1. Telecommunications and Development in Latin America: The Role of Multinationals 12th EADI General Conference Geneva, Switzerland 25 June 2008 Juan R. de Laiglesia OECD Development Centre

2. Telecommunications and FDI in Latin America Good performance by usual indicators… …associated with the large incoming FDI flows However inequality in access remains high and has not been dented by foreign enterprise entry Telephony markets are not very competitive and consolidation has not helped The challenge: creating regulatory frameworks and access promotion strategies to increase coverage, service and affordability. 2

3. Telecommunications performance in Latin America 3 Source: ITU, 2006, World Telecommunications Database

4. Latin America leads developing world in telecoms FDI 4 Source: OECD Development Centre, based on PPI Database, World BankSource: Information and Communications for Development 2006, World Bank

5. In ten years, telephone density has become less sensitive to the countrys GDP… 5 Income per capita and telephone density

6. … but relative performance remains very different from one country to the next 6 Source: OECD Development Centre, based on ITU(2007) and World Development Indicators data.

7. Investment in telecommunications has accompanied a marked increase connectivity 7 Source: OECD Development Centre, based on SEDLAC (2007) and IADB (2007) data. The number of telephone lines has increased by a factor of 10 in Latin America, in part because of foreign investment

8. Across countries, foreign investment has gone hand in hand with increased connectivity 8 Source: OECD Development Centre, based on PPI Database, the World Bank

9. Part of the story is the relative success of privatisations 9 Source: OECD Development Centre, based on PPI Database, the World Bank Note: Includes only countries with available data for Latin America (Argentina, Belize, Bolivia, Brazil, Chile, El Salvador, Guatemala, Guyana, Mexico, Panama, Peru, Trinidad and Tobago, Venezuela)

10. Multinational presence is linked to different models and market structures across the region Public monopolies Costa Rica (all), Uruguay, Paraguay (fixed) Privatised fixed line monopolies with substantial market power: Mexico, Peru, Nicaragua Decentralised competition Bolivia, Colombia Oligopolistic competition (fixed) 10 Source: OECD Development Centre, based on company data

11. An unequal distribution of benefits 11 Source: OECD Development Centre, based on SEDLAC surveys. Inequality is high: a quarter of poor households have a telephone at home, 3 times less than high-income households

12. Foreign actors are not associated with lower inequality 12 Source: OECD Development Centre, based on PPI Database, the World Bank and SEDLAC.

13. Market contestability is limited 13 Source: OECD Development Centre, based on companies data. MonopolyPerfect competition

14. Challenges and opportunities Fair and stable regulatory frameworks … … complemented by access promotion Digital gap and connectivity Expand other services through telephony: –Mobile Banking –Remittances –E-government 14

15. Thank you for your attention! www.oecd.org/dev/

16. Appendix 16

17. Latin Americas performance has improved vis-à-vis other regions 17 Source: OECD Development Centre, based on ITU (2006) and World Bank (2006) data.

18. Access has improved significantly but large disparities remain 18 Source: ITU, World Telecommunication Indicators Database, 2006

19. Quality has also improved substantially 19 Source: Telefónica

20. Two major players: Telefónica and Telmex/America Móvil Similarities: –Safe home markets: the result of national champion policies –Seeking markets: expansion or survival? –Corporate alliances and buyouts Differences –Different corporate cultures –Different paces 20

21. Other outcome measures: inequality Data: household survey aggregates –Differentiated according to income –Measure access as ownership (phone at home) Measuring the access gap: –Absolute Gap = (Q5-Q1) –Relative Gap = (Q5-Q1)/Q5 –Quasi-Gini (measures the concentration of phone access) where q(i) is the proportion of people with access who have income below income index i (so q(1)=1) 21

22. Diffusion and inequality: the example of Brazil 22