The Mobile Economy

The Mobile Economy
Latin America and the

Caribbean 2017
Copyright © 2017 GSM Association

GSMA Intelligence
The GSMA represents the interests of mobile operators GSMA Intelligence is the definitive source of global mobile
worldwide, uniting nearly 800 operators with more operator data, analysis and forecasts, and publisher of
than 300 companies in the broader mobile ecosystem, authoritative industry reports and research. Our data
including handset and device makers, software companies, covers every operator group, network and MVNO in every
equipment providers and internet companies, as well as country worldwide – from Afghanistan to Zimbabwe. It is
organisations in adjacent industry sectors. The GSMA the most accurate and complete set of industry metrics
also produces industry-leading events such as Mobile available, comprising tens of millions of individual data
World Congress, Mobile World Congress Shanghai, Mobile points, updated daily. GSMA Intelligence is relied on by
World Congress Americas and the Mobile 360 Series of leading operators, vendors, regulators, financial institutions
conferences. and third-party industry players, to support strategic
decision-making and long-term investment planning. The
For more information, please visit the GSMA corporate data is used as an industry reference point and is frequently
website at www.gsma.com cited by the media and by the industry itself. Our team
of analysts and experts produce regular thought-leading
Follow the GSMA on Twitter: @GSMA research reports across a range of industry topics.
www.gsmaintelligence.com
info@gsmaintelligence.com
Contents
EXECUTIVE SUMMARY 2
1 INDUSTRY OVERVIEW 8
1.1 Unique subscriber base will continue to grow to reach levels seen 10
in developed regions
1.2 Wide variation in mobile market maturity across the region 11
1.3 Smartphone adoption accelerating in key markets 14
1.4 As 4G coverage reaches critical mass, the technology hits the mainstream 15
1.5 5G will arrive in earnest in the mid-2020s 16
1.6 Smartphone and mobile broadband adoption spurring increase in mobile data usage 17
1.7 Data growth has fuelled a turnaround in revenues 18
1.8 Capex to remain high through to 2020 as 4G coverage broadens and capacity 19
deepens
2 MOBILE DRIVING GROWTH AND INNOVATION ACROSS THE REGION 20

2.1 The direct economic contribution of the mobile ecosystem 21
2.2 Indirect and productivity impacts of mobile technology 22
2.3 Employment 23
2.4 Public funding contribution 24
2.5 Outlook and trends for the period 2016–2020 25
2.6 Latin Americans among most advanced mobile internet users globally 26
2.7 Local startup environment is flourishing 28
2.8 Geographic spread and nature of ecosystem value highlight need 30
for local efforts
2.9 IoT market to see growth driven initially by smart cities and smart meters 32
2.10 Mobile Connect 33
3 MOBILE’S ROLE IN ADDRESSING SOCIAL CHALLENGES IN 34

LATIN AMERICA AND THE CARIBBEAN
3.1 Mobile boosting digital inclusion for the previously unconnected 35
3.2 Delivering financial inclusion across the region 37
3.3 WeCare: supporting the Sustainable Development Goals 40
4 DESIGNING POLICIES FOR THE DIGITAL ECOSYSTEM 42

4.1 Fit-for-digital policies are necessary to boost innovation, investment 43
and regulatory certainty
4.2 Closing the digital divide requires policies to make coverage 45
economically sustainable
4.3 Licensed spectrum is key for digital inclusion and next-generation networks 46
4.4 Policies must be forward-looking in the era of the data economy, big data and IoT 48
4.5 Policies and objectives must be aligned with the fourth industrial revolution 51
Contents 1
THE MOBILE ECONOMY LATIN AMERICA AND THE CARIBBEAN 2017
Executive
Summary
Smartphone and 4G adoption
accelerating
Across Latin America and the Caribbean, smartphone adoption has accelerated to reach 59% of
total connections by the first half of 2017. In the largest markets, adoption has grown particularly
quickly: since the beginning of 2016, almost 85 million new smartphones are in use in the region,
with Brazil adding more than 20 million and Mexico 18 million.
By 2020 the region will have an adoption rate of 71%, ahead of the global average of 66%. This
translates into an additional 171 million new smartphone users across the region by the end of
the decade.
Operators across the region have launched 108 LTE networks in 45 markets, as of June 2017. As
a result, coverage has risen sharply in recent years, now reaching a critical mass of 70% of the
population. 4G adoption rates are now accelerating, with the rate across the region more than
doubling in 2016. By 2020, the region will largely close the gap on the rest of the world, reaching
42% of connections compared to the global average of 44%. Brazil in particular is seeing a
strong 4G growth spurt.
2 Executive Summary
5G to arrive in earnest in mid-2020s
Although the focus for both operators and consumers is currently 4G, 5G coverage will begin
to expand rapidly by the middle of the next decade to reach just under 50% by 2025. Total 5G
connections will exceed 50 million by 2025, nearly 5% of the global total. Adoption will expand
once coverage reaches critical mass in key markets, led by Argentina and Mexico.
Data usage growing, with data revenues powering

a recovery in revenue growth
Driven by the increased mobile broadband and smartphone adoption, mobile data usage is
growing strongly across the region. Overall mobile data usage grew 64% in Latin America in
2016. Going forward, Cisco projects 42% annual growth in data usage to about 5.5 GB per user
(nearly six times the 2016 level) in 2021.
Operators are increasingly successful in monetising this data usage. Data revenue growth,
combined with a positive elasticity response to intense price competition, less regulatory
pressure and an improved economic environment, are driving the first positive ARPU growth
this year since 2012, and the first year of positive revenue growth since 2014. Recurring revenues
will grow at an annual rate of just over 4% through to 2020.
Operators continue to invest in 4G coverage

