Telex puts mobile on expansion agenda in Chile
latintrade.com
09/16/2002 - Source: BNamericas
Chilean long distance operator Telex-Chile may consider providing mobile telephony services, despite not having a license for mobile spectrum, the company's chairman Norberto Morita hinted at a local business conference. "We are interested in all [segments of] the telecommunications sector. We have demonstrated interest in fixed line telephony, but we can also take an interest in the mobile area," Chilean press quoted Morita as saying. Independent consultant Jose Otero told BNamericas there are three ways that Telex could become a mobile operator, though the first option - to acquire spectrum via an auction - no longer exists in Chile. The second option would be to purchase spectrum from one of the existing mobile operators, while the third and most likely option would be for Telex to rent spectrum from one of the existing operators, thereby becoming an MVNO (Mobile Virtual Network Operator).
Chile's four mobile operators are Entel PCS, Telefonica Movil, BellSouth Chile and Smartcom PCS. Entel owns 60MHz of the country's mobile (cellular plus PCS) spectrum, while Telefonica controls 45MHz, BellSouth 35MHz and Smartcom 30MHz. Smartcom and Entel each have 30MHz of PCS spectrum, followed by Telefonica with 20MHz and BellSouth with 10MHz. Otero said the move to mobile would make sense for Telex, a company which has actively voiced intentions to seek out new growth opportunities since being taken over early in the year by the US-based investment firm Southern Cross. "We have a very aggressive growth plan," Morita said, adding, "Improving profitability in Telex is going to come through new businesses and growth, not through a reduction of costs or personnel." According to Otero, BellSouth and Smartcom, Chile's third and fourth largest operators, respectively, would be the most likely candidates to loan out their spectrum to an MVNO. Trends in other countries have shown that MVNOs usually strike their agreements with market laggers that need to diversify their revenue streams and make use of unoccupied spectrum, he noted. If it opts for the MVNO strategy Telex would have to decide whether to rent spectrum and leave network management to the existing operator, or to take management and deployment issues into its own hands. The hands-off option would probably make more sense for Telex, since it has no experience in mobile telecommunications, Otero said.
Another important factor for Telex to consider would be the host company's technology. GSM and CDMA handsets include SIM cards, but their TDMA counterparts do not, Otero said. A SIM card gives the operator access to all the information of its clients, which, for an MVNO, is a very important asset, he said. Another important point with MVNOs is that they rarely approach the market in the same way as their license-holding counterparts. Rather than go for the mass market, the key to profitability for an MVNO is to successfully target a niche market, leveraging value-added services, Otero said. For Telex, Otero said that niche market would be Chile's corporate sector. Indeed, the company has already stated its intentions of going after the corporate data segment. Telex CEO Alejandro Rojas told local paper El Diario in a recent interview that Telex would leverage its advanced IP-based fiber optic network to provide voice, data, Internet and long distance services to businesses. Telex could probably attract clients by offering such value added services as interconnecting mobile phones to corporate intranets, or by taking advantage of its long distance network to provide discounted international roaming fees, Otero said. Telex-Chile is 95.9% owned by Redes Opticas, a holding company created by Southern Cross and its partner GE Capital. Otero recently published an article in the magazine Frequencia, entitled, "The uncertain future of MVNOs in Latin America." |
