Smartphones, the steam engine of Latin America’s mobile market
After years of decline, ARPU in Latin America is expected to increase in 2017, driven by increased 4G adoption and higher data usage. The catalyst to this turn of the region are smartphones, which now account for six out of ten mobile connections, according to a recent report of GSMA.
As the reports notes, in 2012 smartphones accounted for fewer than one in ten connections but during the recent years there was a tremendous growth. As a result, from 690 million connections in Latin America (3rd quarter of 2017), smartphones accounted 60%. The report added that this huge demand of smartphones in the region “has been facilitated by a decline in prices and the increasing availability of handset subsidies and finance offerings by mobile operators”. And as it predicts, the demand will remain strong in the future, reaching 71% during 2020.
Similar conclusion is also coming from GfK. In its report for the 3rd quarter, Latin America recorded the biggest rise in demand for smartphones with almost 28 million sold, representing an 11 per cent increase year-on-year.
On the other hand, 4G remains a minority at around 25% of the mobile base suggesting a lack of willingness among consumers to pay a premium to migrate from 3G. Encouragingly, key markets such as Brazil and Argentina have smartphone adoption levels of over 40% but lower income countries such as Mexico, Venezuela and Panama are below 20%. Demand in Brazil remains the driver of this sterling regional performance. According to GfK report, Brazil experienced a 17 percent increase in demand in 3Q17 compared to the previous year. As a result, analysts have raised their 2017 forecast for Latin America to growth of nine percent year-on-year.
GSMA report notes that smartphones have been instrumental in establishing Latin America as one of the world’s largest consumers of social media, with the vast majority of usage occurring over mobile networks. For mobile operators, the higher mobile data consumption is contributing to an uplift in ARPU levels and mobile service revenue in Latin America is predicted to grow significantly in the current year.
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