and capacity expansion
Operators will continue to invest to expand coverage to close to 90% of population and to add
the capacity required for higher data usage. Overall investment by operators in the region will
total nearly $70 billion through to 2020. However, thanks to the revenue recovery, capex as a
percentage of revenues will drop to 20% by 2020, down from over 23% in 2016.
Executive Summary 3
Mobile ecosystem is a major contributor

to the regional economy
In 2016, mobile technologies and services generated 5% of GDP in Latin America, a contribution
that amounted to $260 billion of economic value added. In the period to 2020, this will increase
to $320 billion (5.6% of GDP), as the region experiences strong growth in productivity brought
about by continued adoption of mobile internet.
The mobile ecosystem supported 1.7 million jobs in 2016. This includes workers directly
employed by mobile operators and the ecosystem, and jobs that are indirectly supported in the
rest of the economy by the activity generated by the sector. The sector also makes an important
contribution to the funding of the public sector, with almost $35 billion raised in 2016 – mainly in
the form of general taxation, including VAT, corporate taxes and employment taxes.
Mobile provides a large, scalable

platform for innovation
Latin America boasts some of the most advanced mobile internet users globally. Three of the
top 10 countries surveyed by We Are Social/Hootsuite on daily mobile internet usage are Latin
American, with Brazil ranked second. Overall, South America has the second highest social
media penetration, while Central America is a few places lower.
Combined with Latin America’s rising smartphone adoption and 4G usage, the mobile
ecosystem provides a large, scalable platform for entrepreneurs and innovators. With nearly
350 million mobile internet subscribers currently, and 420 million by 2020, the Latin American
market is larger than the US and in 2020 will rival the EU in size.
Investment in startups in the

region is flourishing
Venture capital and private equity funding has been especially strong in 2017: according to CB
Insights, the number of transactions – 453 – in the first half of 2017 has exceeded the number
for all of 2016, which itself was a record year. The number of deals has been rising strongly each
year since 2014.
Tecnolatinas identified more than 5,000 technology-based private companies in the region. Of
these, 123 are worth more than $25 million and nine are ‘unicorns’ with a value of $1 billion or
more. Of the ecosystem’s total value of $38 billion, nearly 60% were valued between $25 and
$100 million.
Fintech is an especially ripe area for growth, as half of the region’s population is underserved by
the formal banking system. Indeed, the number of fintech startups in the region had grown to
more than 1,000 by December 2016, a significant share of the 5,000 private tech firms identified
by Tecnolatinas.
4 Executive Summary
Mobile’s role in addressing

social challenges
Despite progress made to date, still too many people across Latin America and the Caribbean
are digitally excluded. By 2020, nearly 250 million will remain excluded; these are predominantly
in rural areas, in lower income classes and more likely to be women. The mobile ecosystem must
address challenges and perceptions around safety and security if it is to connect these people,
as well as tackle a lack of digital skills and affordability challenges.
Designing policies fit for the

digital ecosystem
The converging digital ecosystem is highly dynamic, fast-paced and modular. Rising consumer
demand for data requires new technologies and significant investment. At the same time, the
industry is moving forward to connect the unconnected and serve the nascent Internet of
Things (IoT) sector. This all poses regulatory and policy challenges for both the current and
future digital ecosystem. With that in mind, policymakers must seek to support and enable the
digital ecosystem.
Executive Summary 5
MOBILE ECONOMY
LATIN AMERICA
AND THE CARIBBEAN
Unique SIM connections
mobile
subscribers
2016 451 million

3.2% CAGR 2016–20
70%
PENETRATION
RATE
2016 675 million 105%
511 million
3.4% CAGR 2016–20 PENETRATION
RATE*
2020
771 million
76%
2020 115%
*Excluding M2M
Accelerating Mobile broadband connections Smartphone adoption

moves to mobile
broadband 62%
2016
55% 2016
71%
networks and
smartphone
adoption 79%
2020 2020
Data growth Operator total revenues
driving
revenues 2016 $74.0bn
and operator 4.0% CAGR 2016–20
investments
2020 $86.7bn
Operator capex of up to $67.7 billion for the period 2017–20
Mobile Mobile money
internet services
penetration 2016
2016 2020
51% 63%
6.2% CAGR 2016–20
25m 53m 33
2016
SERVICES
Cellular M2M connections
2020
live in 17 countries
20.4% CAGR 2016–20
Mobile
industry
2016 $260bn 5.0%
GDP
contribution
to GDP 2020 $320bn 5.6%
GDP
Public funding Employment

Mobile ecosystem contribution
to public funding (before regulatory
and spectrum fees)
$33.6bn
2016
740,000
Jobs directly supported
by the mobile ecosystem in 2016
980,000
Indirect jobs supported
1
Industry
overview
8 Industry overview
North America Global
SUBSCRIBER SMARTPHONE SUBSCRIBER SMARTPHONE

PENETRATION ADOPTION PENETRATION ADOPTION
2016 2020 2016 2020 2016 2020 2016 2020
80% 84% 78% 81% 66% 72% 51% 66%

5%
4G 11% 2G 4G 2G
10% 27%
25%
28% 43% 45%

2016 2016
63%
30%
84% 3G
30% 3G
2020 2020
Latin America and the Caribbean

SUBSCRIBER SMARTPHONE
PENETRATION ADOPTION
2016 2020 2016 2020
70% 76% 55% 71%

4G 2G
21%
18%
42%
38%
2016
44%
37%
3G
2020
Industry overview 9
1.1
Unique subscriber base will continue to grow
to reach levels seen in developed regions
Compared to developed regions, Latin America and subscriber penetration will grow by 6 percentage
the Caribbean is still relatively underpenetrated, points, to 76%, representing 3.2% annual growth
with unique subscriber penetration (which measures over the remainder of the decade.
mobile usage on a per-person rather than per-
Connections will grow at a similar rate to unique
SIM-card basis) of 70%, compared to more than
subscribers as the SIM ratio remains stable at about
80% in North America and 85% in Europe. The
1.5 SIMs per unique subscriber. Excluding M2M,
region still has further growth to come before
connections will grow at a 3.4% annual rate through
reaching saturation levels of 80% or more. By 2020,
to 2020.
Figure 1 Source: GSMA Intelligence
Unique subscriber growth
Unique subscribers (end-2016) Subscriber growth (2016–2020)
Others 8%
Others 12% Bolivia 2%
Guatemala 2%
Bolivia 2% Cuba 3% Mexico 31%
Brazil 33%
Guatemala 2%
Argentina 3%
Ecuador 2%
Ecuador 4%
Chile 4%
451 million Venezuela 4% 60 million

Venezuela 4% new subscribers
unique subscribers
(70% of population)
13% growth
(additional 6% of population)
Peru 5%
Peru 9%
Colombia 7%
Colombia 12%
Argentina 9% Mexico 20% Brazil 22%
10 Industry overview
1.2
Wide variation in mobile market maturity
across the region
Penetration is not uniform throughout the region. 70% and well below saturation level; these will see
The southern cone countries (Argentina, Chile and significant growth through to 2020. Other large
Uruguay) are already fully saturated, with a unique countries such as Brazil, Mexico and Colombia have
subscriber penetration level above 90%. At the penetration rates near the regional average but still
other end of the spectrum, Cuba, the Dominican have considerable room for growth; hence these
Republic, Ecuador, Guatemala and Haiti have countries will represent the majority of subscriber
penetration rates below the regional average of growth through to 2020.
Table 1 Source: GSMA Intelligence
Subscriber and connections penetration by country
Subscriber penetration Connections penetration

2016 2020 2016 2020
Latin America and the Caribbean 70% 76% 105% 115%
Argentina 91% 92% 143% 150%
Bolivia 62% 67% 95% 104%
Brazil 70% 74% 110% 119%
Chile 91% 93% 141% 150%
Colombia 66% 79% 105% 122%
Costa Rica 83% 82% 163% 183%
Cuba 30% 44% 36% 58%
Dominican Rep. 59% 62% 81% 87%
Ecuador 59% 70% 89% 103%
El Salvador 81% 83% 151% 167%
Guatemala 54% 55% 109% 113%
Haiti 43% 47% 58% 65%
Honduras 66% 72% 100% 110%
Mexico 70% 81% 82% 93%
Nicaragua 79% 79% 143% 156%
Panama 82% 84% 138% 120%
Paraguay 75% 79% 110% 132%
Peru 71% 84% 112% 100%
Puerto Rico 86% 92% 92% 162%
Uruguay 92% 92% 156% 105%
Venezuela 62% 66% 98% 105%
Industry overview 11
Source: GSMA Intelligence
The eight largest markets1
M E X ICO
GUATEMALA
V E NE Z U E L A
COLOMBI A
B RAZ IL
PERU
C H IL E
ARGE NT INA
1. by population as of 2016
Brazil Mexico
TECHNOLOGY MIX TECHNOLOGY MIX
9%
SUBSCRIBER PENETRATION 20% SUBSCRIBER PENETRATION
4G 2G 4G 2G
21% 2016 2020 19% 2016 2020
70% 74% 70% 81%

26% 41% 33%
2016 34% 2016

57% SMARTPHONE ADOPTION SMARTPHONE ADOPTION
2016 2020 48% 2016 2020
53%
69% 76% 55% 72%

39%
3G 3G
2020 2020
Colombia Argentina
SUBSCRIBER PENETRATION SUBSCRIBER PENETRATION

4G 2G 4G 2G
31% 2016 2020 27% 2016 2020
33% 15% 19%
2016
46%
66% 79% 41%
2016
47% 91% 92%
35%
2016 2020 2016 2020
36% 3G
44% 67% 32% 3G
47% 71%
2020 2020
Peru Venezuela
SUBSCRIBER PENETRATION SUBSCRIBER PENETRATION

4G 25% 2G 4G 2G
7% 30%
16% 2016 2020 2016 2020
36%
2016
45%
71% 84% 42%
42%
2016 51%
62% 66%
2016 2020 2016 2020
38% 3G
31% 56% 28% 3G
61% 73%
2020 2020
Chile Guatemala
SUBSCRIBER PENETRATION 16% SUBSCRIBER PENETRATION

