The Latin American telecommunications market
To meet the growing demand for services, technological transformations of great importance are being undertaken
Emerging markets represent a major opportunity for the telecommunications sector. A recent Google ad to participate in wireless deployments in Sub-Saharan Africa or Southeast Asia is proof that in the next few years, major investments will be needed in order to meet the demand for services in countries with increasingly thriving economies.
Latin America is a clear example. The Telecommunications in Latin America report published in 2013 by the Asociación Iberoamericana de Centros de Investigación y Empresas de Telecomunicaciones (AHCIET, the Ibero-American Association of Research Centers and Telecommunications Firms) provides a telltale sign: In 2011, cell phone penetration reached 100% in Latin America, thereby breaking one of the technological divides that separate the United States and Europe from Central and South America.
On the other hand, broadband penetration in South American homes was approximately 34% in 2012, far from Europe (70%) and the United States (nearly 80%). In addition, according to OECD data, this technological divide has grown in recent years. However, the situation varies in the region, and in countries like Colombia, Brazil, Uruguay, and Chile, broadband development is higher than in other nations in the continent.
If we focus on mobile broadband, penetration in Latin America grew at a rate of 127% in the last five years. The forecasts for the next few years are spectacular. According to Cisco Systems, in three years, data traffic originating in the mobile network will be 18 times higher than the volume in 2011, and mobile broadband subscriptions are expected to multiply by five during this period for a total of 300 million users.
These figures are based on another impressive statistic, which is that the middle class in the region has grown by 50% in the last six years, causing a strong demand for services.
In the case of Brazil, this growth will be boosted by the 2014 FIFA World Cup and the 2016 Río de Janeiro Olympic Games. The challenge of building hotels and transportation infrastructures is combined with developing telecommunications networks that are capable of handling the demand that appears during events of this magnitude.
To meet this growing demand for services, technological transformations of great importance are being undertaken in the region. For example, major FTTH (fiber to the home) deployments are currently being carried out in the continent:
- In Brazil, Telefônica/Vivo expects to double its customer base in 2013 and reach a total of 230,000 subscribers.
- In Uruguay, the state-owned company Antel will invest $140 million this year, and it plans to provide coverage to 25% of the population.
- In Colombia, ETB plans to provide fiber optic coverage to 85% of the population in Bogotá, a city with more than seven million residents.
As far as the LTE implementation, several companies in the region have started to deploy 4G networks in Uruguay, Brazil, Bolivia, Mexico, and the Dominican Republic, with investments worth billions of dollars. There is no doubt that the next few years will be key for the development of telecommunications in Latin America.