Millicom grows mobile subscription base in Bolivia

May 5, 2009

On April 21, Millicom announced its first-quarter 2009 results, which ranked its Bolivian subsidiary as its fastest growing operation in Latin America, with mobile subscribers jumping from 1.4m at year-end 2008 to 1.6m in the first quarter of 2009. From a year earlier, its subscriber total grew 43%. According to our recent Bolivia Country Intelligence Report, mobile penetration in the market will increase from 47% in 2008 to 80% in 2014 over the next five years, one of the fastest growth rates in the region. The current penetration rate is one of the lowest in Latin America—a little more than half the regional average of 82%.

In 2009, we expect Millicom to enlarge its market share above 33% in Bolivia based on three strategies: expanding its coverage of the population, offering 3G services and implementing an effective marketing strategy.  In terms of coverage, the company has increased the number of  cell sites significantly, from 367 in 2007 to 611 in March 2009. It now covers 88% of the Bolivian population, which is concentrated in three cities, La Paz, Santa Cruz and Cochabamba, which together have 40% of the population. 

As for 3G, Millicom launched UMTS/HSPA in Bolivia in the third quarter of 2008, as part of a regional deployment.  Ericsson and Huawei were the selected vendors for these 3G deployments across Latin America.  Pyramid Research believes the 3G launch will be a catalyst for data services growth in Bolivia and will help Millicom gain an edge in the mobile market. As the first operator to launch 3G technology in Bolivia, Tigo has a head start, and it is offering a variety of services such as video calls, mobile TV, mobile broadband, and music and video downloads.

With regard to marketing, Millicom targets all segments of the population with affordable prepaid cards and reloads.   It sells prepaid cards that cost as little as roughly US$1.40, and mobile subscribers can add credit (reloads) at a point of sale by amounts as low as US$0.14, which makes it easier for low-income users to buy mobile services. Here Millicom is leveraging its success in other countries, such as Paraguay, where reloads generate more than 80% of total prepaid sales. With a 51% market share in 2008, Millicom is the leading player in Paraguay.

— Omar Salvador, Senior Analyst

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