Hot hands.(Connection)(Brief Article)

Demand for cellular telephones is surging in Latin America, especially in Argentina, where the market is reemerging from the ashes of financial crises.

In Argentina, consumers are expected to buy 5 million handsets in 2004. That's three times more than the 1.5 million handsets sold in 2003 and 10 times more than the 500,000 handsets sold in 2002, when the largest sovereign default in history slammed an already bruised economy, according to Marcelo Claure, CEO of Brightstar Corporation. Brightstar distributes about half of all handsets in Latin America save Brazil.

"In 2003, people were not that optimistic but it ended phenomenally well," says Claure, adding "2004 looks extremely well [for the region]."

While most markets continue to grow, Mexico and Brazil are the largest by far. They are also the toughest to crack, as companies that do not manufacture products there are subject to hefty tariffs and taxes.

"If you don't manufacture in Brazil, you're dead," says Cados DeVries, director and general manager for Latin America at PalmOne. Others agree. "Brazil is really growing very quickly--it's a third of Latin American market, and to be honest, we are doing extremely well apart from Brazil," says Andre Jacquet, vice president of marketing for the Latin American region at Sony Ericsson.

Sony Ericsson does not manufacture cellular telephones in Brazil although it is studying such possibilities. The company exports mainly high end products to wealthier consumers in Brazil.

Even in crisis-stricken Venezuela, consumers continue to dial away despite horrendous headlines on the economic and political fronts. Analysts point out that in good times and in bad, consumers will continue to buy cell phones due to the status they project.

"It's become more of a fashion item than an enabler of services," says Carlos Rodriguez, regional manager for the Americas at Pyramid Research.

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