Movida targets US Hispanic mobile users

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“Press one for Spanish, press two for English,” subscribers to Movida's US mobile phone service are told.

The company, controlled by Venezuela's Cisneros group, will next month launch its new Movida pay-as-you-go mobile phone service in Los Angeles the first to specifically target the 40m-plus Hispanics living in the US.

The roll-out marks the start of a campaign by privately owned Cisneros to tap demand for mobile phone services among the fast-growing Hispanic population in the US and comes amid signs of a resurgence of interest in pre-paid or pay-as-you go mobile phone services in the US market.

The Movida service is structured as a mobile virtual network operator (MVNO) using network capacity leased from Sprint, the third-largest US wireless operator. This mirrors the approach of Virgin Mobile USA, the venture launched by UK entrepreneur Sir Richard Branson.

Movida has customer care operations in Buenos Aires, Argentina, and will sell a range of mobile phones starting at $99 through big retailers such as Wal-Mart, and via regional sales outlets in cities with large Hispanic populations.

The Cisneros group, whose other business interests in the US include Univision Communications, the largest provider of Spanish-language content to US-based Hispanics, began rolling out the Movida service through Wal-Mart stores in Phoenix and San Diego in April.

But Movida executives see the launch in Los Angeles, home to many of California's 11.7m Hispanics, on Friday as the real test.

“We are extremely pleased with sales so far,” says Enrique Garcia, Movida's chairman. “The response of the US-Hispanic community is just what we hoped it would be at this early stage of our roll-out across the US.”

In spite of increasing mobile penetration in the US now about 60 per cent many Hispanics have been unable or unwilling to sign up for traditional wireless service plans that typically require credit approval and a commitment to a lengthy contract.

In contrast, Movida customers pay a flat 20-cents-a-minute to call anywhere in the US (calls to Mexico are 25 cents a minute) and can top up their pre-paid accounts by buying $20, $30 or $50 Movida cards. There are no contracts, complex rate plans or credit checks.

“It is not that Hispanics lack purchasing power or are not interested in wireless communications,” says Mr Garcia. “Often they do not have a credit history or simply do not want to sign a contract.”

In fact, Hispanics' purchasing power in the US is rising rapidly and is expected to exceed $1,000bn within four years. “They love to talk,” says Mr Garcia, but research suggests they are also more likely to use their mobile phone as their primary phone and send SMS (short message service) text messages.

Steven Bandel, Cisneros' chief operating officer, said the group had been encouraged by the success of Virgin Mobile USA the joint venture MVNO between Sprint and the UK's Virgin Group that has signed up more than 3m pre-paid customers in the US in less than five years by focusing on the youth market.

“If Virgin Mobile can do that, we [Movida] want to get to at least 1m customers by 2007/2008,” he says. While that might appear an ambitious target, Movida's executives believe their understanding of the Hispanic market, coupled with powerful demographic forces, make it achievable.

In particular, they note that the Hispanic population is the fastest-growing ethnic segment in the US and is heavily concentrated in 11 states, most of then in the geographic south-west. Movida's executives emphasise that Movida has been designed from the ground up as a service for Hispanics and is not just a Spanish language service grafted on to an established English offering.

In the past, traditional mobile operators have made efforts to target Spanish-speaking consumers with Spanish-language content and rate plans that cater to subscribers who frequently call Mexico and Latin America, and have had some success with those offerings.

But Hispanic-targeted MVNOs such as Movida believe that their specialised offerings, which include Spanish-language handsets, go a step further and make wireless much simpler and easier for consumers to understand and find.

Studies show that almost 70 per cent of US Hispanics only speak Spanish or prefer Spanish to English. “They retain a very strong cultural affinity,” says Mr Garcia.

“Movida bilingual wireless phones offer the kind of service and the pay-as-you-go convenience traditionally available in most Latin American countries.”

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