M&A disrupts monopoly on the Latin American telecom industry

Recent merger and acquisitions activities have disrupted the long running monopoly in the Latin American telecom industry, specifically in Mexico and Brazil.

RCR Wireless News reports that the Latin American telecom industry, dominated by monopolies for a time, has seen new mergers and acquisitions opened doors for new smaller companies to compete. Countries such as Mexico and Brazil disrupted the monopoly by allowing new merged smaller companies to join the competition.

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Key events that led to this disruption in the Latin American telecom industry were identified. The end of 2014 marked major telecom M&A in Brazil that saw the merger of America Movil with three Brazilian operators: Claro, Embratel and Net. Another Brazilian operator, Telefonica Brasil (Vivo), merged with Vivendi’s Global Village Telecom. Even though Brazil experienced economic downturn, billion dollar investments by Ukrainian billionaire Mikhail Fridman made these merges possible.

Consequently, Mexico has also undergone considerable change in its telecom industry with the entrance of AT&T, which acquired Iusacell and Nextel. Mobile services such as data services and data centres have also improved following the merger of Axtel and Alestra.

The M&A’s resulted in a two-way benefit for consumers and service providers. Combined assets and infrastructure resulted in financial growth increase and faster service delivery. On another note, consumers have been provided the market top of the line products and services that meet their exigent expectations.

Another significant turning point of the industry is a change in the regulatory environment that helped boost the M&A in the region. RCR further wrote that just like in Mexico, the government initiated telecom regulation, which made it easier for new companies to enter the competition.

Despite the imminent threat of economic downturn and decreased average revenue per user, the mobile market in Latin America remained strong. Companies continued to provide next-generation mobile services and develop high-end engaging products for consumers.

Engaging products that helped boost mobile service include a network extender that is making its way in Latin America. An American company, 5BARz International (OTCQB: BARZ), recently introduced a radiofrequency-based, single plug-and-play unit that enhances weak indoor mobile signals.

The pioneering phase of the product took place in India, where top “Tier One” mobile operators openly embraced the technology. Commercial rollouts have already taken place, and CEO Daniel Bland said that the primary goal of the company is to conquer the global market. Countries like India and South Africa have already experienced the revolutionary product, and the company is now preparing to conquer Latin America.

“We have a technology solution that never has been done before and has revolutionised the way telcos build out their networks and provide this much-needed, last-mile connectivity solution. What we do is make this affordable for telcos, make it easy to install, which is just really plug and play; there is no solution prior,” Bland said.

With the recent changes in the telco industry in Latin America, its wireless technology has huge potential growth in its hands. The regulatory changes in the region also provided new perspective on the industry, along with the fading of an age-old monopoly. More positive developments are expected as consumer expectations through the emergence of innovative tech companies in the area.