News
virgin mobile store Virgin arrived last June with high expectations. el semanario

Targets prove elusive for mobile carriers

New firms have run up against strong competition

Newcomers looking to capture a stake in Mexico’s mobile phone market arrived with great fanfare during the past year, hoping to cash in on telecommunications reform and sign up millions of new customers.

But it hasn’t turned out that way.

Five new telephone firms entered the marketplace, hoping to capture as much as 7.6% of the mobile phone market, or about 8 million clients.

By the end of last year, they had signed up just 400,000, a dismal 0.38%.

The companies — Virgin Mobile, Tuenti, Cierto, Maz Tiempo and Lykamobile — were to some extent outmaneuvered, it appears, by a nimble Carlos Slim and his mobile carrier Telcel, as well as Telcel competitor Movistar/Telefónica.

Industry specialists say the newcomers have lacked sophistication and differentiation in their offers compared to the established carriers.

In response to Virgin Mobile’s entry in the market, Telcel introduced a new brand called Aló, with features similar to those of Virgin, and designed to reach that company’s target market, the millennials demographic cohort.

“They’re competing with each other for the same profile of user, the youngsters who use social networks,” said Gonzalo Rojón of CIU, a communications consultancy, “but they haven’t known how to define their particular market niche, with the exception of Cierto, which has focused on migrants.”

In spite of the new entrants’ failure to meet their targets, pay television providers and retailers have shown an interest in getting into the game. But companies such as Elektra and Chedraui have the advantage of extensive retail infrastructure, and can see opportunities in tying the telephone business into their retail operations and offer added value to consumers, said one analyst.

Source: El Financiero (sp)

Reader forum