BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications Sector of Argentina

Argentina has finally got its first 3G service, launched by Telecom Personal (TP) in late May/early June in the capital Buenos Aires. TP, which expects to have extended coverage to the cities of Córdoba and Rosario by YE07 and to all provincial capitals by 2009, is hoping to sign up 1mn 3G customers over the next two years. To this end it has contracted Sweden's Ericsson to build an HSPA-enabled 3G network, as well as to expand and upgrade its existing network with its Mobile Softswitch solution. Movistar, which has only recently launched a mobile banking service (TP first launched last September), is also expected to launch 3G services in 2007. The company has a more modest target of 1mn 3G handsets in operation by 2010, out of a total customer base of 15mn.

The mobile market could soon be seeing more competition, as regulator CNC has decided to allow Fecotel and Fecosur, Argentina's two co-operative associations, to bid for the 45.2MHz spectrum that is being returned by Movistar. The associations cater for lower-income families in rural areas, parts not currently served by the existing operators, and believe their joint customer base of 700,000 households means a potential mobile subscriber base of around 2mn. But both CTI Móvil and TP are also vying for the bandwidth, which they could use to support 3G services, and it remains to be seen whether the cooperative will have the financial resources to fend off the competition.

Argentina's mobile market continues to post growth rates that are quite remarkable given its already high penetration and the far slower rates seen in countries elsewhere in the region, such as Chile and Brazil. Yo- y growth rates slowed during 2006, but the market rebounded in Q107 with some 2.4mn net additions, growth of 42.2% y-o-y. However, this is in line with our expectation that growth rates will generally slow, punctuated by occasional quarters of stronger growth driven by prepaid services, and we are maintaining forecasts for the time being. Forecasts may be revised upwards later this year if it turns out the stronger than expected Q1 growth was not just an isolated incident but the start of another growth spurt. We currently anticipate penetration will near 93% by YE07 and reach around 115% in 2011.

There is healthy competition among Argentina's three main mobile operators, which between them account for nearly 98% of the market. Meanwhile, Nextel Argentina provides a good alternative for business customers in larger cities, and is planning investment of US$68mn this year to upgrade its existing network and expand its reach. However, it is not just in the mobile sector that there are signs of increased investment. Mexico's Telmex plans to invest around US$400mn annually in its Argentine mobile operator CTI Móvil and broadband internet projects, for an unspecified number of years. Further, VoIP provider CrossFone is planning to invest US$1.2mn in partnership with Redcotel for the production of alternative handsets for CDMA450 networks, ADSL 2+ modems and VoIP gateways, in addition to plans to launch triple play services in the capital Buenos Aires in Q407. Meanwhile, US-based Global Crossing has completed the acquisition of Impsat Fiber Networks for a total of US$347mn.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-Line

Table: Argentinean Telecoms Sector – Fixed-line – Historical Data & Forecasts

Internet

Table: Argentinean Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table: Argentinean Telecoms Sector – Mobiles – Historical Data & Forecasts

Chapter 3 - Macroeconomic Climate

Solid Growth, But Risks Remain

Growth To Remain Strong

Future Risks

Table: Economic Activity – Historical Data And Forecasts

Chapter 4 - Country Snapshot: Argentina Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 - Business Environment

Latin America

Argentina

Argentina Telecoms Industry – SWOT Analysis

Chapter 6 - Competitive Landscape

Market Overview

Competitor Analysis

Table: Key Players: Argentina Telecoms Sector

Table: Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data

Fixed-Line

Table: Argentinean Local Fixed-Line Market, Q206

Internet

Table: Argentinean Broadband Market, Q206

Mobile

Table: Argentina Wireless Market, Net Additions, 2005-6

Table: Argentina Wireless Market, Q206

Table: Argentina Wireless Market, Blended ARPU, 2005- 6

Industry Developments

Chapter 7 - Company Profiles

Telecom Argentina

Telefónica de Argentina (TASA)

Telefónica Comunicaciones Personal (TCP) – Movistar

Impsat Fiber Networks

CTI Móvil

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Latin America Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Latin American Telecommunications Sources

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BMI's Latin American Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: