Draft of my presentation for the IBC Mobile VAS Forum 2009, Miami FL June 9-10 2009

1. Mobile VAS Forum 2009
Finding
Opportunities
In A Year Of
Economic
Uncertainty
Raúl Castañón

2. Agenda
o Market segmentation analysis by ARPU and usage behavior in
Latin America
o Can operators generate more revenue from the low ARPU
segment?
o Understanding subscriber usage and opportunities of the low
ARPU segment
o How to adapt VAS offering using market segmentation and
usage trends

3. Expected growth rate for 2009 for the Telecom equipment
market, compared to the year before (IDATE).

4. Expected negative growth rate for 2009 for mobile phone shipments,
compared to the year before (IDC).

5. Nortel will cut 3,200 positions on top of previous cuts, Nokia will cut
another 1,700 jobs and Microsoft will cut 5% of its workforce over the
next 18 months.

6. LATAM to grow at slowest pace in seven years
LATINFOCUS expects Latin America to grow at the slowest pace in
seven years. Industry analysts estimate wireless subscriber growth in
2009 to be between 5% (Yankee Group) and 8% (Moody's), down from
double digit growth in previous years.

7. Operators face
delayed
investments,
reduced CAPEX
and slower
growth rates.
Pricing might be an option to grab new subscribers but in a year of economic
hardship and with subscriber growth coming mainly from lower ARPU segments,
price discounts can only get them so far.

8. Operators
will limit
CAPEX to
maintain
healthy cash
flows.
Since the region is still expected to grow in total number of
subscribers, expanding capacity of existing network infrastructure will
be their top priority.

9. Despite the
downturn, some
operators still
expect 10%
subscriber
growth for 2009.
With mobile penetration reaching saturation in major markets and
slower growth rates this year, the only way they can achieve this is via
churn from other operators.

10. Even as subscribers
limit spending
there are
opportunities
to generate
revenue,.
Opportunities can come from increased MOU or SMS, introducing SMS
based services in countries with low voice usage or new data services
where usage and ARPU show potential for rapid adoption.

11. Opportunity Map Latin America
The chart above shows three key factors: (x) Average Monthly
SMS; (y) MOU - Minutes of Usage; and ARPU - Monthly Average
Revenue per User (bubble size) for the six largest markets in the
region; Brazil, Mexico, Chile, Colombia, Venezuela and Argentina.

12. Opportunities
can also be
found in
network
productivity
improvement.
Some of these opportunities can be positioned as new services; this
year operators will have limited resources but they cannot afford to
miss opportunities to maintain or improve their position in the market.

13. There are still
opportunities
to generate
more
revenue
from voice.
Call Completion practices in Latin America focus on “B” party solutions:
Voice Mail and Missed Call Alert. Slam down at voice mail or regulatory
prompt in Latin America is ~ 70% - 80%.

14. Heavy Users
1%
Mass Users
14% Non Users
51%
Light Users
34%
Voice Mail Revenue Generation
Approximately 50% of voice mail subscribers generate no revenue
but do generate significant traffic in the network.
This does not include an additional ~30% of subscribers that are
not provisioned in the voicemail system.

15. 70%
60%
50%
40%
30%
20%
10%
0%
A B C D E F G
SUBS % TOTAL Ch SOU %
Voice Mail Revenue Generation
Approximately 50% of voice mail subscribers generate no revenue
but do generate significant traffic in the network.
This does not include subscribers that are not provisioned in the
voicemail system.

16. Can operators
generate more
revenue from
the low ARPU
segment?
This segment includes a majority of young, prepaid subscribers that
generate traffic but no significant revenue. Most calls end in slam
down with no billable SOU.

17. Latin America Mobile Market
Doing business in Latin America is becoming
increasingly challenging; the region is incredibly
complex and major players have consolidated
their presence and gained negotiating power.
Understanding the market and the specific
needs of each country can help identify
opportunities in Latin America, a market that is
complex, fascinating and full of potential.

18. Raul Castanon
http://telcolatam.blogspot.com/
http://www.linkedin.com/in/rcastanon