Technology | Media | Telecommunications

Thursday, December 19, 2013

Smartphone Adoption in Latin America Gains Momentum

Communications infrastructure investment is having a substantive impact on economic development within Latin American. By the end of 2013, Latin American cellular mobile phone subscriptions are expected to grow by 3.9 percent to reach 709.4 million, according to the latest market study by ABI Research.

An expanding population base and positive economic indicators for a number of Latin American markets means the region continues to stimulate the interest of foreign and regional telecommunications companies and other investors.

At the end of 3Q-2013, while the mobile service prepaid ratio stood at 79.5 percent, the smartphone user base was just 16.1 percent. But smartphone adoption is forecast to grow at a CAGR of 31.7 percent between 2013 and 2018.

"Smartphones are presenting mobile carriers with an opportunity to upgrade prepaid subscriptions to postpaid subscriptions," commented Jake Saunders, VP and practice director at ABI Research.

An example of this mobile internet growth opportunity can be seen with Telefónica Brazil, an operator with 76.6 million subscriptions.

In the past year, total subscriptions have been essentially static; however, the ratio of postpaid customers, driven by smartphone upgrades, has increased by 23 percent year-on-year, to 22.2 million.

Smartphones continue to come down in price -- especially in emerging markets. Chipset manufacturers like MediaTek and Qualcomm are working with mobile phone handset manufacturers to provide less expensive smartphones aimed at emerging markets.

In April 2013, smartphones produced in Brazil with a retail price below $750 received a benefit from a government waiver in welfare tax -- which is boosting smartphone consumption in the country.

With such initiatives from government and handset manufacturers, ABI Research expects that Latin American smartphone subscriptions will reach 453 million -- that's 54.6 percent of the total subscriptions -- by the end of 2018.

Smartphone adoption will also contribute to LTE subscriptions. In Latin America, LTE subscribers will grow from just 0.3 percent of total subscriptions at the end of 2013 to 12.5 percent by 2018, or 104 million mobile subscribers.