4G 27% 2G 4G 2G
2016 2020 8% 30% 2016 2020
23%
46% 2016 52%

91% 93% 29%
2016
54% 55%
63%
2016 2020 2016 2020
28%
3G
47% 71% 54%
3G
55% 65%
2020 2020
1.3
Smartphone adoption accelerating in key
markets
Smartphone adoption
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Global North Latin Argentina Brazil Chile Colombia Guatemala Mexico Peru Venezuela
America America
2016 Q2 2017 2020
Across the region, smartphone adoption accelerated smartphone adoption rate of 72%2 (versus 81% in
in 2016. Adoption rose by 9 percentage points North America).
during the year to 55% of connections, and has
By 2020 the region will have an adoption rate
added a further 4 points in the first half of 2017 to
of 71%, ahead of the global average of 66%.
reach 59%. In the largest markets, adoption has
This translates into an additional 171 million new
grown even more quickly: since the beginning of
smartphone users across the region by the end of
2016, almost 85 million new smartphones are in
this decade.
use in the region, with Brazil adding more than 20
million and Mexico 18 million. Brazil now boasts a
2. Q2 2017
1.4
As 4G coverage reaches critical mass, the
technology hits the mainstream
Figure 3 Source: GSMA Intelligence Figure 4 Source: GSMA Intelligence
Technology migration Brazil leads the region in 4G

adoption
100%
57%
90%
80% 50%
Percentage of connections (excl. M2M)
70%
43%
60%
36%
50%
40%
30%
26%
20%
10%
10%
0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
2G 3G 4G
Operators across Latin America and the Caribbean By 2020, the region will largely close the gap on the
have launched 108 LTE networks in 45 markets as rest of the world, reaching 42% compared to the
of June 2017. As a result, coverage has risen sharply global average of 44%.
in recent years, now reaching a critical mass of 70%
Brazil in particular is seeing a strong 4G growth
of the population.3 As operators continue to invest
spurt. From only 10% of connections at the start of
heavily in 4G networks, coverage across the region
2016, take-up has grown to 34%4 and will reach 57%
will reach 84% in 2020.
by 2020 – the first country in the region to reach
4G adoption rates are now accelerating, with the more than half of total connections on 4G.
rate across the region more than doubling in 2016.
3. Q2 2017, GSMA Intelligence

4. Q2 2017, GSMA Intelligence
1.5
5G will arrive in earnest in the mid-2020s
5G take-up
60
45%
50
52.0
40
31%
30
20 17%
21.6
10
3% 3% 4% 7.7
0
2020 2021 2022 2023 2024 2025
Connections Coverage
(million) (% of population)
While countries such as South Korea and the US 5% of the global total. Among the major markets,
will be the earliest 5G adopters, Latin American Argentina will see the fastest take-up of the new
countries will launch 5G in the early 2020s, with 4G technology, with 15 million connections on 5G by
still operators’ primary focus, including the launch of 2025 (over 20% adoption), followed by Mexico with
LTE-Advanced networks. 5G coverage will begin to over 17 million connections (nearly 15%).
rapidly expand by the middle of the decade to reach
América Móvil has been the clearest about its
just under 50% by 2025.
intentions, with 5G to be launched in Mexico by
Adoption will expand once coverage reaches critical 2020. In Brazil, Telefónica Vivo does not expect to
mass in key markets, reaching 6% by 2025. Total 5G launch 5G before 2022 as it continues to focus on its
connections will exceed 50 million by 2025, nearly 4G as well as fibre broadband investments.
1.6
Smartphone and mobile broadband adoption
spurring increase in mobile data usage
Figure 6 Source: Cisco
Mobile data growth

Mobile data traffic per user (MB/month)
9,000
8,000
44%
7,000
42%
42%
6,000
5,000
4,000
3,000 38%
2,000
37%
37%
1,000
0
Global Latin Brazil Mexico Argentina Chile
America
2016 2021 CAGR
Driven by the increased mobile broadband and countries in the region, with a 44% CAGR through to
smartphone adoption, mobile data usage is 2021.
growing strongly across the region. Overall mobile
Operators are increasingly successful in monetising
data usage grew 64% in Latin America in 2016,
this growing data traffic. In Brazil, Telefónica Vivo
with particularly strong growth in Mexico and
reported a 144% year-on-year increase in data
Argentina – more than 70% on a per-user basis.5
traffic in Q2 2017, which it credited to improving 4G
Data consumption has been fuelled not only by the
coverage and strong adoption and consumption
increased adoption of 4G smartphones but also
trends. It led to a 31% year-on-year increase in
the launch of 15 LTE-Advanced networks in 2016,
data ARPU, more than offsetting the decline in
in 13 countries, including two in Brazil as well as in
voice ARPU. América Móvil’s Mexican unit similarly
Argentina, Chile and Peru.
reported strong trends in Q2, with mobile data
Cisco projects 42% annual growth in data usage or revenues up 23% year-on-year, powering a small rise
nearly 6 times the 2016 level, to about 5.5 GB per in overall service revenues.
user in 2021. Mexico will grow faster than the other
5. Cisco Mobile VNI, 2016 and 2017
1.7
Data growth has fuelled a turnaround in
revenues
Data growth has fuelled a turnaround in revenues
Revenue turnaround in 2017
5.2%
Recurring revenues ($ billion)
4.6%
YoY change 3.6% 75
73 3.1%
71
69
-1.3% 66 67
64
-3.6%
-3.8%
2014 2015 2016 2017 2018 2019 2020
Driven by recovery in major countries
10%
6.2%
5%
2.8%
Year-on-year change in revenues
0%
-1.8%
-3.2%
-5% -4.6% -4.7%
-10% Latin America
Colombia
-15% Brazil
Mexico
-20%
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
The recovery in ARPU that began in late 2016 has • new, more innovative mobile plans for consumers
accelerated in 2017, with the regional weighted that are more tailored to evolving ways of
ARPU growing for the first time since 2012. This has consuming data and certain consumers’ spending
been driven by recoveries in major countries such limits
as Brazil, Mexico and Colombia. Factors that have
• an improved economic backdrop, especially in
driven this include:
Brazil, where GDP grew 1% in the first quarter of
• strong growth in data usage leading to double- 2017 following a deep two-year recession, and in
digit rises in data ARPU Argentina following a contraction in 2016.6
• the elasticity effect of intense price competition Consequently, despite slow subscriber growth,
in markets such as Chile, Mexico and Peru, which recurring service revenues will grow modestly in
has driven strong consumption growth and thus 2017, the first positive year since 2014, and through
monetisation the rest of the decade, at an annual rate of just over
4% from 2016.
1.8
Capex to remain high through to 2020 as 4G
coverage broadens and capacity deepens
Capex to remain strong as 4G networks are built up
16.9 17.3 Total

