Telefonicawatch Report #52 Extract: Telefónica Latinoamérica: Regional developments
16 March 2011
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Extract from Telefonicawatch, report #52. Click through for: the Executive Brief from this month’s report; the Report Snapshot; or to contact us for more information about the full 60-page report, this industry standard monthly report service, and ongoing subscription access.
Telefónica Latinoamérica | Regional developments
Telefónica and MasterCard target financial services
Telefónica Group and financial services company MasterCard announced a new joint venture, which will offer mobile financial solutions to consumers in twelve Latin American countries where the telco has a presence.
87 million Movistar customers are to be targeted by the new entity in which the telco and card company will each hold a 50% stake. Offerings are to include bill payment, mobile airtime reload, money transfers, and retail purchases, among others. The venture is intended to integrate the perceived accessibility and convenience of mobile phones with financial solutions that will be compatible with existing electronic payment solutions.
The initiative with MasterCard is described as a global first, and Telefónica is now seen to be taking a more ambitious and focused approach, after a couple of years of merely tinkering around the edges of mobile financial services through local partnerships with banks.
It was stressed that the new service will be based on an open model to attempt to ensure barriers do not emerge between existing users of banking services and the ‘unbanked’, and amid Movistar and non-Movistar customers in the region.
The two companies also emphasised the potential social benefits of the new scheme in terms of raising financial inclusion and encouraging development of societies across the continent. It was noted that by 2014 mobile financial transactions will be worth an estimated $63bn (EUR46bn) in Latin America.
“ MasterCard’s commitment to foster financial inclusion across the globe makes the joint venture an exciting opportunity to provide accessible and affordable financial solutions to the millions of consumers in the Latin America region who have never been able to enjoy the benefits of electronic payments. This initiative puts us at the forefront of mobile payments in the region and arms us with the right artillery to strengthen our war on cash. ”
– Richard Hartzell, President, MasterCard Latin America and Caribbean.“ By offering mobile financial solutions, we are fully responding to the demands of the population in Latin America that trusts in their mobile phone to conduct financial operations. This joint venture places Telefónica in a solid position to lead the development of mobile financial solutions in Latin America. ”
– Joaquin Mata, Global Head of Financial Services for Telefónica.
Brazil excluded from partnership plans?
The agreement does not appear to relate to Brazil, but only operations currently trading under the Movistar name. However, towards the end of 2010, MasterCard was reported to be partnering Redecard, a Brazilian credit card company, and Vivo, on a mobile payments processing platform. It is not clear whether the reported announcement refers to the ongoing development of a partnership between Vivo and MasterCard, announced towards the end of 2009 (Telefónicawatch, 2009.10), or was recycled news.
[Further reference: MasterCard and Telefónica create a joint venture to offer mobile financial solutions in Latin America -- MasterCard, 26 January 2011; MasterCard launches mobile payments gateway with Redecard, Vivo -- BN Americas, 3 December 2010.]
Telefónica wins Costa Rica licence
Telefónica Latinoamérica was one of only two bidders for a mobile licence in an auction held in Costa Rica.
Three licences had been made available, with a minimum offer price of $70m (EUR51m), but only Telefónica and rival América Móvil expressed interest in entering the market. Telefónica is said to have secured the most desirable tranche of spectrum, having bid $95m for a licence for the available 850MHz bandwidth, beating América Móvil’s $77m. América Móvil secured 1800MHz band spectrum with an offer of $75m.
Licences are expected to be issued in February 2011, with services anticipated to launch during September 2011. A resolution approving the issue of the Telefónica licence was issued in mid January 2011, with a ten day window to object to its finalisation.
The new Telefónica business is likely to be part of the “Challenger” unit within Latinoamérica led by Jaime Smith (Telefónicawatch #50), which includes operating companies in Mexico, Venezuela, and other countries in Central America.
The two new entrants will be competing with state owned operator ICE in the Costa Rican mobile market.
A further auction could be conducted by regulator SUTEL to sell the spectrum not bid for during the December 2010 process. Operators Cable & Wireless Communications and Digicel, which had been expected to bid for a licence, are said to have been in attendance at the opening bidding presentation phase of the Costa Rican auction, but declined to submit offers.
[Further reference: America Movil, Telefónica bid for Costa Rica mobile licences -- Wireless Federation, 15 December 2010; SUTEL could potentially hold second spectrum auction -- BN Americas, 16 December 2010; Surprise lack of interest in mobile auction -- Telecommunications Insights, 1 January 2011; Telefónica pips America Movil in Costa Rica auction -- Total Telecom, 11 January 2011; Costa Rican President approves spectrum awards to America Movil, Telefónica -- Global Insight, 20 January 2011.]
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