Latin America could be telecom's golden goose

Jessica Scarpati
08 Oct 2010
Telecom operators have only so many new revenue opportunities in mature markets like North America. They are desperately trying to drum up new services to compensate for a saturated market weighed down by sluggish ARPU growth. But poised for huge leaps in data consumption and subscriber growth, Latin America could be telecom's golden goose if carriers can overcome infrastructure challenges, including the lack of subsea cable systems.
"We continue to see really strong growth in Latin America," said Michael Wheeler, vice president of the global IP network business unit at NTT America, the wholesale arm of NTT Com. "We don't have any IP network in South America yet, [but] we've been looking at it very closely, and I think we'll be building out [infrastructure] … in less than five years."
NTT is hardly the only carrier that has noticed Latin America's revenue potential. Consumer and business IP traffic is expected to grow at a 51% CAGR between 2009 and 2014 -- faster there than in any other region of the world, according to Cisco Systems' latest Visual Networking Index, released earlier this year. The Middle East and Africa follow closely behind with a 45% CAGR through 2014.
Mobile data is widely expected to be the fastest growing category of IP traffic. Every region except Japan will more than double its mobile data and Internet traffic, according to Cisco's report. Latin America ranks fifth in mobile data growth with a 111% CAGR through 2014, behind Central/Eastern Europe (114%), Asia Pacific (116%), North America (117%), and Middle East and Africa (133%).
"In all of these countries, you've got the right combination. You've got a reasonably nascent market, particularly for prepaid services, and you've got an area where the local providers and local companies may not have a lot of capital to invest," said telecom consultant Tom Nolle, president of CIMI Corp. "You may be able to move in there entirely on your own if the country's regulations permit it, or as a partner of a local [provider], where there's still a lot of opportunity for subscriber growth."
NTT Communications has been operating private networking services for enterprises in Brazil through its São Paolo-based subsidiary, NTT do Brasil, since 1999. Hoping to expand its footprint further across the continent to support wholesale operations, NTT America and other operators looking to move in will face significant challenges, Wheeler said.


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