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Latin American Mobile Market: Trends and Developments
Telecom Trends International (TTI), July 2003
With more wireless subscribers than wireline subscribers, Latin America presents great opportunities to carriers and vendors. This report explores the opportunites and challenges, and highlights major trends driving the market. The report presents six-year forecasts for subscribers broken down by technologies, and provides in-depth analysis on different facets of the market.
Mobile communications services have been the fastest growing segment of the Latin American telecommunications industry. However, its initial growth drivers - pent-up demand and low teledensity - have gradually been eroded by the increasingly shrinking the addressable market mainly composed of the lower strata of the market. Telecoms Trends International (TTI) recognizes the importance of understanding the dynamics of Latin America’s mobile market conditions in order to identify available opportunities as well as market trends. This market analysis report addresses both of these issues by presenting an overview of the major challenges and opportunities faced by operators of Latin America.
TTI considers that Latin America’s mobile market still presents great opportunities for vendors and operators. Operators need to start reinventing their position in the market to assure customer retention and higher returns per subscriber. Vendors will have to move beyond solely being equipment providers to become ‘partners’ with mobile operators by facilitating the launch of solutions that will ultimately increase Arpu and augment the need for network upgrades and new terminals.
Questions Addressed by This Study
However, with a region-wide recession in place, coupled with political instability a number of questions remain about the prospects of mobile communications in Latin America:
- How has the transition from monopoly towards competition contributed to the explosive mobile growth in the region and what is its future outlook?
- What are the interconnection difficulties that need to be solved?
- How can mobile operators increase their revenue from prepaid customers?
- What is the next evolutionary step for calling party pays?
- What are the consequences of imposing foreign ownership restrictions?
- How much danger to mobile operators do iDEN operators represent?
- Why is there continuous delay in spectrum auctions if governments only want to increase competition to benefit consumers?
- Consolidation seems to be the future of Latin America’s mobile market but how are operators moving towards this path?
- Is the Mvno model a feasible alternative for Latin America?
- What are the prospects for mobile messaging in the region?
All of these questions are addressed in this report, providing an overview of Latin America’s current mobile market and identifying the trends that are shaping the current competitive landscape.
Key Findings - the following are the key findings of the study:
1. By year-end 2002, there were 98.7 million mobile subscribers in Latin America. These will grow at a compound annual growth rate of 13.3 percent over the next six years. In 2008, the number of subscribers will be 209.0 million.
2. The GSM family of technologies, including Gprs, Edge, and W-cdma, will have 53 percent of the market by 2008. Cdma family of technologies, on the other hand, will have 35.6 percent of the market.
3. Mobile messaging will grow from 2.1 billion messages in 2002 to 62.1 billion messages in 2008, a compound annual growth rate of 75.6 percent.
4. Only by making available the new enhanced value-added services to their prepaid subscribers would operators be able to justify and recoup their investments in 2G+ spectrum and/or network build out.
5. The adoption of CPP not only facilitates an increase in mobile telephony penetration but also benefits mobile service providers by guaranteeing them a new revenue source.
6. The introduction of radio dispatch services under 2G+ platforms by mobile operators will erode iDEN’s less loyal customers.
7. The emergence of Mvnos is not being driven by corporations with established brand names in other industries but by telecom operators seeking to become ‘full service providers’ - as Cotas did in Bolivia and Telsur has been trying to do for over a year in Chile.
8. The fostering of competition in the mobile arena by Latin American regulatory authorities has translated into an increase in foreign direct investments in the region.
9. The ‘nationalistic’ policy of placing ceilings on foreign investors’ ownership share has had a negative impact on the development of telecommunications services.
10. The impetus towards consolidation will increase the interest in wireless spectrum for both fixed and mobile deployments as companies seek economically viable opportunities to expand their service.
Scope and Methodology
Scope
The report, “Latin American Mobile Market: Trends and Forecasts,” provides a snapshot of major trends and developments in the Latin American mobile communications market. The report analyzes industry trends, market developments, and operator strategies. Some of the topics covered in the report include the following:
1. Market forecasts broken down by technolgies
2. Next-generation networks
3. Opportunites for Mobile Virtual Network Operators (Mvnos)
4. Trends in mobile messaging
5. Competitive climate and consolidation
6. The emergence of dispatch services
7. Implications of prepaid and calling party pays
8. Regulatory climate, particularly with reference to spectrum licensing, competition, and foreign ownership.
Additional Information Relating to This Topic:
In order to develop a complete understanding the capabilities of Latin America’s mobile wireless marketplace, Telecom Trends International has launched the Latin American Mobile Information Service which consist of five reports:
- Latin American Mobile Market: Trends and Forecasts
- Latin American Mobile Enterprise: Market Trends and Forecasts
- Latin American Mobile Devices: Market Trends and Forecasts
- Latin American Mobile Infrastructure: Market Trends and Forecasts
- Latin American Mobile Data Market: Trends and Forecasts
This report is first in the series. In addition, TTI has published a landmark study on Mobile Virtual Network Operators (Mvno) opportunites in Latin America. The report is entitled, “Mobile Virtual Network Operators: The Latin American Landscape.” More in-depth coverage of mobile messaging will be found in a series of studies put out by TTI.
Methodology
The information presented in this report stems from numerous in-depth interviews, extensive research into Latin American mobile market, and analysis of major trends and developments. In addition, the author performed analysis and modeling using up-to-date data supplemented by information collected by Telecom Trends International for other studies on mobile wireless markets.
In particular, these tools include:
- Vendor Interviews: Interviews with vendors marketing hardware equipment for mobile wireless networks - covering different technologies - helped provide insights into deployment trends.
- Carrier Interviews: Interviews with national and regional mobile carriers helped provide primary insights into investment strategy and deployment timing, as well as the capacity of the respective markets to sustain a new mobile operator.
- Trend Tracking. The author continuously tracked trends in the entire Latin American mobile market.
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