Frost & Sullivan: Smartphone Sales Fuel Growth in Latin American Wireless Market Carriers scramble to address the growing popularity of data and prepare for fixed-mobile convergence and multi-play offers
SAO PAULO, Nov. 21, 2013 /PRNewswire/ -- Smartphone sales have boosted Latin American mobile market revenues in 2012, although mobile broadband penetration is still limited due to high prices and low service quality. Now, carriers focus on expanding 3G and 4G network coverage and increasing data revenues in order to offset losses in voice revenues due to mobile termination rate (MTR) cuts.
New analysis from Frost & Sullivan (http://www.wireless.frost.com), Latin American Mobile Services Markets Outlook II, 2012, finds that the market earned revenues of $81.03 billion in 2012 and estimates this to reach $110.30 billion in 2018 at a compound annual growth rate of 5.3 percent. The study covers Argentina, Brazil, Chile, Colombia, Mexico and Venezuela.
Despite a mobile penetration rate of over 100 percent, the mobile services market in Latin America still holds tremendous promise, with growing demand for machine-to-machine and broadband services. In fact, mobile broadband is likely to become a strong alternative to fixed broadband, especially in remote regions.
"Telcos are also increasingly focused on fixed-mobile convergence as groups merge operations in different countries in order to offer multi-play services," said Frost & Sullivan Information & Communication Technologies Research Analyst Georgia Jordan.
The voice services market, however, is approaching saturation in some Latin American countries, limiting the scope for market growth. Severe cuts in mobile termination rates have further curbed carriers' revenues. With interconnection tariffs representing close to 25 percent of an operator's revenue, these cuts force carriers to find new sources of income. Moreover, data usage, while representing over 25 percent of total revenues in most Latin American countries, is for low-value text messaging services rather than high-value mobile broadband services, reducing the average revenue per line in the segment.
Regulatory delays in new spectrum auctions and restrictions on convergence and multi-play offers are also a cause of concern in some Latin American countries. To add to this, the implementation of mobile number portability and expansion of mobile virtual network operators have so far done little to encourage competition in the highly concentrated Latin American mobile market, resulting in low-quality services and high prices for subscribers.
''In this scenario, mobile carriers must offer voice and data as well as innovative value-added services that can meet customer requirements, while maintaining reasonable service quality and generating free cash flow," said Jordan. "As mobile broadband service demands huge investments in backbone, backhaul and other network elements, service providers will need to develop plans that do not impact network usage excessively while addressing niche customer needs."
Finally, carriers can improve the average revenue per line by strengthening the penetration of post-paid plans and mobile data by initially encouraging the migration of pre-paid users to hybrid plans. This will prove to be a more affordable option for Latin America's emerging middle class as it provides better discounts for voice and data services as well as subsidies for device purchases.
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Latin American Mobile Services Markets Outlook II, 2012 is part of the Mobile & Wireless Communications Growth Partnership Service program. Frost & Sullivan's related research services include: Argentinean Total Telecommunications Services Market, European ICT Vertical Market Model, South African Mobile Banking Market, and Smartphones and Tablet Market in South Asia, Latin American Pay TV Services Markets, Latin America Mobile Broadband Services Markets, Latin American Data Communications Services Markets, and Latin American Fixed Broadband Services Markets. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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