New Report Highlights challenges to Argentina Telecom and Media Markets

From: Fast Market Research, Inc.
Published: Thu May 12 2016

The arrival of Mauricio Macri in November 2014 to the Argentinean presidency brings a more optimistic investment environment for the country in general and the telecom sector in particular. The introduction of a series of regulatory changes aimed at improving and modernizing the telecom sector will help to boost competition and growth in the market. We project that from 2015 to 2020, telecom and pay-TV services revenue will decline at a -5.1% CAGR in US dollar terms as a result of the progressive depreciation of the Argentinean peso over the forecast period. However, in local currency terms, double-digit inflation will push nominal revenue to expand at a CAGR of 12.1% annually, mainly supported by rising demand for fixed and mobile data services.

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Key Findings

* Argentina's telecom and pay-TV market generated $13.3bn in service revenue in 2015, up 2.9% from 2014 (20.0% in local currency), a modest expansion given the country's double-digit inflation rates. Mobile voice and data services were the main contributors to revenue, together accounting for 54.5% of the total in 2015, followed by the pay-TV segment, which accounted for 18.7% of total service revenue. With the EIU forecasting a strong devaluation for the Argentinean peso in 2016, most telecom segments will experience revenue declines in dollar terms during the forecast period.* President Mauricio Macri has introduced a set of important reforms aimed at improving and modernizing the telecom and media sectors through the creation of a regulatory framework more attuned to current digital convergence trends. In support of these changes, and one year after the approval of Argentina's telecom law (Argentina Digital), the government announced plans to issue a new telecom and media law to replace the "Argentina Digital Law" (Law 27.078), approved in December 2014, and the Media Law (Law 26.522), approved in 2009, which regulates the distribution of TV and radio licenses in Argentina.
* Telecom incumbents Telefonica/Movistar and Telecom Argentina/Personal were responsible for nearly 53% of total telecom and pay-TV services revenue in 2015. Their combined share has been declining progressively over the past few years, mostly the result of the rising contribution of cable operator Cablevision Fibertel, which competes with Telefonica and Telecom in the fixed broadband market. With the approval of the country's new telecom regulatory framework, we expect competition among these three players to intensify as Telefonica and Telecom enter the pay-TV market and as Cablevision Fibertel enters into the mobile telecom market, thanks to its recent acquisition of Nextel.
* Argentina closed 2015 with 63.5m active subscriptions and a penetration rate of 147.3%, well above the Latin American average (119.3%). We project that Argentina's mobile subscriber base will continue expanding during the 2015-2020 period (3.8% CAGR).

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