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Branson's Virgin eyes Mexican phone market

Fri, 11/18/2011 - 6:17am
Richard Branson's Virgin group has got the green light to tap mobile phone services in Mexico, a market with high penetration that would require big money to attract customers and build brand recognition.

Mony de Swaan, the head of Mexico's telecom regulator Cofetel, used his account on microblogging site Twitter to make the announcement on Thursday. He declined to comment further.

Virgin Group disclosed mid-year plans to tap eight countries in Latin America with an initial investment of $300 million, deemed low by some analysts who considered a bigger amount was needed to break into markets with several competitors.

The venture between Virgin and Tribe Mobile is known as Virgin Mobile Latin America.

Nick Fox, public director for Virgin Group, said no network partner had been chosen yet in Mexico, but anticipated Chile would be the first country in the region to kick off a mobile virtual network operator (MVNO) business with them in the first half of next year.

"We are looking at a number of mayor markets in Latin America," he said in a phone interview from London.

MVNO's rent capacity from companies with communication networks to offer their own mobile services.

Mexico's cable television company Megacable recently launched such a partnership with Spain's Telefonica under the Megacel brand, adding one more competitor to a market led by billionaire Carlos Slim's America Movil.

Virgin, whose earlier experiences in MVNO resulted in market participations no bigger than 20 percent, may have to dig deeper into its pockets if it wants a piece of the Mexican pie. America Movil had 68 million wireless subscribers in Mexico as of the end of September.

Signals Telecom Consulting President Jose Otero said Virgin's previous MVNO ventures were helped by the company's other businesses, like stores or music catalogs, something not available yet in Mexico.

Virgin owns book, wine, gaming, airline and cruise businesses across the globe.

In a statement released this week, Otero highlighted Chile's experience with MVNOs, saying the South American country handed out 10 MVNO licenses about five years ago, and only one ended up in business.

(Reporting by Cyntia Barrera Diaz, Elinor Comlay and Tomas Sarmiento; Editing by Bernard Orr and Richard Chang)

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