Mobile telephone competition in Latin America could intensify

There is the potential for stronger competition between mobile telephone operators in Latin America as many users would willingly change their service provider if given incentives, a recent study of 4,911 customers showed.

“The study was done to observe the behavior of clients when they change mobile operators and understand why some do not change,” Cristobal Salazar, digital world director of GfK Consumer Choices said in an interview with Latin Business Daily.

The GfK study was carried out in Argentina, Brazil, Chile, Colombia, Mexico and Peru, which are some of the biggest markets of this region where about 100 million mobile telephone equipment are sold annually.

“We were able to find which attributes are more important. There are clients that even if you offer them a benefit they will not change. Not all mobile telephone clients in Latin America perceive their operators in the same way,” he said.

Across Latin American countries, only 20 percent or fewer of cell phone users have switched their service provider in the last 12 months. But when presented with various scenarios of improved offers, the percentage of people who would switch increases to between 35 and 59 percent, the study showed.

"When GfK presented the respondents with a number of scenarios of different improved packages, it found that the percentage of loyal users, who would not switch in any of the presented scenarios, is low (5 to 16 percent)," the report said. On the other hand, those who would switch ranged from a third to over half, it added.

Competition in the region is very intense between Mexico-based America Movil, which owns the brand Claro, and the other main player which is Movistar, of Spain´s Telefonica. The two operate across Latin America. There are other smaller regional players including Entel from Chile, which also operates in Peru.

The competition has become more intense after it recently became possible for customers to change operators and retain their numbers.

The study also showed differences per country. Only 9 percent of Argentina clients changed their operator within the last 12 months compared, with 20 percent in Colombia, according to the survey.

“The study showed that the client in Argentina does not change operators because of a belief that all operators will offer the same,” Salazar said. In Chile, at first glance it could seem that there is a high degree of loyalty but it is only regarding one operator.

According to industry sources, each of the two biggest operators have well over 100 million clients in the region in mobile telephone services.

“The market is very fast. It is constantly changing with new offers generated based on market conditions but not in particular country characteristics. There are tailored packages, like for example one for users between 14 and 25,” Salazar said.

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