Argentina Telecommunications Report Q2 2010

End-of-year figures for Argentina were unavailable at the time of writing, but BMI maintains that the market continued to grow well throughout the final quarter of the year. Argentina continues to buck the trend of a slowdown in growth seen across the region. While the rate of expansion has declined, growth remains robust, seeing Argentina sail past 100% penetration and operators continue to add subscribers. Operators increasingly focus on getting more value from subscribers, adding new services and content to their product offerings. This has also created opportunities for high-end handset manufacturers to offer the latest models in the country. Demand for on-the-go mobile services continues to increase with mobile broadband proving very popular. With good download speeds available over mobile broadband networks, this technology looks set to compete with fixed broadband services for subscribers, particularly in youth markets.
Broadband is now the major area of growth in Argentina's telecoms market, with expansion estimated to have been 20% in 2009. While about half the rate seen in 2008, this is still a strong growth rate, particularly given Argentina's economic woes, which could have had a much stronger negative impact on the market's development. However, Argentina's relatively low broadband penetration rate has enabled growth to remain strong. The advances in offering triple-play services, including Telefónica de Argentina and Telecom Argentina's agreements with DirecTV to provide joint billing services, have helped keep interest in broadband services high.
Cable operators are also keeping on their toes by offering new products and expanding the reach of their networks. Supercanal aims to expand its network to an additional seven cities throughout 2010 as well as boost its digital TV options. The high growth in pay-TV has helped encourage greater take-up, with an estimated 57.6% of households having pay-TV services.
Meanwhile, the fixed-line market teeters on the edge of decline, although it has held up for several quarters. The strong rivalry between Telefónica de Argentina and Telecom Argentina has kept interest high, with the latter continuing to add new subscribers, albeit at a slow rate. While BMI does not believe this to be an endless trend, we do not see a significant decline in fixed-line connections over our five-year forecast period.
The resolution of ownership at Telecom Argentina should do much to boost this operator's position, as it will be able to focus on its operations. Interest in acquiring Telecom Italia's 50% stake in one of Telecom Argentina's shareholders has been high, attracting several locally owned businesses.