Carlos Slim entered Paraguay and already is in 13 countries in the region. Through América Móvil the businessman has acquired the Hutchison Telecommunications assets in the country, operating under the Porthable brand. The firm has around 51,000 customers and a market share that does not exceed 3.2%.

The company figure being the smallest in the Paraguayan cell market, leads us to believe that the new Mexican operation would be managed as an extension to its businesses in Argentina, such as what is currently happening with its branch in Uruguay. That is the way that América Móvil would begin to integrate the Paraguayan branch under the same structure and lead its agreement strategy to regional parameters, with the following operative costs reduction, making the business profitable again. More importantly, on joining the Argentine scale it could launch very proactive offers that would allow it to recuperate positions quickly. Personal Paraguay is currently operating similarly to its Personal Argentina headquarters (Telecom Argentina, TIM).

The Mexicans must also change the company’s commercial brand (Porthable), to stay far from the Porthable name in Paraguay since it has not created too much prestige and because the same name is used by Hutchison in Argentina. Using the commercial brand CTI Móvil would belong more to Carlos Slim’s regional ambition and would allow the company marketing to also be associated with that of Argentina and Paraguay.

Within the local environment, América Móvil will meet up with a market that has “two realities”. According to official data, there are currently around 1.76 million activated cells and a good penetration of 30.2%. However, that penetration is “false”. Due to high interconnection costs that duplicate the cost of a call, the same user can have up to three telephones: one per company to cut communications costs. According to market sources, the real user total figure in Paraguay would not exceed 1.2 million. In other words, regulating the interconnection value of between 500,000 and 600,000 lines that would disappear and there is a great opportunity for businesses since it deals with more profitable customers. Because those customers have higher earning power and corporations are thinking more and more that Porthable will change its name.

Outside that reality the Paraguayan mobile market lacks the major growth index and activity that most of the regional countries present, although it has a strong competition. Of all the customers, 91% belong to pre-paid plans and they are disputed by Hola Paraguay (from the Japanese KDDI Corporation); Person (from Telecom Argentina) and Tigo (from Millicom Paraguay), presented as the market leader. If that weren’t enough, sustained by an investment of around US$ 7 million, Copaco, the fixed telephony state company, is preparing “to enter the ring” and offer mobile telephony throughout the country.

To fight for the Paraguayan market, América Móvil would initially put its hand on the GSM network that Porthable has had since 2000 and that only joins one the main country’s cities. However, it believes that it could bet on expanding its stretch as an extension of its network in Argentina’s north and integrate it to its operative systems; just like it was done in Uruguay, annexed as an extension of the coastal network in Argentina.

The chance that Slim is thinking about carrying out another acquisition in Paraguay should not be ruled out. Some speculated voices mentioned the chance to keep Copaco, but privatizing the state company seems difficult, since it only has 300,000 lines and it has lost the worth that the Government set (US$ 300 million) and the Paraguayan society has advanced in development without falling back on the fixed telephony and making mobile telephony easier to use. Negotiations should be closely watched with the Mexicans to see if they can keep Hola Paraguay or even Millicom, who are speedily catching up with América Móvil and Telefónica Móviles at the regional level.  

Although there has not been an official confirmation, the transaction for Porthable assets could have been around US$ 30 million, a figure that at first glance seems excessive for the business but not for the scale that América Móvil manages. That is why Carlos Slim can “say present” in a new country in the region and total a step more in the battle that is getting closer to Telefónica Móviles. The new Slim advancement has not done more than confirm the sayings from the América Móvil director, Daniel Hajj, who two weeks ago stated that the firm “is looking for its fingerprint throughout Latin America”.