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Mobile Providers Target U.S. Hispanic Customers:Posted By: Tom Braswell Reinhardt Krause Cisneros Group, the largest shareholder in Spanish-language media firm Univision Communications, has its eye on Hispanic mobile phone users.The company is expanding a pay-as-you-go mobile phone service that it started last year in parts of Texas, Arizona, California and Puerto Rico. It will bring the service -- called Movida -- to Florida and elsewhere on the East Coast in 2006. That could spell trouble for TracFone, the wireless service with the most Hispanic customers. TracFone -- owned by Mexico's America Movil (NYSE:AMX - News) -- ended 2005 with 6.1 million customers, up 39% from a year earlier. Movida, which launched services in May, hasn't disclosed how many customers it has. But it's aiming to have 1 million by the end of 2007, says Enrique Garcia, the company's chief executive. "We're very bullish on getting there," he said. Movida's entry into the U.S. market should shake things up -- though Movida isn't moving at full speed yet. A big name in Latin America, Venezuela-based Cisneros Group has marched into the U.S. wireless business quietly, says Roger Entner, an analyst at the research firm Ovum. "It's been a stealth launch," Entner said. Movida should soon step up its marketing efforts. It hired a Miami-based ad agency and plans to spend $20 million on marketing this year. For now, the company sells its prepaid cards and phones at Wal-Mart Stores (NYSE:WMT - News), as well as at Puerto Rico's Pueblo supermarket chain, which Cisneros Group owns. Univision (NYSE:UVN - News), which broadcasts in the U.S., should help Movida with marketing, analysts say. Movida advertises on Univision radio and TV stations. Telecom firms are increasingly targeting the U.S. Latino market, estimated at 42 million-plus people. Satellite TV firms EchoStar (NasdaqNM:DISH - News) and DirecTV (NYSE:DTV - News) have expanded their Spanish-language channels in recent years. Some cable firms, such as Cablevision Systems (NYSE:CVC - News), also offer a Spanish-language channel package. For Movida, the best strategy may be to target recent U.S. immigrants -- rather than second- or third-generation Americans, Entner says. Since Movida's cell phone plans are prepaid, customers don't need to have good credit histories. TracFone will be Movida's closest competitor, Entner says, even though TracFone doesn't focus solely on the Hispanic market. TracFone declined to comment on Movida's efforts. Movida's Garcia downplays any rivalry. "We compete with them, but everybody in telecom competes with each other," he said. Both Movida and TracFone rent their network capacity from others. Movida uses Sprint Nextel's (NYSE:S - News) network, while TracFone has a deal with Cingular Wireless, a joint venture of AT&T (NYSE:T - News) and BellSouth (NYSE:BLS - News). In the U.S., Movida charges a flat fee of 20 cents per minute for calls -- about the same as other wireless firms. Movida gives prepaid customers extra minutes on nights and weekends. And it's developed Spanish language content for wireless data services. Movida operates its customer service out of Argentina. Also on the Cisneros Group front: In January, it bought Venezuelan wireless firm Digitel for $425 million from Telecom Italia (NYSE:TI - News). Earlier, Cisneros joined forces with BellSouth to operate TelCel in Venezuela. But Spain's Telefonica Moviles (NYSE:TEM - News) acquired TelCel in 2004 from BellSouth. America Movil, meanwhile, operates in most Latin American countries -- but not Venezuela. Wally Swain, analyst at Yankee Group, says it's possible America Movil could try to buy Digitel from Cisneros, though the two are competing in the U.S. wireless market. Swain doesn't think Cisneros Group plans to expand into other Latin American wireless markets.
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