16.8 23% 17.0 17.1 2017-2020
$68 billion
22% 16.3 16.3
21% 21%
21%
20%
20%
2014 2015 2016 2017 2018 2019 2020
Capex ($ billion) Capex as a % of revenues
In advance of 5G, operators will continue to invest drop to 20% by 2020, down from more than
significant sums in both expanding 4G coverage 23% in 2016.
and adding more capacity – for example, launching
Operators will re-invest some of those savings
LTE-A networks and other upgrades to keep up with
in marketing, customer service and other operating
the growth in data usage. Annual capex will exceed
costs, with EBITDA margin dropping from around
$17 billion from 2018 onwards, and cumulative capex
36% in 2016 to less than 34% in 2020. As a
over the remainder of the decade (including 2017)
percentage of revenues, operators’ operating
is forecast at nearly $70 billion. Due to the revenue
cash flow margins will remain broadly stable.
recovery, capex as a percentage of revenues will
6. “Latin America and the Caribbean: Bouncing Back from Recession”, IMF, May 2017
2
Mobile driving
growth and
innovation
across the
region
20 Mobile driving growth and innovation across the region

2.1
The direct economic contribution of the
mobile ecosystem
The mobile ecosystem consists of mobile network economy, including employee compensation,
operators, infrastructure service providers, retailers business operating surplus and taxes.
and distributors of mobile products and services,
In 2016, the total value added generated by the
handset manufacturers and mobile content,
Latin American mobile ecosystem was more than
application and service providers. The direct
$70 billion (or 1.4% of GDP), with network operators
economic contribution to GDP of these firms is
accounting for the majority of this.
estimated by measuring their value added to the
Direct GDP contribution of the mobile ecosystem

($ billion, % 2016 GDP)
0.90%
47
0.13% 0.16%
0.10% 0.07%
7 8
5 4
Infrastructure Mobile Handset Distributors and Content, applications
providers operators manufacturers retailers and other services
Note totals may not add up due to rounding.
Mobile driving growth and innovation across the region 21

2.2
Indirect and productivity impacts of mobile
technology
In addition to their direct economic contribution, been able to access high-speed mobile broadband
firms in the mobile ecosystem purchase inputs as 4G networks are rolled out, which provides
from their providers in the supply chain. For better access to information and services, with key
example, handset manufacturers purchase inputs impacts in industries such as finance, healthcare,
from microchip providers, and content providers education and agriculture. Lastly, while the adoption
require services from the IT sector. Furthermore, of M2M and IoT is currently relatively limited, we
some of the profits and earnings generated by the expect this to drive efficiency gains in areas such as
ecosystem are spent on other goods and services, manufacturing, logistics and retail.
stimulating economic activity in those sectors. We
Overall, the productivity gains driven by the mobile
estimate that in 2016, this additional economic
ecosystem have been estimated at $170 billion in
activity generated a further $20 billion in value add
2016. More than half of this impact is attributed
(or 0.4% of GDP) in Latin America.
to mobile internet, which has a substantial impact
The use of mobile technology also drives given the relatively low penetration of fixed line
improvements in productivity for workers and broadband in Latin America.
firms across the economies in Latin America. The
Overall, taking into account the direct, indirect and
mobile economy has supported the productivity of
productivity impacts, in 2016 the mobile industry
the labour force, as workers can use mobile voice
made a total contribution of $260 billion to the
and messaging services to communicate more
Latin American economies in value added terms,
efficiently. Employees and businesses have also
equivalent to 5% of the region’s total GDP.
Total (direct, indirect and productivity) contribution to GDP

($ billion. % 2016 GDP)
170 260
3.2%
5.0%
20
70 0.4%
1.4%
DIRECT INDIRECT PRODUCTIVITY TOTAL IMPACT

2.3
Employment
In 2016 mobile operators and the ecosystem wages, public funding contributions and profits paid
provided direct employment to approximately by the industry are spent in other sectors, which
740,000 people in Latin America. In addition to this, provide additional jobs.
economic activity in the ecosystem generates jobs in
We estimate that in 2016, around 1 million jobs
other sectors. Firms that provide goods and services
were indirectly supported in this way, bringing the
as production inputs for the mobile ecosystem
total impact (both direct and indirect) of the Latin
(for example, microchips or transport services) will
American mobile industry to more than 1.7 million
employ more individuals as a result of the demand
jobs.
generated by the mobile sector. Furthermore, the
Figure 11 Source: GSMA Intelligence analysis
Employment impact
(Jobs, thousands)
980 1,720
80 740
235
150
230
45
INFRASTRUCTURE MOBILE HANDSET DISTRIBUTORS CONTENT, DIRECT INDIRECT TOTAL
PROVIDERS OPERATORS MANUFACTURERS AND RETAILERS APPLICATIONS
AND OTHER
SERVICES

