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Technology Stocks : Nuevo Grupo Iusacell (CEL) -- Ignore unavailable to you. Want to Upgrade?

To: Rob Preuss who wrote (68)	6/1/2000 3:14:00 PM
From: Nancy Haft	Read Replies (1) \| Respond to of 206

Thursday June 1 9:04 AM ET Mobile Internet Seen Taking Off Slowly in Mexico By Fiona Ortiz MEXICO CITY (Reuters) - Mexico's three major cellular phone companies are all launching wireless Internet services, but analysts say mobile Web services will catch on slowly and will not generate big revenues in the short term. Mexican cellphone use exploded in 1999, with subscriber growth of 128 percent to 7.6 million, but most of the clients buy blocks of ``prepaid'' calling minutes whereas analysts said the most likely wireless Internet customers are contract clients who are billed monthly. Given the small percentage of contract customers -- 20 to 25 percent in the biggest Mexican cellphone companies -- the impact of Internet services on the average revenues per user (ARPU), will be minimal in the first year, analysts said. ``In terms of impact it's very premature. I do not see a huge impact on ARPU or the companies,'' said Ronald Aitken, Latin America Telecommunications analyst for UBS Warburg. Analysts also said a relatively low number of cellphone users in Mexico have digital handsets equipped for Web surfing, and exchanging handsets will be expensive and slow. Companies Launch Mobile Internet Grupo Iusacell (NYSE:CEL - news), Mexico's No 2 cellular company, launched Web access services in March, and newer cellphone company Pegaso PCS followed in May. Telcel, the cellular division of phone giant Telefonos de Mexico (Telmex) (NYSE:TMX - news), plans to launch the service mid-year. Iusacell, 37.4-percent owned by and fully administered by U.S. company Bell Atlantic (NYSE:BEL - news), projects 2 million cellular subscribers by year's end, and expects 60,000 of them will be using Internet services. Iusacell officials expect Internet growth to boom in the next two years. ``We believe that easily 45 to 60 percent of our users, within two years will be using Internet over cell phones,'' said Carlos Peralta, majority shareholder of Iusacell. Telmex projects 100,000 Internet service users within the first year of the service, or by mid-2001. Telcel projects 10 million cellular telephone users by the end of 2000. Pegaso, 51 percent owned by Grupo Pegaso and Mexican media group Grupo Televisa (TLEVISACPO.MX) (NYSE:TV - news), and 28 percent by U.S. firm Leap Wireless International Inc. (NasdaqNM:LWIN - news), projects one million cellular subscribers by December. Pegaso spokeswoman Roberta Lopez said a ``big part'' of their clients would sign up for wireless Internet, but declined to provide a specific projection. She said 80 percent of Pegaso clients' phones were already equipped for Web browsing. Lopez said Pegaso briefly offered the service for free to all customers so that they could see that it was not ''elitist.'' She sees people from all walks of life using mobile Internet, or messaging such as soccer scores -- which would mean a charge per each goal reported to your personal telephone. Analysts See Slow Growth A March report by telecommunications analyst Luiz Carvalho of Morgan Stanley Dean Witter forecast an 8-12 percent increase in average revenues per user for Latin American cellular companies, over the next five years. In the same time period, the report said, the percentage of cellular users subscribing to data Internet services, in Latin America could go from almost zero now, to 19 percent. Cellphone companies will make money through advertising sent to Internet-connected cellphones, monthly service fees and commissions from mobile commerce, the report said. Aitken said he saw perhaps 50 percent of each company's contract customers opting for Web access service within the first six months they are offered. More could sign up for short messaging, which is more attractive to prepaid customers. He said only about 24 percent of Iusacell clients are contract customers, and about 20 percent of Telcel's. Although there are only about five personal computers per every 100 people in Mexico, analysts said it was not clear that that low computer penetration would boost the success of Internet via cellphones. They saw the limited Internet information on cellphones being used for short, mobile transactions through sites specially formatted for cellphones, not the prolonged browsing people do on PCs. One analyst, who asked not to be named, said mostly high-end, heavy users who already have PCs at home were likely to sign up for mobile Internet. The same analyst saw advertising to cellular Internet users adding up to $1 or $1.5 additional dollars in revenue per month but the expert added, ``It doesn't solve the problem ... of low revenues per user.''