AMERICATEL DIALING HOMES ACROSS AMERICAS:BUT HOW TELCO FARES IN SNARING ITS SHARE OF U.S. CONSUMERS HOLDS THE KEY

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A half-dozen satellite antennas perched in the teleport compound of Americatel Corp. look southward for Latin American telephone signals.

Vice Chairman Marco Northland looks southward for Latin American consumers.

In the coming months, he hopes both will find what they're looking for.

TRYING CONSUMERS

Americatel, an emerging telecommunications provider that since 1991 has provided business telecom voice and data transmission service, is preparing to break into the consumer market.

The company serves business customers in Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Peru. But Americatel will face its greatest challenge later this year when it launches consumer service in the U.S. and Ecuador.

It's a daunting move, one that will place the company squarely in competition with well-positioned giants of the industry, AT&T Corp., MCI Communications Corp. and Sprint.

TOUGH TASK

It won't be easy, say those who know the market. But the company and its largest shareholder, Entel Chile, which holds 80% of Americatel, operate in some of the most aggressive telecommunications markets. So at least they're aware of what lies ahead in a varied consumer market.

"Business-to-business is high-revenue, low-cost contacts," said John Holmes, president of J. Walter Thompson Latin America, Mexico City. "To get into the mass market is a different game."

Americatel's name reflects its corporate mission-to link the Americas' telephones. And like its business-to-business strategy, which plays up the company presence in its markets, a hands-on approach to consumers is essential, said Mr. Northland. He hopes the strategy translates well into the consumer market.

One magazine ad for the business market, from Tinsley Advertising, Miami, carries a shot of the Americas from outer space, with curving white lines descending to the markets in which Americatel operates. The headline reads: "To succeed in Latin America, you have to be well connected."

Business-based clients include General Motors Corp.'s computer services subsidiary Electronic Data Systems, Visa International and Peru's Faucett Airlines.

Client Western Union Financial Services International researched Americatel, PanAmSat and General Electric Co. as communications providers, said Earl Perritt, director-global telecommunications for the Paramus, N.J.-based company.

WESTERN UNION SEARCH

The company had been using local providers in each country, but didn't have an international network to carry the signal. The result was high prices, weak links, premium connect time charges as well as charges for the amount of data transferred, said Mr. Perritt.

But Americatel's flexibility, government contacts and operating strategy of aligning with local providers convinced Mr. Perritt that Americatel was the way to go.

"Most of the South American countries are very bureaucratic and insisted on use of [telecommunications providers] locally," he said. "Americatel pretty wisely made affiliations with them."

EXPANDS WITHOUT ADS

Direct marketing efforts and slow product and service introductions have allowed the company, which achieved $500 million in systemwide sales in 1995, to expand its services this year without broadcast advertising. That will change with the introduction of consumer services, Mr. Northland admitted.

"If it was consumer-oriented, then they would utilize mass media, too," said Mr. Northland, whose company uses agencies such as Saatchi & Saatchi, Santiago, for Entel Chile, and Leo Burnett, Bogot , for Americatel Colombia, with local agencies handling other markets. Direct marketing is handled in-house.

EXPANDING ITS FOCUS

The company will focus on other markets where it already provides business service and build on existing name recognition, Mr. Northland said.

The company doesn't yet have the reach of an AT&T or MCI-companies that can place an ad in a publication that circulates thoughout Latin America and know it will hit their customer base, Mr. Northland said.

Instead, the company will identify its consumer base by interests, ethnic groups, even cities, and target them with ads in niche publications. Every country will have its own strategy, which will be overseen by Eduardo Moran, VP-marketing and sales with Entel Chile, that nation's largest telecom provider. Once Americatel becomes a regional name, it will break a TV campaign throughout the region, he said. The U.S. likely will have broadcast TV ads to announce the product when it launches later this year, he added.

QUALITY AND REACH CLAIMS

The message will be that Americatel's quality and network reach place it above the competition, and possibly will draw on its existing awareness in the business community, said Mr. Northland. "That way, you differentiate yourself," he said. "Then it's easier to go to the consumer."

The potential is enormous- 60% of all international calls out of Latin America terminate in the U.S.-but competition will be keen. The company learned this with AT&T's failed legal fight before the Federal Communications Commission to keep Americatel out of the U.S. market, said Mr. Northland. By building its own network, Americatel will benefit by being at both ends of each telephone call.

The company also is creating local products and services, like voice mail, Internet provider services and calling cards, which are already available in Colombia and Chile. Such products will provide a "uniqueness" that will help improve Americatel's brand positioning, he said.

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