LATIN AMERICA TELECOMS MARKET: TRENDS AND FORECASTS … · Latin America telecoms market: trends...

Latin America telecoms market: trends and forecasts 2015–2020

© Analysys Mason Limited 2015

REGIONAL FORECAST REPORT

LATIN AMERICA TELECOMS MARKET:

TRENDS AND FORECASTS 2015–2020

PABLO IACOPINO and ROMAN ORVISKY



REPORT COVERAGE

Geographical Key performance indicators

Regions modelled:

Latin America

Countries modelled

individually

Argentina

Brazil

Chile

Colombia

Mexico

Peru

Venezuela

Connections Revenue

Mobile

Handset, mobile

broadband1, M2M2

Prepaid, contract

2G, 3G, 4G

Smartphone,

non-smartphone

Fixed

Voice, broadband,

IPTV, dial-up

Narrowband voice,

VoBB

DSL, FTTH/B, cable,

BFWA, other

Mobile

Service3, retail

Prepaid, contract

Handset, mobile

broadband1, M2M2

Handset voice,

messaging, data

Fixed

Service3, retail

Voice, broadband,

IPTV, dial-up, BNS

DSL, FTTH/B, cable,

BFWA, other

ARPU

Voice traffic Mobile:

SIMs, handset

Prepaid, contract

Handset voice, data

Fixed and mobile

Outgoing minutes,

MoU

2

This report provides:

a 5-year forecast of more than 100 mobile and fixed KPIs for

Latin America as a whole and seven key countries

an in-depth analysis of the trends, drivers and forecast

assumptions for each type of mobile and fixed service, and for

key countries

an overview of operator strategies and country-specific topics,

in order to highlight similarities and differences by means of a

cross-country comparison

a summary of results, key implications and recommendations

for mobile and fixed operators.

Our forecasts are informed by on-the-ground regional market

experts from our topic-led research programmes and our

consulting division, as well as external interviews.

In addition to our robust set of historical data, our forecasts draw

on a unique and in-house modelling tool, which applies a rigorous

methodology (reconciliation of different sources, standard

definitions, top-down and bottom-up modelling).

For the complete data set, see the accompanying Excel file at

www.analysysmason.com/LATAM2015.

