Boston, MA -- (ReleaseWire) -- 06/23/2014 -- LTE networks spread across Latin America and the Caribbean
This report includes scenario-based forecasting for the fixed-line, mobile and broadband markets in the major Latin American countries. Scenario forecasting presents us with an opportunity to address the market variables and their likely impact on future growth. Essentially, our scenario forecasts provide bands between higher and lower limits within which growth is expected to occur.
Economic backgroundThe 2014 economic outlook for LAC is uninspiring, with GDP forecast to grow by only 2.5%, well behind the projected world average of 3.6%. Although 2015 is expected to be a more favourable year for the region, GDP growth will still be almost one percentage point behind the global average: 3.0% as opposed to the world's 3.9%. The region's best performers in 2014/2015 will be Panama, Peru, Bolivia, Paraguay, and Colombia, where GDP growth is expected to top 4.5%. Panama outshines every other country in the region, with 7.2% growth forecast for 2014 and 6.9% for 2015.
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Investment opportunitiesThe LAC region includes a number of emerging markets that offer attractive investment opportunities. Conditions vary substantially from country to country. Most governments follow pro-business, pro-growth policies, but a few are less supportive of private enterprise. The most promising telecom markets for prospective investors are mobile telephony, fixed and mobile broadband, and pay TV. Also, several countries are developing ambitious national broadband projects, which require substantial investment.
Brazil, LAC's largest market, is the region's most popular investment destination. Its telecom regulatory environment is one of the most favourable in Latin America for investors. The provision of telecom services is simply linked to acquiring an authorisation from the regulator.
Privatisation and competitionAll governments in the LAC region have introduced some form of liberalisation, especially in the value-added and mobile markets. A few countries still have a monopoly in the local fixed-line telephony sector, notably Guyana, Paraguay, and Uruguay.
In the broadband sector, most incumbents have secured a virtual monopoly in the delivery of ADSL access. The only competition is across technologies, from cable modem and mobile broadband. Local Loop Unbundling is rare in this region, and wholesale activity not very well developed. The concern governments face is the shortage of fixed line infrastructure, tied to the fear that operators will cease to invest in their network if they are forced to unbundle their local loop or lower wholesale prices.
The most competitive telecom sector is the mobile one, with most countries having at least two or three providers contending for market share.
Fixed-line marketDespite a low 18% teledensity (in most Western European countries teledensity ranges between 40% and 60%), fixed-lines in service have grown little since 2001, with consumers favouring mobile devices over traditional phones. New entrants using VoIP, wireless technologies, or triple play solutions are attracting a growing number of subscribers, but their market share remains comparatively small. Almost invariably, the incumbents continue to dominate the fixed line industry.
Fixed broadband marketEstimated fixed broadband penetration in LAC was 9.2% per capita at end-2013, slightly below the world average of 9.8% but ahead of other developing regions.
Hurdles in the Latin American broadband market include:
- weak competition and insufficient bandwidth (hence, expensive and/or slow services);
- inadequate fixed-line infrastructure (hence, service unavailability in many areas);
- low PC penetration, poverty, and unequal income distribution (hence, limited demand).ADSL is the favoured technology in most countries, but low teledensity limits its availability. Cable modem access has been gaining popularity thanks to triple play solutions comprising voice, internet, and video over HFC cables. The largest proportion of cable modem subscribers can be found in Chile, where this technology accounts for about half of the broadband market.
- Fibre-to-the-Premise (FttP) is becoming more widely available throughout the region, but subscription fees are extremely high; therefore, the service still only attracts high-income residential customers and small businesses that require fast connections. The future of FttP is particularly promising in Brazil and Uruguay, the first because of preparations for the 2016 Olympics, the second because the government has started to deploy a nationwide FttP network through state-owned Antel.
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