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Latin America market is a strong market for the telecommunications industry. In fact, at a global level, mobile subscriptions totaled 88.2% of the region's population in 2009, compared to 55.2% in Asia Pacific, 90.4% in North America; and in Middle East and Africa 55, 2 % and 50, 6%, respectively.



The largest mobile telephone markets in Latin America are Brazil, Mexico and Argentina, with mobile subscriptions numbering 169.7 million, 83.3 million and 49.1 million respectively in 2009. And figures could be even more impressive.



According to a research carried out by the international consultancy firm Euromonitor, with headquarters in London, mobile telephone industry prevails over fixed line market which only grew to a level of 18,6 % users in Latin America. Due to geographical constraints for infrastructure expansion, this is an opportunity for mobiles becoming the dominant form of communication.



It is estimated that 2010 and 2012 will be key years, as a result of economic growth and improving income levels, as well as the companies’ offer of deals targeted to attract low-income consumers. There will be a tendency towards Internet access, which will potentially boost telecommunications profits.



Mobile telephone market structure. Mobile telephone subscriptions grew by an average of 26% per year between 2000 and 2009. Markets experiencing particularly high growth were Cuba with 58, 3%, Honduras with 52, 4% and Ecuador with 44, 2%.



As regards market penetration, the highest in Latin America was registered in El Salvador, with 1228 subscriptions per 1000 people, in contrast with 1217 in Argentina and 876 in Brazil, in relation to the same number of users.



Caribbean countries also have high levels of mobile penetration. Antigua has 1648 subscriptions per 1000 inhabitants. In Jamaica and Bahamas, subscriptions rise to 1060 and 1107 respectively.



The reason for this, according to Euromotor, is that mobile communications offer the benefit of buying packages or a prepaid card and pay exactly for the time we speak, in contrast to previous years when the minute spoken was charged and also incoming calls.



Fixed lines. Fixed line market grew by an average of 2.5% per year in Latin America, between 2004 and 2009, well below growth rates for mobile subscriptions which grew into an annual average of 23.7%. In Colombia and Jamaica, for example, the use of fixed lines dropped a 2, 5% and 6, 3%, respectively.



This derives from the fact that this kind of communication is restricted to geographical conditions, like Andean area or tropical regions, which make it difficult to expand the infrastructures to these areas.



The tendency is for fixed line communications to be less competitive. According to Euromonitor, mobile communications is a relatively new sector, which enables the companies to drive down prices and become more competitive.



With the launch of 3G and broadband services, that between 2007 and 2008 have had an increase in subscription demands, the companies benefit from getting new customers (who do not consider these services as luxury services, but they view them as essential for the development of their work), as well as obtaining other revenue streams.



Finding a signal. Latin American growth offers new opportunities for expansion. Between 2010 and 2012 an average growth of 0, 9% is expected, the highest rate among regions, except for the Middle East, Africa and Oceania.



But great challenges are yet to come. The first hindrance to keep growing countries like Venezuela, Bolivia and Ecuador, is the nationalization of the sector, with an increase of state control in the industry. The Mexican markets continues to be dominated by America Movil (owned by Carlos Slim), leaving little space for competitivity. The second obstacle might be that prices remain higher than those in most advanced economies, reflecting the effects of a non-competitive market, over those in which state-owned companies remain dominant.



Mobile Tendency. It is expected that Latin American GDP will grow by 3.6 in 2010, compared to a 1.9% in 2009. This might produce the reactivation of the USA demand, as well as rising global prices for the region’s key commodities exports.



As a result, mobile subscriptions could grow by 8, 2% annually in 2010, reflecting a strong growth compared to rates registered in 2009 (10, 9%).



Mobile subscriptions in Latin America might reach 1170 subscriptions per 1000 people in 2020. This does not mean that all consumers will have mobile phones, but some will have two or more.



In 2020, the main mobile markets in Latin America will be Brazil, with 259 million subscriptions, Mexico, with 135 million and Colombia with 61, 1 million.



It is highly probable that telephone companies will continue targeting specific consumer demographics, with low-income and mobile broadband users in clear expansion. However the process will be slower due to the high cost, 3G will continue growing. Initial market expansion is likely to take place in wealthier markets of the region like Argentina, Chile and Mexico.



Source: America Economía