Personal Paraguay is a society made up of Grupo Telecom Argentina- a holding whose main stockholder is Telecom Italia – and ABC, country’s main editorial group. In the first quarter of 2005, Personal Paraguay had accumulated 560,000 subscribers, a figure that equals 41.1% of the total lines in the country, becoming Paraguay’s market leader.

Personal`s advance – which has added 58,000 new lines in six months – has succeeded within the last year with the appointment of Juan Serventi as executive director. The executive embarked within the operator with a team of professionals that came from Telecom Argentina. According to several market sources consulted by Convergencialatina, the company has been characterized with its new administration stage as commercially offensive, based on more than 20 offers, a rhythm which is not customary among Paraguayan people.

However, its decisive factor was an improvement in its distribution of prepaid cards, which kept it away from the typical stock plunge in the Paraguayan market, originated by deficient national infrastructure, with what Personal made its presence well known in the country’s provinces. Likewise, that strategy was bolstered with the launching of plans and promotions in its sales points with a special emphasis on teenagers.

The Paraguayan market as of June 2005 registered 1.365 million mobile lines and a little more than 80% of that is in the hands of Personal and Tigo (Millicom). The remaining 250,000 lines mostly belongs to VOX, and in a lesser amount to Porthable; a company recently acquired by América Móvil. The figure is notably lower than the 1.8 million, which is informed by the communications authority, Conatel. This difference could be due to two factors. On one hand, operators “inflate” before the regulating entity the real amount of users with the objective to promote their market share, but within their balances, declare a sensible amount lower. On the other hand, at the closing of the first quarter they treated the amount of lines with the application of one policy that forces companies to sell prepaid, meaning, that they have to have all of the users information.

Although its good performance, and its strong debt decrease that Personal Paraguay obtained last year, the company has been placed on sale. This strategy is within Telecom Italia’s strategy to exit all of the Latin American markets, with exception of Argentina and Brazil. In addition, according to different versions, América Móvil is the main company interested in obtaining Personal Paraguay.

There are different reasons that support this theory. On one hand, América Móvil possesses Porthable, by far, the smallest market share in the market, and not a very known brand. Its plan is to operate in the country as an extension of its network in Argentina and change the Porthable brand to CTI Movil to optimize costs. However, the Paraguayan market has very peculiar characteristics that hinders América Móvil`s classic entrance sustained with high discounts in handset prices.

In Paraguay, it is easy to obtain last generation phones in the black-market. Handsets enter the country mainly from Argentina, where they are sold with strong subsidies. That characteristic has allowed, for example, that some operators offer mobile data services to their prepaid clients; strange at a world level, due to the handset availability with technology that points to zero costs for local operators. It is to say, within such a grand setting; América Móvil could focus on buying clients since its classical strategy of subsidies plummets. In other words, this time it would be cheaper to buy users than steal them from their competition.

Another piece of information that supports this theory is a purchase of Personal Paraguay from the Mexican holding which is América Móvil, which has just finished making a similar movement in Peru. There it purchased at the beginning of the year a frequency and has to confront Movistar which concentrates 70% of the market and TIM Peru which has close to 25% of the lines. On the other hand, due to the country’s low mobile penetration it would allow it to face that competition, América Móvil finally purchased TIM Peru for US$ 503 million; a figure that would be much cheaper  than deploying a new network and face a brand positioning strategy. Rumors indicate that, América Móvil only purchased that frequency with the purpose to win-over Telecom Italia’s resistance to sell assets. In Paraguay, the purchase of Porthable had had the same sense: to scare