Latin America isn’t quite as mobile crazy as the Middle East or Asia-Pacific, but it’s still the the fourth fastest growing region globally — with both consumers and enterprises spending more than before on mobile applications or services, according to new reports from Pyramid Research.
Latin America mobile subscriptions grow steadily
Mobile cellular subscriptions in Latin America will reach 757.2 million by the end of 2015, with LTE accounting for 4.2% of all subscriptions, according to Pyramid’s most recent “Mobile Data Forecast” report. Data will account for 40% of total revenue, nearly double the 22% from 2011.
The number of Latin America mobile subscriptions will increase by 3.3% to reach 757.2 million in 2015, accounting for around 10% of total global mobile subscriptions. This translates into a mobile penetration rate of 122%.
Looking ahead, Latin America mobile subscriptions will grow at a CAGR of 3.2% over the next five years, making the region the fourth fastest growing globally, behind MEA (5.9%), APAC (5.3%) and North America (3.4%). By year-end 2020, Pyramid Research estimates that Latin America will have 885 million mobile subscriptions, giving the region a 136% penetration rate.
“Growth will be primarily driven by operators expanding network coverage to unserved and underserved areas, regulators implementing pro-competition policies, such as those easing the entry of new operators and MVNOs, and the uptake of cellular M2M/IoT,” says Guillermo Hurtado, Pyramid Research senior analyst.
Latin America enterprises boost mobile budgets
Enterprises in Latin America will increase IT budgets for mobile value-added services (MVAS), presenting a big opportunity for mobile network operators (MNOs) and tech vendors, predicts another recent Pyramid report, “Enterprise Mobile Value-Added Services in Latin America”.
The demand for enterprise MVAS, such as mobile apps and IoT/M2M services, will experience a significant increase in Latin America in 2015. A recent survey conducted by Pyramid’s sister company Current Analysis shows that more than 40% of Latin American enterprises already use some kind of enterprise MVAS. Moreover, 85% of Latin American enterprises expect their MVAS spend to increase in the next 12 months.
Mobile revenue picture quickly changing
Pyramid Research estimates that the Latin America mobile service market will be worth US$80.3 billion by year-end 2015. “Mobile data is quickly becoming the cornerstone of the mobile operators’ business” says Hurtado.
Mobile data revenue in Latin America will expand at a CAGR of 10% between 2015 and 2020, to account for over 60% of the region’s total mobile service revenue by 2020, predicts Hurtado.
“Regional mobile operators are most concerned about pushing data-centric services and mobile value-added services as increasing efforts from regulators to reduce voice termination / interconnection rates and the growing threat from OTT communication apps including voice features, put downward pressure on operators’ voice service revenues,” he says.
LTE adoption remains low
Although Pyramid says that LTE penetration will be a pivotal factor supporting MVAS growth in Latin America, LTE connections accounted for only 1.9% of Latin America’s total mobile subscriptions in 2014. Pyramid projects LTE connections will hit 32.6 million by the end of 2015, to represent just over 4.2% of the region’s total mobile connections.
“Some regulators in the region have been particularly slow in auctioning and making spectrum available for LTE, and the premium price tag on LTE-capable smartphones remains a key barrier to LTE adoption,” says Hurtado. “Mobile operators are still largely focused on 2G to 3G migration, devoting a large proportion of their capital expenditures to improving the coverage, quality and capacity of their 3G networks.”
During 2014, 3G effectively overtook 2G as the most widely adopted mobile technology in Latin America. Pyramid Research expects that close to 62% of the region’s mobile subscriptions will be on 3G networks by year-end 2015.
MNOs need to be different from other MVAS service providers
Large IT service providers, such as IBM and HP, are currently the largest providers of MVAS in Latin America, according to Pyramid. Four out of ten enterprises partnered with a large IT service provider to help them manage their MVAS, while 24% opted for network service providers.
Nevertheless, mobile operators will continue to engage in collaborative partnerships with IT service providers and technology vendors in order to build LTE based MVAS platforms and differentiate themselves from other MVAS service providers.
You can find Pyramid’s “Mobile Data Forecast” report, as well as its report “Enterprise Mobile Value-Added Services in Latin America: Major Forces Driving and Inhibiting MVAS for MNOs” here.
