Nearshore Americas

Virgin Comes to Challenge Carlos Slim’s America Movil in Mexico

British telecom firm Virgin Mobile has unveiled plans to expand in Latin America, launching a mobile service in Mexico and Brazil. The Richard Branson-owned firm, which is waiting for approval from Brazilian regulators, is hoping to challenge America Movil on Carlos Slim’s own turf – Mexico.

“We will launch our Mexican service in the next few months and in Brazil after Regulatory approvals are obtained,” Richard Branson said in a press release.

Ongoing telecom reforms in Mexico and Brazil’s growing thirst for bandwidth seem to have prompted the UK firm to expand in Latin America, a region Virgin has been serving for the past two years. Mexico’s telecom market is heavily dominated by the America Movil, but the Carlos Slim’s firm may have to offload some of its assets after the Mexican regulator imposed a 50% market share limit in May last year.

Virgin is offering voice services in Colombia and Chile, where it signed up more than 65,000 mobile users in a space of just four months. This sudden growth in Chile is also contributing to Virgin’s ambition to to tap Latin America’s growing telecom market.

In august 2012, the International Finance Corporation (IFC), a unit of the World Bank, lent Virgin $11 million to help the telecom firm bolster its operations in Colombia.

The UK firm stated that it filed an application with Brazil’s telecom regulator Anatel for an MVNO license after wrapping up an agreement with Vivo (a subsidiary of Telefonica) to obtain bulk access to network services at wholesale rates. Virgin has signed a similar agreement with Telefonica to utilize its network in Mexico (Telefónica operates in Brazil under the Vivo brand and in México under the Movistar brand).

Reports say Virgin is likely to launch services in Argentina and Peru as well, at least a year later.

Virgin Mobile is the originator of the MVNO model, and the brand now has over 18 million customers in 10 countries. MVNOs don’t pour money into building networks, instead they rent a network built by a competitor.  In Brazil, Anatel started to regulate MVNOs only in November 2010.

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“This is the first step in our process for Mexico and Brazil to reach the same high level of service our customers are enjoying in Chile and Colombia,” said Phil Wallace, Chairman for Virgin Mobile operations in Latin America.

Mexico is working to overhaul its telecom sector, which outgrew the overall economy in the first quarter of 2013, led by growth in services such as satellite television and mobile broadband.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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