About this report

1 Includes USB modem, and mid- and large-screen, but not handset-based data.

2 M2M connections and revenue figures include mobile services only.

3 Service revenue is the sum of retail and wholesale revenue.

http://www.analysysmason.com/LATAM2015


© Analysys Mason Limited 2015 3

8. Executive summary

9. Latin America’s telecoms market offers significant growth opportunities for

operators – service revenue will reach USD140 billion by 2020

10. Mobile handset data services will be the largest source of retail revenue

growth in LATAM between 2014 and 2020, followed by fixed broadband

11. Telecoms retail revenue will grow in all markets between 2014 and 2020,

although regulatory activity will constrain growth in Chile and Mexico

12. Key trends, drivers and assumptions for the mobile and fixed markets

13. Key implications and recommendations for telecoms operators

14. Regional forecasts and cross-country comparison

15. Geographical coverage: We model the seven largest markets, which

account for about 90% of Latin America’s total telecoms service revenue

16. Market context: Mobile penetration exceeds 100% in all countries except

Mexico, and Brazil and Mexico account for 61% of the region’s revenue

17. Revenue and ARPU: Mobile handset data services will overtake mobile

voice services in 2020 and become the largest source of retail revenue

18. Mobile penetration: Most handset markets are saturated and offer low

growth prospects, and non-handset broadband take-up is slowing down

19. Mobile connections: LTE is making an impact in Latin America and will

account for 19% of mobile SIMs (excluding M2M) by 2020

20. Smartphones and LTE: Brazil will have the highest smartphone population

penetration and LTE take-up rates over the next 5 years

21. Mobile ARPU: Competition is set to intensify in all markets and will drive

down ARPU, while Argentina and Venezuela will have high inflation

22. Fixed services: Cable services will gain the most subscribers – driven by

pay-TV bundles – but DSL will retain the largest share through 2020

23. Fixed broadband: Household penetration will grow in all markets through

2019 as competition stimulates demand and multi-play adoption grows

24. Key drivers at a glance

25. Individual country forecasts

26. Argentina: Service revenue will reach ARS122 billion in 2020, but high

inflation will be partly responsible for this growth

27. Argentina – mobile: Penetration peaked in 2013 and will decline further as

multiple-SIM ownership shrinks

28. Argentina – fixed: Broadband penetration growth will be mainly driven by

single-play voice and pay-TV users adding broadband

29. Brazil: Service revenue will continue to grow through 2019 as LTE drives up

data spending and fixed broadband take-up accelerates

30. Brazil – mobile: LTE gains strength, but regulation, price competition and

substitution to OTT services will reduce ARPU

31. Brazil – fixed: The broadband market will become more dynamic thanks to

fibre take-up and fixed–mobile bundles

32. Chile: Data revenue growth will offset the decline in mobile voice revenue,

which will be driven by MTR cuts and MVNO competition

33. Chile – mobile: Mobile ARPU will remain almost stable as data usage

compensates for the strong pressure on voice prices

34. Chile – fixed: Fixed–mobile substitution will drive down fixed voice revenue

while fixed broadband will maintain solid growth

Contents



35. Colombia: Service revenue will stagnate after a peak in 2018 because fixed

and mobile data growth will eventually slow down

36. Colombia – mobile: OTT services will almost completely eliminate mobile

messaging revenue by 2020 and LTE take-up will be slow

37. Colombia – fixed: Growth in the broadband market will continue thanks to

expanded coverage and service bundling

38. Mexico: Regulation will limit mobile revenue growth in the short term, but

may ultimately unlock the market’s potential

39. Mexico – mobile: AT&T’s market entry and Telefónica’s presence will make

the market more dynamic

40. Mexico – fixed: Broadband growth will accelerate as operators invest in

coverage and fixed voice remains resilient

41. Peru: Service revenue will reach PEN17 billion in 2020 as improvements in

3G and 4G networks drive mobile revenue

42. Peru – mobile: Small operators are gaining momentum, which will make the

mobile market more dynamic and drive growth

43. Peru – fixed: Low-ASPU cable connections will drive a short-term decline in

fixed broadband ASPU, but it will eventually stabilise

44. Venezuela: Service revenue will reach VEF238 billion in 2020, driven by

data services and boosted by a high rate of inflation

45. Venezuela – mobile: LTE will gain strength because operators have to meet

population coverage targets conditions

46. Venezuela – fixed: The broadband market will grow slowly because fixed

competition is low and LTE will boost mobile Internet usage

47. About the authors and Analysys Mason

48. About the authors

49. About Analysys Mason

50. Research from Analysys Mason

51. Consulting from Analysys Mason

Contents



Figure 1: Telecoms retail revenue by service type and total service revenue

(retail and wholesale), Latin America, 2010–2020

Figure 2: Telecoms retail revenue growth by service type, Latin America,

2014–2020

Figure 3: CAGRs for fixed and mobile retail revenue (2014–2020) and market

size by total retail revenue (2020), by country, Latin America

Figure 4: Summary of key trends, drivers and assumptions for Latin America

Figure 5: Mobile connections by technology generation and fixed broadband