2.4
Public funding contribution
The mobile ecosystem also makes a significant from firms and employees. We estimate that the
contribution to the funding of public sector activity ecosystem made a tax contribution to the public
in the region through taxation. For most countries finances of governments across Latin America of
in the world, this includes value added taxes, almost $34 billion in 2016.
corporation tax, income tax and social security
Public funding contribution of the mobile ecosystem

(2016, $ billion)
5.1 33.6
4.9
7.9
15.8
TAXES ON MOBILE TAXES ON HANDSETS TAXES ON PROFITS EMPLOYEE INCOME AND TOTAL
SERVICES CONSUMPTION SOCIAL SECURITY
These public contribution figures do not include In addition to this, operators also make one-off and
regulatory fees paid by operators. For instance, annual payments to secure access to spectrum. For
most operators in the region make annual instance, in 2016 there have been spectrum auctions
contributions to universal service funds, typically in Mexico and Peru, raising almost $1.1 billion.
ranging between 0.2% and 5% of operator revenue.

2.5
Outlook and trends for the period
2016–2020
We expect the economic contribution of the mobile 5.6% of GDP. The majority of this increase is due to
industry in Latin America will continue to grow. In improved productivity driven by continued adoption
value-added terms, we estimate that the ecosystem of M2M and IoT technology, and the increased
will generate $320 billion by 2020, representing digitisation of industry and services.
Outlook to 2020
($ billion, % of GDP)
350
300 5.6%
5.5%
5.4%
250 5.2%
5.0%
200 205 215

195
180
150 170
100
20 25 25
20 20
50
70 70 75 80 80
0
2016 2017 2018 2019 2020
Direct Indirect Productivity % of GDP

2.6
Latin Americans among most advanced
mobile internet users globally
Figure 14 Source: We are Social/Hootsuite, Digital in 2017 Global Overview
Time spent on internet accessed via mobile device
India
Mexico
Philippines
Malaysia
Argentina
Saudi Arabia
UAE
Indonesia
Brazil
Thailand
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Hours per day

Figure 15 Source: We are Social/Hootsuite, Digital in 2017 Global Overview
Social media penetration
North South
America America
66%
59%
East West
Oceania
Asia Europe
57% 54% 52%
Central South
America East Asia
51% 47%
Note: Penetration measured as total active accounts on the top social network in each country compared to population.
Latin America boasts some of the most advanced third and fourth globally in social media usage per
mobile internet users globally. Three of the top 10 day. Overall, South America has the second highest
countries surveyed by We Are Social/Hootsuite social media penetration, while Central America is a
in daily mobile internet usage are Latin American few places lower at sixth.
and the same three countries are listed as second,

2.7
Local startup environment is flourishing
Figure 16 Source: CB Insights
Venture capital and private equity funding
500
450
5.3
400
350
300
3.7
No. of deals
250
200
2.2
2.0
150
100 1.2
0.7
50
0
2012 2013 2014 2015 2016 2017 H1
Mobile & Total funding

Internet deals Other deals
telecoms deals ($ billion)
Includes all deals tracked by the CB Insights database, i.e. venture capital, private equity, corporate minority investments and
corporate VC investments, angels, others.
Venture capital and private equity funding has 2017 has also seen a record level of funding in dollar
been especially strong in 2017, with more terms.7 However, as most deals are for small dollar
transactions (453) in the first half of 2017 than in amounts – and the amounts are often not disclosed
all of 2016, which itself was a record year. Moreover, – the number of deals is a better indicator of the
the number of deals has been rising strongly each health and momentum of the startup environment.
year since 2014.
7. Financing totals can be heavily influenced by large deals in a particular time period – for example, a single transaction in Brazil of over $2 billion in May 2017 (XP Investimentos) and
one in Jamaica for more than $1 billion in April 2017 contributed significantly to this year’s high dollar figures

Figure 17 Source: Latin America Riding the Technology Tsunami, Tecnolatinas, January 2017
Lion’s share of startups have relatively low valuations
>$1 billion
$500m-1bn
Total ecosystem value

