AOL Expands in Latin America

Looking to pave the way for future growth in a largely untapped region, AOL Latin America (Nasdaq: AOLA) formally launched a portal Wednesday with content aimed at Internet users in countries including Venezuela, Chile and Colombia.

The regional portal, which will feature content in Spanish and Portuguese, is designed to complement the growth of AOL Latin America’s membership in Brazil, Mexico and Argentina, where the company has already rolled out limited local online access.

AOL Latin America, which is a joint venture between America Online (Nasdaq: AOL) and Cisneros Group, now has 314,000 members, including many on trial memberships, in those three countries.

20 Countries

Guy Garcia, vice president of content strategy at AOL Latin America, said the new portal will be a gateway for potential AOL users to download software and sign up for Internet service. Garcia said AOL Latin America plans to boost localized content in 20 countries in the region.

Earlier this month, the company said it would begin service in Venezuela by the end of the first quarter of 2001, with long-range plans calling for Colombia, Chile and Puerto Rico to be added to the roster next year.

The portal will feature content from AOL’s partnership with Time Latin America, which includes essays and other writings from prominent Latin American writers, as well as other Time Warner content, including news from CNN.

AOL and Time Warner are still awaiting U.S. regulator approval for their planned merger.

Growth Area

Latin America has consistently been cited as a potential growth region for e-commerce, with AOL Latin America predicting that online advertising will growto US$1.4 billion by 2003.

A report issued by the Boston Consulting Group in October said $580 million would be spent this year online in Latin America, an increase of 400 percent over a year ago.

Still, analysts say logistical barriers, including widely differing regulations and cultures in the countries in the region, are keeping many U.S. players on the sidelines. One study from IDC noted that while online access is growing quickly in the region, it still remains relatively small, with only about 6 percent of the population expected to have access by 2004, compared to about 70 percent in the United States.

Losses at the Start

AOL Latin America, which went public in August at $8 per share, has traded recently just above its 52-week low of $4.75. For its most recent quarter, AOL Latin America lost $98 million on $4.6 million in revenue, including $1.9 million in e-commerce and advertising revenue.

Big-name advertisers on the site include Citibank, American Airlines and Nestle.