household penetration, by country, Latin America, 2020

Figure 6: Metrics for the seven countries modelled individually in Latin

America, 2014

Figure 7: Telecoms retail revenue by service type, fixed voice and fixed

broadband ASPU, and mobile ARPU, Latin America, 2010–2020

Figure 8: Telecoms retail revenue by service type, total service revenue and

growth rates, Latin America, 2014–2020

Figure 9: Connections by type, and growth rates, Latin America, 2014–2020

Figure 10: Active mobile SIM penetration by country (excluding M2M), Latin

America, 2010–2020

Figure 11: Mobile connections by technology generation (excluding M2M), and

3G and 4G’s share of connections, Latin America, 2010–2020

Figure 12: Smartphones as a percentage of handsets, and LTE’s share of total

connections (excluding M2M), Latin America, 2014 and 2020

Figure 13: Mobile ARPU by country, Latin America, 2010–20201

Figure 14: Fixed broadband connections by type, and fixed voice, IPTV and

mobile broadband connections, Latin America, 2010–2020

5

Figure 15: Fixed broadband penetration of households by country, Latin

America, 2010–2020

Figure 16: Major forecast drivers and impact, by country, Latin America,

2015–2020


(retail and wholesale), Argentina, 2010–2020


growth rates, Argentina, 2010–2020

Figure 19: Connections by type, and growth rates, Argentina, 2010–2020

Figure 20: Mobile, smartphone and 4G penetration rates, Argentina,

2010–2020

Figure 21: Mobile ARPU by type, and mobile ARPU, Argentina, 2010–2020

Figure 22: Summary of key mobile market drivers and assumptions, Argentina

Figure 23: Fixed penetration rates by service type, Argentina, 2010–2020

Figure 24: Fixed ASPU by service type, Argentina, 2010–2020

Figure 25: Summary of key fixed market drivers and assumptions, Argentina


(retail and wholesale), Brazil, 2010–2020


growth rates, Brazil, 2010–2020

Figure 28: Connections by type, and growth rates, Brazil, 2010–2020

Figure 29: Mobile, smartphone and 4G penetration rates, Brazil, 2010–2020

Figure 30: Mobile ARPU by type, and mobile ARPU, Brazil, 2010–2020

List of figures



Figure 31: Summary of key mobile market drivers and assumptions, Brazil

Figure 32: Fixed penetration rates by service type, Brazil, 2010–2020

Figure 33: Fixed ASPU by service type, Brazil, 2010–2020

Figure 34: Summary of key fixed market drivers and assumptions, Brazil


(retail and wholesale), Chile, 2010–2020


growth rates, Chile, 2010–2020

Figure 37: Connections by type, and growth rates, Chile, 2010–2020

Figure 38: Mobile, smartphone and 4G penetration rates, Chile, 2010–2020

Figure 39: Mobile ARPU by type, and mobile ARPU, Chile, 2010–2020

Figure 40: Summary of key mobile market drivers and assumptions, Chile

Figure 41: Fixed penetration rates by service type, Chile, 2010–2020

Figure 42: Fixed ASPU by service type, Chile, 2010–2020

Figure 43: Summary of key fixed market drivers and assumptions, Chile


(retail and wholesale), Colombia, 2010–2020


growth rates, Colombia, 2010–2020

Figure 46: Connections by type, and growth rates, Colombia, 2010–2020

Figure 47: Mobile, smartphone and 4G penetration rates, Colombia, 2010–2020

Figure 48: Mobile ARPU by type, and mobile ARPU, Colombia, 2010–2020

6

Figure 49: Summary of key mobile market drivers and assumptions, Colombia

Figure 50: Fixed penetration rates by service type, Colombia, 2010–2020

Figure 51: Fixed ASPU by service type, Colombia, 2010–2020

Figure 52: Summary of key fixed market drivers and assumptions, Colombia


(retail and wholesale), Mexico, 2010–2020


growth rates, Mexico, 2010–2020

Figure 55: Connections by type, and growth rates, Mexico, 2010–2020

Figure 56: Mobile, smartphone and 4G penetration rates, Mexico, 2010–2020

Figure 57: Mobile ARPU by type, and mobile ARPU, Mexico, 2010–2020

Figure 58: Summary of key mobile market drivers and assumptions, Mexico

Figure 59: Fixed penetration rates by service type, Mexico, 2010–2020

Figure 60: Fixed ASPU by service type, Mexico, 2010–2020

Figure 61: Summary of key fixed market drivers and assumptions, Mexico


(retail and wholesale), Peru, 2010–2020


growth rates, Peru, 2010–2020

Figure 64: Connections by type, and growth rates, Peru, 2010–2020

Figure 65: Mobile, smartphone and 4G penetration rates, Peru, 2010–2020

Figure 66: Mobile ARPU by type, and mobile ARPU, Peru, 2010–2020

List of figures



Figure 67: Summary of key mobile market drivers and assumptions, Peru

Figure 68: Fixed penetration rates by service type, Peru, 2010–2020

Figure 69: Fixed ASPU by service type, Peru, 2010–2020

Figure 70: Summary of key fixed market drivers and assumptions, Peru


(retail and wholesale), Venezuela, 2010–2020


growth rates, Venezuela, 2010–2020

Figure 73: Connections by type, and growth rates, Venezuela, 2010–2020

Figure 74: Mobile, smartphone and 4G penetration rates, Venezuela, 2010–2020

Figure 75: Mobile ARPU by type, and mobile ARPU, Venezuela, 2010–2020

Figure 76: Summary of key mobile market drivers and assumptions, Venezuela

Figure 77: Fixed penetration rates by service type, Venezuela, 2010–2020

Figure 78: Fixed ASPU by service type, Venezuela, 2010–2020

Figure 79: Summary of key fixed market drivers and assumptions, Venezuela

7

List of figures



0

20

40

60

80

100

120

140

20

10

20

11

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12

20

13

20

14

20

15

20

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17

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20

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Rev

enu

e (U

SD

bill

ion

)

