Grupo Clarín breaks up its operating divisions in line with government orders
Argentina has one of the more advanced telecom infrastructures in Latin America, with a large number of companies licensed to provide services. Telecom revenue is expected to have reached more than $17.8 billion in 2013. Mobile revenue accounts for more than two thirds of the total, and this proportion continues to rise at the expense of fixed-line sales.
Telefónica Argentina and Telecom Argentina are the largest telcos in terms of subscribers and revenue, followed by Claro and Grupo Clarín.
The country’s regulatory framework encourages competition and supports smaller telecom players. Argentina has adopted a single licence system (Licencia Única), which telcos must obtain regardless of the services they provide. Operators must list in their licence applications which services they wish to offer, but can at any time register for additional ones. However, broadband competition is weak, and the wholesale market is poorly regulated.
Argentina’s fixed-line teledensity is the fourth highest in South America after Uruguay, Chile, and Brazil. As in other countries, fixed-to-mobile substitution has adversely affected the fixed-line market, leading to lower revenue while teledensity has shrunk by 2.7 percentage points since peaking at 24.5% in 2005.
The local fixed-line market is dominated by Telecom and Telefónica Argentina. Some 400 smaller telcos, mostly cooperatives, are also active, as well as a few cable TV companies which provide fixed telephony over their networks as part of bundled service offerings. While long distance services are highly competitive, in the local telephony sector, despite the large number of operators, meaningful competition has yet to develop. Telefónica Argentina and Telecom own respectively 52% and 45% of the country’s fixed lines in service.
Unlike other countries where triple play has helped boost the flagging fixed-line sector, the only company that could have made a difference – Grupo Clarín – has not been allowed to offer telephony services.
Although Argentina’s broadband penetration is the third highest in Latin America, after Uruguay and Chile, economic and political difficulties during the last decade have impacted on sector investments, with the result that average download speeds, at about 5.5Mb/s, are relatively low for the region. The average speed ranks Argentina 120th of 190 countries.
To boost fixed broadband uptake, further regulatory measures are needed to promote competition. Telefónica Argentina and Telecom dominate the DSL market, offering similar services and together controlling about 68% of all broadband connections. Competition from Grupo Clarín, via its cable network, has been complicated by disputes between the company and government, which obliged Grupo Clarín to separate its operations, including its broadband division Cablevisión (providing services branded as FiberTel) into separate entities as part of new media legislation introduced in 2013.
A national connectivity plan, dubbed ‘Argentina Conectada’ and launched in late 2010, involves the deployment of broadband services and free-to-air digital TV to underserved parts of the country. The plan, to be completed by the end of 2015, is being undertaken by the state-owned satellite company Arsat.
Argentina’s pay TV market is the most mature in Latin America. The country has one of the highest pay TV penetration rates in the region, with about two-thirds of homes subscribing to services. Pay TV households are evenly distributed, with penetration in the major cities only slightly higher than in the rest of the country.
Grupo Clarín’s Cablevisión is the country’s leading pay TV operator with about 36% of the market; DirecTV is the second largest player, followed by Supercanal, Telecentro, and Red Intercable. About a quarter of the market is shared among small local companies and cooperatives.
Argentina also has one of the most dynamic mobile markets in the region, with the third largest number of subscribers after Brazil and Mexico. Three mobile operators compete and a small number of other players, with América Móvil’s Claro the market leader, followed by Telecom Personal (the mobile unit of Telecom Argentina) and Telefónica’s Movistar. Argentina’s smartphone penetration is relatively high for the region, though it continues to be held back by the high cost of devices.
Data in this report is the latest available at the time of preparation and may not be for the current year
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Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
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