(January 2017):
$100-500m
$37.7 bn
$50-100m
$25-50m
0% 10% 20% 30% 40% 50% 60% 70%
Value Companies
Tecnolatinas identified over 5,000 technology- fintech startups in the region had grown to more
based private (non-state-owned) companies born than 1,000 by December 201611, a significant share of
and/or headquartered in the region; of these, 123 are the 5,000 tech firms identified by Tecnolatinas.
worth more than $25 million and nine are ‘unicorns’
Among the many notable fintech startups are the
with a value of $1 billion or more.8 Although these
following:
nine unicorns account for more than 60% of the
ecosystem’s total value of $38 billion, nearly 60% • Mesfix, a Colombian venture that helps SMEs
were valued between $25 and $100 million, and (including micro-enterprises) raise capital by
more than 4,000 private tech companies are worth selling their receivables
less than $25 million. • QueroQuitar, a Brazilian financial services startup
E-commerce, with a market size of $70 billion that helps consumers manage and negotiate their
in 20159, accounts for much of the value of debts
Tecnolatinas today, with many of the unicorns such • Nubank, a Sao Paulo-based startup that offers
as Mercadolibre, Despegar, B2W and OLX in the consumer credit. It raised $80 million from
e-commerce space. American and Russian venture capitalists in 2016
The Tecnolatinas report highlights areas where it • Kueski, a Mexican short-term micro-loan firm that
expects the greatest future growth opportunities: raised $10 million in series A equity from Mexican,
fintech, agtech/food tech, AI and automation American and UK venture capitalists in 2016 and
software, synthetic biology, renewable energy, VR/ $25 million in debt financing.
AR and IoT.
Visa has also launched an accelerator programme
Fintech is an especially ripe area for growth, as half to assist new ventures in the fintech space in Brazil
of the region’s population is underserved by the with their business models and fundraising.
formal banking system.10 Indeed, the number of
8. Latin America Riding the Technology Tsunami, Tecnolatinas, 2017

9. Latin America Riding the Technology Tsunami, Tecnolatinas, 2017
10. “Mobile money in Latin America:An industry taking off”, GSMA, March 2017
11. “2017 will be the year of Fintech for Inclusion in Latin America”, Finnovista, December 2016

2.8
Geographic spread and nature of ecosystem
value highlight need for local efforts
Table 2 Source: CB Insights
Funding flowing disproportionately to regional leaders
5 years (2012-16) H1 2017

Funding No. of % funding % deals % population % unique Funding No. of
($ million) deals mobile ($ million) deals
subs
Brazil 5,033 484 51% 47% 33% 33% 3,247 223
Mexico 2,407 189 24% 18% 20% 20% 77 71
Chile 681 80 7% 8% 3% 4% 16 31
Argentina 658 115 7% 11% 7% 9% 68 46
Colombia 529 45 5% 4% 8% 7% 234 28
Puerto Rico 166 30 2% 3% 1% 1% 345 13
Jamaica 151 2 2% 0% 0% 0% 1,035 1
Peru 47 21 0% 2% 5% 5% 38 13
Total 9,831 1,032 5,360 453
Includes all transactions in the CB Insights database (including VC plus private equity, corporate investments, angels, etc.)
Similar to other regions, startup funding flows has flowed to Brazil, and nearly as much in terms of
disproportionately to the regional leaders. Over the share of deals – though it has only one-third of the
past five years, more than half of startup funding region’s population and mobile subscribers.

Figure 18 Source: Tecnolatinas
Share of Tecnolatinas by country
Brazil
Others 48%
5%
Colombia
7%
Chile 8%
14%
18%
Mexico
Argentina
Similarly, the share of established tech startups Startup Perú was launched by the Ministry of
by country shows a strong bias towards larger Production in 2012. In the first seven months of 2017,
countries, with the top three countries accounting more than 800 ventures applied for and more than
for 80% of the total. By value, Brazil and Argentina 100 received seed funding of between $5,000 and
alone account for 82%. $150,000. The Ministry of Production also launched
Innovate Perú in 2014, with a goal to not only
The disproportionate share of financing and,
support entrepreneurs but also develop innovative
especially, of established tech startups in Argentina
systems and processes within existing companies.
and Brazil highlights the importance of forming and
Peru has a $100 million fund to promote micro,
supporting an ecosystem to the development of the
small and medium-sized enterprises, with 40%
technology sector. However, once the ecosystem
contributed by the Inter-American Development
is sufficiently developed, it is largely self-nurturing
Bank (IDB) and the remainder by the Ministry of
thanks to network effects and virtuous cycles. Apart
Finance. Additionally, The World Bank approved
from Latin American tech hubs such as Buenos
a $45 million loan in 2017 for the development of
Aires and São Paulo, the same development cycle
science, technology and innovation in Peru.
has occurred and continues internationally in places
such as Berlin, Israel and Singapore. In Colombia, iNNpulsa, an agency within the Ministry
of Commerce, Industry and Tourism, was set up in
Smaller countries, such as Colombia and Peru,
2012 to “promote entrepreneurship, innovation and
are making multi-pronged efforts to support
productivity as the path for business development
ecosystem development. In contrast with the
and Colombia’s competitiveness”. Its medium-term
US and other developed countries, the lack
aim, for 2018, is to help realise the government’s
of a strong venture-capital network as well as
goal of being one of the three most innovative
foreign investors’ hesitation around committing
and competitive economies in the region. From
significant capital into a region with a history of
its inception to early 2016, iNNpulsa has invested
hostility towards them puts more of the burden on
around $80 million into 1,200 ventures. There
government-backed entities to deliver seed funding
have also been local initiatives in Colombia, such
and startup support. This is something that Israel
as Medellín’s incubator Ruta N, which started in
recognised when developing its tech sector in the
2010, providing funding and workspace to local
1990s. Nevertheless, startups today have access
entrepreneurs.
to advantages such as cloud infrastructure and
collaborative workspaces that previous generations
did not, so the seed capital required is usually much
less now.
12. “Gobierno ha invertido US$80 millones en apoyo a los emprendedores”, El País, March 2016

