BUENOS AIRES, Argentina-Foreign investment in South America’s Southern Cone telecommunications sector has increased during the past decade thanks to new globalization, privatization and liberalization politics in the region. International investors, including a heavy U.S. contingent, have increased their presence in the region most recently through new personal communications services licenses and acquisitions.
BellSouth
The international company with the most presence in the Southern Cone countries-which include Argentina, Bolivia, Chile, Paraguay and Uruguay-is BellSouth. It holds 65 percent of Movicom BellSouth Argentina, 100 percent of BellSouth Chile and 46 percent of Movicom BellSouth Uruguay. Together these carriers have 1.7 million users.
Of the three businesses, the one that generates the most revenue and has the largest amount of clients is Movicom BellSouth Argentina, with $820 million in 1999 and 1.25 million users.
BellSouth arrived in Argentina in 1989 and was the first company to offer cellular service. During the succeeding 10 years, BellSouth operated exclusively in the Metropolitan Area of Buenos Aires (AMBA). However, it soon will begin to offer services all over the country as last year the company acquired three PCS licenses for nearly $300 million.
“Argentina is the first country in the region in which BellSouth has PCS,” said Mauricio Wior, vice president of BellSouth for Latin America.
Since Dec. 1, BellSouth has offered services throughout Chile, but it does not offer PCS. Previously, the company was present only in Santiago, Vina and Valparaiso. That changed in early 1999 when BellSouth purchased Entel’s cellular telephony license for approximately $90 million.
The operation in Uruguay is the smallest, probably because Uruguay has an overall population of just 5 million people; Movicom BellSouth has 125,000 users there.
BellSouth said in early February it may issue a tracking stock for its Latin American operations by late April or early May. Overall, BellSouth’s Latin American business comprises properties in 10 countries.
Leap Wireless
Leap Wireless International’s Chilean branch, Smartcom PCS, closed its first year and a half of service with 78,000 clients. Early in 1999, Leap startled the market with the purchase of shares from its associate Telex-Chile to increase its participation in Chilesat PCS from 50 percent to 100 percent at a cost of $50 million. Later that year Leap decided to change Chilesat PCS’s name to Smartcom PCS.
Harvey White, president and general manager of Leap, declared the launch of the new name was “the culmination of the first stage of the restructuring process and the Leap investment plan. The objective is to provide a mobile wireless telephony service, which is easy to purchase, easy to use and easy to pay.”
Leap was the first in Chile to launch national long-distance calls at local call tariffs and invoicing on a per-second basis.
Millicom
Luxembourg-based Millicom International Cellular is present in Paraguay and Bolivia through the trademark Telecel. The company currently has approximately 500,000 users.
Millicom was the first to offer cellular telephony in Paraguay in 1992, and it holds the distinction of being the only company in the region close to surpassing its state-owned competitor. Telecel has almost the same quantity of clients as Antelco, the monopoly fixed telephony operator.
Miguel Guanes, assistant manager of marketing for Telecel Paraguay, commented, “We’re competing with fixed telephony because activating a cellular line is much more accessible than an Antelco line.”
The state operator charges $600 per line compared with Telecel’s $20 per line.
Something similar is occurring in Bolivia, where fixed telephony is offered under monopoly conditions by regional cooperatives at a cost of $1,500 per line. Toward the end of 2000, however, Telecel and cellular competitor Entel together are projected to reach the same quantity of users as fixed telephony. The companies said their total combined subscribers should reach almost 700,000 by the end of 2000.
In June 1999, Millicom launched PCS service in Paraguay, under the brand name Telecel Next.
GTE
The only country GTE can be found in within the Southern Cone is Argentina, through CTI Movil. It began to offer cellular services in the country’s interior in 1994, reaching 900,000 clients in December 1999.
GTE owns 58 percent of CTI and is associated with one of the main multimedia groups in the country, Clarin. Together they will also offer PCS in the same region where they currently provide traditional cellular services.
However, GTE acted alone when it purchased the PCS license for the Metropolitan Area of Buenos Aires, with a price tag of $301 million.
Maximiliano von Keselstatt, regulatory frame director for CTI Movil, said that “although GTE is developing the network (in AMBA), operation in the AMBA will be integrated by both GTE and CTI, forming a single commercial operation.”
PCS service in AMBA will be launched during the first half of the year, and the company’s penetration within the market likely will be boosted because it is the only company that charges national long-distance phone calls at local-call tariffs. CTI expects to launch PCS in its other service areas in the second half of the year.
GTE’s Argentine branch is important for the company, demonstrated by the fact that CTI Movil President Eduardo Menasce will leave his current position at the end of March. He’s moving to New York to become president of Enterprise Solutions, a company formed as a result of the merger between GTE and Bell Atlantic.
With investments close to $3 billion, BellSouth, Leap, Millicom and GTE are the leaders of the pack as cellular telephony providers in Latin America’s Southern Cone region. The next step is their transformation into full-service providers. BellSouth already has public stated its intentions to become a full-service provider in Latin America.
