29 Jan 2009

Left-of-centre friends to the rescue of Ecuadorean cellco?

An item in Tuesday's Global Mobile Daily reminded me of comments I made back in August last year regarding one of the actors in Ecuador's mobile market, Alegro PCS, a state-owned CDMA MNO aligned with incumbent wireline operators Andinatel (which serves the Ecuadorean interior region) and Pacifictel (which offers services in the ten coastal provinces).

I noted back then that Alegro PCS was lagging far behind its two GSM rivals in terms of market share. At that time, I observed that according to Informa Telecoms & Media's World Cellular Information Service, Alegro's share of subscriptions shrank from 4.03% down to 3.00% in the period March 2008 to June 2008, losing further ground to Telefonica-backed Movistar Ecuador and América Móvil-owned Porta. Since then, the situation has worsened further for the state-backed cello, whose share of the market stood at just 1.31% by December last year, according to WCIS.

Tuesday's news concerned intervention which might save beleaguered Alegro from disappearing altogether. This comes in the form of reported offers for prospective strategic partnerships from Uruguay's Antel, and Venezuela's Movilnet, both of which are also owned by the Governments of their respective countries. For me, this is interesting in light of conversations I had in Caracas back in April 2008. I was visiting the Venezuelan capital as part of a tour intended to boost and diversify the participation at our Americas Com event, the latest iteration of which will take place at the end of June this year in Rio de Janeiro. In Caracas I got the impression that Movilnet and its parent company CANTV, entities renationalised by President Hugo Chávez's government in 2007, were looking hard at development partnerships with telcos in politically sympathetic states such as Cuba and, I think, Nicaragua. From what I heard in Caracas, it certainly sounded as though the Chávez Government intends to use CANTV and Movilnet to drive forward its social policies. I won't pretend to know as much about Ecuadorean politics as (the little) I have picked up regarding Venezuela. However, it is my understanding that Ecuador's Prsident Rafael Correa Delgado is a self-described "humanist and Christian of the left".
I am therefore not massively surprised to hear of Venezuela's state-owned telco coming to the aid of a similar company in what I assume to be a friendly country for President Chávez. Uruguay, too, is currently led by a left-leaning President, Tabaré Vázquez.

I came back from last April's trip with a slightly better understanding of life in South America, 75% of whose inhabitants now live under left-of-centre governments. I started to wonder about the links which might be forged bewtween these governments and how this would affect the region's telecoms landscape. The interest of Antel and Movilnet in coming to the rescue of troubled Alegro PCS looks like a development of this kind.

However, it might be the case that neither of these companies will become involved in the Ecuadorean MNO. Another interested party, according to the GMD story is Indonesia's Telekomunikasi Indonesia (Telkom).

We will know within 60 to 90 days, according to the report. Whichever company prevails, they will need to provide capital estimated at US$200 million to help improve operational efficiency at Alegro PCS.

This is all of interest to me because one of my final tasks here at Informa Telecoms & Media - before moving on to pastures new in March - is to pass on what I know about the Latin American telecoms scene to the colleagues gearing up for another successful Americas Com.