Source: Analysys Mason

Figure 1: Telecoms retail revenue by service type and total service revenue (retail and

wholesale), Latin America, 2010–2020

9

More than 60% of the revenue growth in Latin America (LATAM)

between 2014 and 2020 will come from mobile services.

LATAM’s telecoms service market will be worth USD140 billion in

2020, up from USD123 billion in 2014 (at a 2.1% CAGR). Retail

revenue (end-user spending) will account for USD134 billion of

this, while wholesale (inter-company) revenue will account for the

rest. Fixed and mobile data services will drive most of the growth.

Smartphone adoption continues to be strong (Telefónica’s

smartphone user base in LATAM grew by 52% between 2013

and 2014, supporting 62% growth in mobile data traffic) and

LTE is gaining momentum – particularly in Brazil (which

received a strong boost from the FIFA World Cup in 2Q 2014).

The fixed broadband market will continue to grow as operators

intensify their customer segmentation strategies to attract

previously unserved users (household penetration is still low at

36% in LATAM in 2014), drive multi-play adoption (there are

many single-play voice and pay-TV service users) and upgrade

their customers to faster speeds (and higher ARPU levels).

Leading operators are strengthening their positions through

investments (in spectrum and fibre) and acquisitions. AT&T is set

to acquire DirecTV (which had over 19 million pay-TV customers in

LATAM at the end of 2014), as well as Iusacell and Nextel in

Mexico. Telefónica’s acquisition of GVT has been approved and

MVNOs continue to enter some markets.

Latin America’s telecoms market offers significant growth opportunities

for operators – service revenue will reach USD140 billion by 2020

Mobile voice Mobile messaging Retail revenue:

Service revenue (retail and wholesale):

Mobile handset data

Mobile broadband Mobile M2M

Fixed voice and narrowband Fixed broadband and IPTV

Business network services



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5%

10%

15%

20%

25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Arg

enti

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Bra

zil

Ch

ile

Co

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Mex

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Pe

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Ven

ezu

ela

LATA

M

Per

cen

tage

of

con

nec

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Per

cen

tage

of

ha

nd

sets

Source: Analysys Mason

Figure 12: Smartphones as a percentage of handsets, and LTE’s share of total connections

(excluding M2M), Latin America, 2014 and 2020

20

Smartphone adoption is quite strong in LATAM: 64% of handsets

will be smartphones by 2020.

Smartphone net additions reached 62.5 million in the region in

2014, up from 47.8 million in 2013. We estimate that LATAM had

174 million smartphone connections in 2014, of which Telefónica

had the greatest share (43%). By 2020, there will be 489 million

smartphone connections in the region.

Venezuela had the highest smartphone penetration rate in LATAM

in 2014 (at 45% of handsets, which will grow to 72% in 2020), as

poor fixed broadband coverage pushes consumers towards mobile

Internet access. Smartphones also remain somewhat of a status

symbol in Venezuela – more so than in other LATAM countries.

Brazil will account for 43% of smartphone net additions in LATAM

between 2014 and 2020. The country’s LTE coverage is advanced

because operators had to meet specific conditions for the FIFA

World Cup and the addressable market is very large – Brazil had

about 200 million inhabitants in 2014, and further growth is

expected among the migrant community. This makes the country

appealing for vendors, which are likely to introduce inexpensive

smart devices that encourage take-up of advanced data services

– even among low-spending users.

We assume operators will continue to stimulate smartphone

adoption via targeted campaigns to promote device upgrades,

handset subsidies, as well as voice, SMS and data packages.

