Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
During the fourth quarter of 2011, data revenues of Argentinean operator Personal represented 49.8% of service revenue, reaching $363.2 million. Informa estimates that the operator data average revenue per user topped $6.73 in the period, while voice ARPU accounted for $6.40. This is a milestone for the region as Personal is the first operator to see data ARPU surpass voice ARPU.
Personal data ARPU is in fact the highest in Latin America. Personal’s large and competitive portfolio of value-added services puts it in a strong market position. Personal has its own branded e-mail, Facebook SIM cards, instant messaging, and social network services. Voice is becoming a commodity, while data offers operators the opportunity to differentiate services.
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However, only having a larger portfolio of data services does not generate revenues as it is also essential to offer affordable data plans. The success of Personal can be attributed to the combination of an attractive VAS portfolio and a variety of data plans. The operator has data plans for all users, starting from 25 cents per day for prepaid handset users. Personal also focuses on the high-value segment providing exclusive and premium handsets, data plans and customer services under the Personal “Black” brand.
In terms of data revenues, Brazilian mobile operator Vivo remains at the top of the list, reporting $743.3 million during the fourth quarter, of which 48.4% comes from mobile broadband services and 35.5% from messaging.
In Brazil, fixed-broadband household penetration is very low, accounting for only 28.3% of the market at the end of 2011. As a consequence, mobile technology represents an unique way to access broadband services in many areas. Vivo is keen to exploit this opportunity. Since 2010, Vivo has been investing heavily in 3G network expansion, and by the end of 2011, 3G serivces reached 2,516 towns across the country. The results of such strategy can be seen in its data services figures. In 2011, Vivo revenues increased 32.7%, while data ARPU was up 16.3%, reaching $3.06 per customers in the period.
Falling ARPU is a consequence of increasing competition and high mobile services penetration. However, when we split ARPU into voice and data, it is clear that only voice ARPU is decreasing, while data ARPU is growing. This trend should not change in the short term as the importance of mobility is increasing.
Smartphones and tablets play a key role in data revenues growth, both in the consumer and enterprise market. Although machine-to-machine revenues are still not representative, it is expected that they will bring a significant contribution to data revenues in the near future, as enterprises are increasingly keen to support the mobility of their workforce and to offer M2M-based services.
Undoubtedly, the increasing demand for data services not only generates revenues but also data traffic, which can compromise mobile network quality. Operators must upgrade their networks according to data demands to maintain quality of service and keep customers satisfied. Irrespectively of how attractive a data services portfolio can be, if operators are not able to offer reliable services, they are unlikely to continue growing their data revenues.
Marceli Passoni is research analyst at Informa Telecoms & Media.
