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The telecom market in Latin America continues to show positive trends in most of the mobile and fixed key performance indicators (KPIs) which will drive retail revenue up to $167 billion by 2017. According to Analysys Mason’s forecast report, “Global Telecoms Market: Trends and Forecasts 2013–2017,” telecoms retail revenue will grow at a 3.3% CAGR 2012-2017 in Latin America, compared with 1.7% for the global telecoms industry. Brazil is the fourth-largest market worldwide in terms of retail telecoms revenue, after the U.S., China and Japan.
Positive outlook for smartphone and broadband take-up
Population penetration rates for smartphones, mobile broadband and fixed broadband in Latin America are lower than in more developed countries, and this leaves room for further growth in the next five years. In addition, a few demographic and social trends will contribute to the increase in spending per capita on telecoms services: GDP per capita is rising; the middle class is expanding in the region’s largest market—Brazil; and the number of Internet users is expected to grow substantially.
According to Analysys Mason’s forecasts, smartphones will account for 50% of total handsets in Latin America in 2017, up from 8% in 2012, with Brazil leading the take-up. Smartphones reached about 50% in North America, and 40% in Western Europe and developed Asia-Pacific in 2012. The FIFA World Cup 2014 is expected to play an important role in Brazil because the winners of the 4G wireless spectrum have to launch services in World Cup host cities by the end of 2013.
Fixed broadband penetration will reach about 50% in Brazil, Mexico and Chile by 2017. Mobile broadband will steadily gain momentum, driven by take-up in some customer segments, such as young people and business users, as well as by growing adoption in rural areas where fixed-line infrastructure is poor or unavailable. The number of mobile broadband connections in Latin America will double by 2017, compared to 2012, and penetration will reach 7%.
The customer mix will improve because of the combined effect of the growing penetration of high-end devices and the ongoing cut in mobile termination rates—on average higher than in Europe—which is likely to reduce the need for multiple prepaid SIMs to optimize the cost of making calls. Contract handset subscribers will represent 24% of the total handset subscriber base in Latin America in 2017, up from 21% in 2012.
Mobile handset data and broadband will lead revenue growth
The main contributors to revenue growth during 2012–2017 in Latin America will be mobile broadband (growing at a CAGR of 15.8%), mobile handset data (12.6%) and fixed broadband (6.6%). These three segments will account for almost 90% of the retail revenue increase during the forecast period.
However, there is still room for growth in mobile voice because penetration and outgoing mobile minutes of use (MoU) in Latin America are lower than in developed markets. In 2012, the gap between Latin America and Western Europe was more than 20 percentage points in terms of mobile penetration (113% vs. 136% respectively, including mobile broadband and M2M) and about 20% in terms of mobile MoU (about 100 vs. 130 respectively). According to Analysys Mason’s forecasts, the Latin American region will match the 2012 level of mobile penetration in Western Europe in 2017, at about 140%.
All the largest countries in terms of market size in Latin America will have retail revenue growth during 2012-2017, both on mobile and fixed (Figure 1).
Figure 1: Telecoms retail revenue growth rates by country and service type, Latin America, 2012–2017 [Source: Analysys Mason, 2013]
The two-largest markets, Brazil and Mexico, will grow at about 3% on average per year, but the largest-service contributor to revenue growth will be different: fixed broadband in Brazil because penetration is lower compared with Argentina, Chile and Mexico and will grow from 36% in 2012 to 51% in 2017, and mobile handset data in Mexico because smartphone penetration was relatively low in 2012 and will match the regional average of 50% in 2017.
To find out more, see Analysys Mason’s report, Latin America Telecoms Market: Trends and Forecasts 2012–2017 which is a comprehensive source of detailed fixed and mobile forecasts for the seven-largest countries in terms of market size, and for the regional level. It analyzes the most important trends that are affecting fixed and mobile telecoms services and assesses the impacts of these trends over the next five years.
Pablo Iacopino (Analyst) focuses on forecasting and analyzing telecoms markets in Europe and Latin America. He is co-leader of the Analysys Mason’s Global Telecoms Forecasts program. Pablo joined Analysys Mason in 2012, after eight years in the telecoms industry. He worked for five years in Strategy and Investor Relations at Telecom Italia, followed by three years in investment banking as a senior equity research analyst covering telecoms stocks.