Smartphones and LTE: Venezuela will have the highest smartphone

penetration, but Brazil will lead LTE take-up rates over the next 5 years

2014 2020 Smartphones as a percentage of handsets:

LTE’s share of total connections (excluding M2M): 2014 2020



CONTENTS

47

EXECUTIVE SUMMARY

REGIONAL FORECASTS AND CROSS-COUNTRY COMPARISON

INDIVIDUAL COUNTRY FORECASTS

ABOUT THE AUTHORS AND ANALYSYS MASON



About the authors

Pablo Iacopino (Senior Analyst) focuses on forecasting and analysing telecoms markets in Europe and Latin America. He leads Analysys

Mason's Global Telecoms Forecasts and European Core Forecasts research programmes, and is the lead analyst for research on the Latin

America region. Pablo is also a key contributor to our European Country Reports and Telecoms Market Matrix. Pablo joined Analysys Mason in

2012, after 8 years in the telecoms industry. He worked for 5 years in Strategy and Investor Relations at Telecom Italia, where he was

responsible for European telecoms benchmarking, followed by 3 years in investment banking as a senior equity research analyst covering

telecoms stocks. Pablo specialises in industry analysis, benchmarking, modelling, forecasts and valuation. He holds a Master's degree in

business administration and a postgraduate Master's degree in statistics and economics from Università degli Studi di Roma 'La Sapienza'.

Roman Orvisky (Research Analyst) is a member of the regional markets research team in London, contributing mainly to the Telecoms Market

Matrix, European Core Forecasts and European Country Reports programmes. Prior to joining Analysys Mason in November 2014, he worked in

the Transaction Services department of the Royal Bank of Scotland in a customer experience internship role. During his studies, Roman

focused on consumer behaviour in an online context, and has experience in churn modelling in the telecoms sector, social network analysis and

browsing data analysis. Roman holds a Bachelor's degree in business from Durham University, and an MSc in marketing research from the

Tilburg University School of Economics and Management.



About Analysys Mason

Knowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the

complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist

knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.

Consulting

Our focus is exclusively on TMT.

We support multi-billion dollar investments,

advise clients on regulatory matters,

provide spectrum valuation and auction

support, and advise on operational

performance, business planning

and strategy.

We have developed rigorous

methodologies that deliver tangible

results for clients around the world.

For more information, please visit

www.analysysmason.com/consulting

Research

We analyse, track and forecast the different

services accessed by consumers and

enterprises, as well as the software,

infrastructure and technology

delivering those services.

Research clients benefit from

regular and timely intelligence

in addition to direct access to

our team of expert analysts.

Our dedicated Custom Research

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For more information, please visit

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49

Consumer services

Enterprise and M2M

Regional markets

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Strategy and planning

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Performance improvement

Regulation and policy



Research from Analysys Mason

We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors, through a

range of research programmes that focus on different services and regions of the world.

50

To find out more, please visit www.analysysmason.com/research

Research portfolio

PROGRAMMES

Service Assurance

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Customer Care

Revenue Management

Analytics

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Software-Controlled Networking

Service Delivery Platforms

Service Fulfilment

Telecoms Software Market Shares

Telecoms Software Forecasts

PROGRAMMES

Digital Economy Strategies

Digital Economy Platforms

Future Comms and Media

IoT and M2M Solutions

PROGRAMMES

Mobile Services

Mobile Devices

Fixed Broadband and Multi-Play

SME Strategies

PROGRAMMES

Fixed Networks

Wireless Networks

Spectrum

Consumer and SME services

Digital economy

Regional markets

Telecoms software

Network technologies

PROGRAMMES

Global Telecoms Forecasts

Asia–Pacific

The Middle East and Africa

European Country Reports

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European Telecoms Market Matrix



Consulting from Analysys Mason

For 30 years, our consultants have been

bringing the benefits of applied intelligence to

enable clients around the world to make the

most of their opportunities.

Our clients in the telecoms, media and technology (TMT)

sectors operate in dynamic markets where change is

constant. We help shape their understanding of the

future so they can thrive in these demanding conditions.

To do that, we have developed rigorous methodologies

that deliver real results for clients around the world.

Our focus is exclusively on TMT. We advise clients on

regulatory matters, help shape spectrum policy and

develop spectrum strategy, support multi-billion dollar

investments, advise on operational performance and

develop new business strategies. Such projects result in

a depth of knowledge and a range of expertise that sets

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We help clients solve their most pressing problems,

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To find out more, please visit

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51

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P ER FO R MA N C E I MP R O VEME N T

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and best practice

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