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Americas Perspective Vol. 7, Issue 8Product Type: Market Research ReportPublished by: Pyramid Research Published: April 2007 Product Code: R8-557 Description Over the past couple of months, Telmex acquired five cable operators in Colombia. Rumors continue to circulate over two more potential acquisitions, in addition to Amnet’s assets in Central America. Pyramid Research expects Telmex to continue acquiring cable operators throughout Latin America in order to strengthen its position in the residential segment. Additionally, we expect the company to base its strategy and commercial offerings on Net Serviços, the largest cable operator in Brazil and a Telmex subsidiary since 2003. Net offers Pay TV services including digital cable (Net Digital), broadband access (Net Virtua), and voice telephony (Net Fone) services. The company, which targets the middle-to-high income segments (A&B) in urban areas, has successfully adopted a policy of pushing existing subscribers up the value chain. This is evidenced the company’s number of revenue generating units (RGUs) per subscriber, which increased 16% in 2006. The sale of triple-play services has improved gross 2 ©2007 margins, which climbed from 28.3% in 2002 to 43.7% in 2006, along with ARPU. In 2006, Net reached US$1.1bn in revenues, a 39% increase over the previous year. We have identified three key areas contributing to Net’s growth: the company’s product flexibility, its focus on broadband services, and its proactive sales approach. Telmex has clearly achieved a winning formula that it will replicate across the region.Table of Contents As Telmex purchases cable operators in Latin America, we expect the Mexican incumbent to base its strategy on the work it is currently doing in Brazil through its Net Serviços subsidiary.Net Serviços emphasizes product flexibility by offering an extensive portfolio of triple-play bundles and by placing the decision-making process in the hands of consumers. Broadband is clearly the growth engine behind Net’s triple-play strategy, aided by the company’s pricing policy and a focused sales effort. The company’s sales approach is highly efficient and contrasts with other Pay TV markets in Latin America that are typically local in nature and tend to lack scale. |
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