movicom BellSouth. Movicom is currently the only competition to state-owned Ancel, from whom it leases its network. With the TEM-BellSouth deal due to be completed in stages during the third and fourth quarters of this year, Movicom is expected to be one of the first countries where TEM completes its take over. The Italian-based group has yet to confirm its strategy going forward, but its timing in changing the Movicom name over to the TEM brand is likely to prove pivotal in the operator’s development.

Above all, the licence sale represents a victory for URSEC, which has faced repeated delays in its attempts to introduce new players into the market. The regulator tried to auction new 2.5G and 3G spectrum without success on four separate occasions during 2001-02 and the Movicom-Ancel duopoly has remained unchallenged since the latter’s launch nearly ten years ago. The regulator has high hopes for the new entrants. Following years of under investment due to the knock-on effects of financial meltdown in neighbouring Argentina and Brazil, mobile penetration in the country actually fell between mid-2002 and mid-2003, though it has now returned to growth. URSEC hopes that the presence of two of the region’s biggest mobile players can help quicken the turnaround and push the market to new heights.

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