ABI Research expects growth of 10 percent in mobile telecom service provider capital expenditure (CapEx) within Latin America, rising to $6.1 billion. Upgrades and expansion of 3G WCDMA and 4G LTE coverage will result in radio access network-related spending capturing 40 percent of CapEx.
Investment in small cell base stations is gaining momentum -- with a forecast of 40 percent year-on-year growth in 2014 to $484 million.
"Mobile telecom capital expenditure in Latin America is expected to grow rapidly in 2014 as investment in 4G LTE starts to accelerate. Significant amounts of capital expenditure are still required to build out 4G LTE coverage," said Jake Saunders, vice president at ABI Research.
In particular, mobile cellular CTOs are prioritizing investment in the core network functions as Internet packet traffic and value-added 3G and 4G services are playing an increasingly prominent role in the telecom services of the region.
ABI Research estimates that population coverage stood at just 34 percent at the end of 2013. This should change over the next two years as LTE subscriber adoptions grow from 2.33 million to 23 million.
There is pent-up demand for access to Internet services in Latin America that cannot be addressed by wireline DSL and cable Internet services. Mobile internet adoption could increase dramatically, if the essential wireless broadband infrastructure was available.
Examples of Latin American investment plans include:
- Telefonica Chile has been consolidating its 3G network infrastructure, including the deployment of fiber. It plans to invest a further $200 million over the next three years.
- In Peru, Telefonica plans to invest $250 million in LTE-related infrastructure.
- In 4Q-2013, TIM Brazil rolled out its first 150 small cells to boost signal transmission capacity on its mobile network.
- In Colombia, Avantel announced in 4Q-2013 it would invest $250 million on the first stage of its 4G roll-out. It was awarded 30 MHz of spectrum in June 2013.
According to ABI's assessment, while some of the economies in Latin America have troubled leadership and a mixed bag of economic growth, when it comes to mobile voice and broadband, the telecom service providers are struggling to keep up with demand.