Latin America Braces for Price War on 3G iPhone

As the countdown began for Apple (News - Alert) 3G iPhone (News - Alert) to create a sensation among its fans, service providers in various parts of the world are triggering off a price war on the much-awaited Apple gadget, according to officials.

 

Apple 3G iPhone with faster Internet connection, GPS navigation, and many third-generation (3G) features will debut on Friday in 22 countries, including United States, Mexico and Canada.

 

In Mexico, Latin America’s second-largest telecommunications market, the iPhone will be available at less than half of its price in the United States.

 

America Movil, the largest mobile phone service provider in Latin America, announced that it would offer the eight-gigabyte 3G iPhone for 773 pesos ($75) for subscribers who opt for a two-year 799-pesos monthly plan. America Movil is the first to offer iPhone in Latin America.

 

Movil will offer the 16-gigabyte version of the iPhone for its subscribers for 1,877 pesos (US$182) under the same plan that includes 400 minutes of call and 200 text messages. Movil offers different monthly plans for its subscribers; the plan with the lowest monthly fee will have the highest rate for iPhone.

 

However, in the United States, the price makes a big difference. AT &T said it plans to sell the eight-gigabyte model for $199 and the 16-gigabyte model for $299. Its cheapest monthly plan costs $70 per month, which includes 450 minutes calls and unlimited email and Web browsing. AT&T (News - Alert) is offering the phones to customers with a two-year contract, according to the company.

 

Movil’s move will spur Spain’s Telefonica to roll out competitive offers for its customers, company officials say. Both America Movil and Telefonica are fighting for the control of Latin America’s mushrooming market of more than 300 million mobile users. With 159 million customers, America Movil is the largest mobile phone service provider in Latin America while Telefonica is the second with 104 million customers.

 

In addition to Spain, Czech Republic, Ireland and Britain, Telefonica said it plans to sell the new iPhone in 12 Latin American countries. The company also has plans to sell 3G iPhone in Mexico. However, it has not announced the release date or pricing details.

 

In Mexico, the competition is fierce between Telefonica and the affiliates of America Movil. Telmex (News - Alert), Movil’s fixed-line associate, holds an 81 percent share of fixed-line telephones whereas Telcel, its mobile subsidiary, holds about 70 percent of the mobile phone market.

 

Experts opine that the high upfront costs of iPhone may limit the number of customers for both companies. However, as both the companies are planning to offer the phone, they expect continued gains in disposable income.