2.9
IoT market to see growth driven initially by
smart cities and smart meters
Several promising initiatives have been announced group successfully tested connectivity management
by operators, in cooperation with equipment of a telemetry solution for residential water meters.
vendors and the wider ecosystem, in the IoT space Telemetry will allow clients to monitor their daily
recently. Among the focus areas are smart cities use, will facilitate accurate invoicing by avoiding
and smart meters, but as the technology develops estimated use, and will detect leaks and abnormal
a greater range of initiatives will be tested and situations in the home. It will also offer the water
deployed. network operation team information regarding
provision to the end customer.
Telefónica and Huawei have opened a laboratory
in Brazil for the development and testing of IoT In Mexico, AT&T and GE unit Current are
applications. The Open IoT Lab is located at collaborating with local authorities to begin
Telefónica’s research centre in Rio de Janeiro and equipping streetlights with cameras, microphones
will be open to partners and third-party developers, and sensors. These sensors will help authorities
with the goal to boost the IoT ecosystem and drive estimate crowd sizes and check vehicle speeds. For
innovation in the IoT space. Solutions will be built motorists, they will help locate parking places. Police
using narrowband IoT (NB-IoT), a low power, wide can use the smart infrastructure to monitor criminal
area (LPWA) technology standard using licensed activity. Most importantly, the smart technologies
spectrum that enables low battery consumption will help save on energy costs, monitor air quality
with greater coverage. and issue alerts for emergency weather conditions.
AT&T is providing both the connectivity and the
Telefónica and Huawei also have a smart meter
platform for the service.
project with Chilean water utility Kamstrup. The
Cellular M2M connections

(million)
53
45 CAGR
31
37 20%
25
21
2015 2016 2017 2018 2019 2020
Note: Cellular M2M forecasts exclude licensed LPWA connections

2.10
Mobile Connect
Mobile Connect is the global, mobile industry-led, such concerns were cited by 64% of non-mobile
single login solution that delivers secure consumer internet users in the GSMA Intelligence 2016
access to websites and apps. It uses the consumer’s Consumer Survey.
unique mobile number to verify and grant online
The Mobile Connect solution is already available to
access anywhere the user sees the Mobile Connect
more than 3.1 billion consumers globally. Telefónica
logo. Mobile Connect can play a significant role in
is leading the way in Latin America, having enabled
driving growth within digital economies.13
Mobile Connect in Argentina, Brazil, Chile, Colombia,
Mobile Connect provides clear advantages to Mexico, Peru and Uruguay; more than 158 million
consumers, such as eliminating the ever-increasing mobile subscribers in these markets have access
number of passwords needed to securely maintain to Mobile Connect. América Móvil has also made
online identities, and giving consumers control Mobile Connect available to its 68 million customers
over their data, helping them interact online with in Mexico.
confidence. Mobile Connect can reduce the risk of
Latin America is a key region targeted for growth
fraud for service providers when users access their
in 2017, as more operators in more countries make
services, and can reduce the number of abandoned
Mobile Connect available to their customers, and
online transactions. Issues around safety and
operators grow their customers’ engagement with
security are a particular concern in Latin America;
the service in all markets.
13. See www.mobileconnect.io for more information on Mobile Connect

3
Mobile’s role
in addressing
social
challenges in
Latin America
and the
Caribbean
Mobile’s role in addressing social challenges in
34 Latin America and the Caribbean
3.1
Mobile boosting digital inclusion for the
previously unconnected
Mobile internet penetration
100%
90%
26% 28% 22% 31% 34%
80% 40% 37% 35% 38%
70% 54% 49%
60%
50%
40%
30%
20%
10%
0%
Global North Latin Argentina Brazil Chile Colombia Guatemala Mexico Peru Venezuela
America America
Additional mobile internet

2016 mobile internet subscribers Remain digitally excluded in 2020
subscribers by 2020
Latin America has seen rapid growth in the number can bring. By 2020, nearly two thirds of the
of mobile internet subscribers over recent years, population will be connected, still well behind the
with a total of nearly 350 million, registering developed market average but in line with the global
growth of almost 10% since the start of 2016. Of average. However, nearly 250 million people across
these subscribers, more than two thirds connect the region will still be digitally excluded. There
to the internet via mobile broadband (3G or 4G) remain significant barriers to adoption, particularly
networks. As the importance of digital access and for underserved population groups (rural, women,
engagement increases, so this figure will continue to low income and youth).
grow strongly, to reach about 420 million by 2020.
Mobile internet penetration also varies significantly
Despite the growth to date, only slightly more across the region. Chile had the highest penetration
than half of the population currently have a mobile as at the end of 2016, with Argentina only slightly
internet subscription, well below the developed behind. In contrast, the Dominican Republic,
market average of two thirds – though some lower- Guatemala and Haiti have mobile internet
income groups may connect using Wi-Fi only. penetration rates of one third or less (Cuba
has among the lowest levels of mobile internet
As a result, around 300 million people are
penetration globally, at 3% of the population).
digitally excluded and unable to enjoy the
socioeconomic benefits that mobile internet

Latin America and the Caribbean 35
Key barriers to digital inclusion in Latin America

Table 3 Source: GSMA Intelligence Consumer Survey 2016
Safety/security the highest barrier for non-users of mobile internet
Safety and Lack of Affordability Lack of Lack of Other

security digital skills awareness network
concerns and locally coverage
relevant
content
Argentina 50% 66% 77% 43% 3% 19%
Brazil 29% 39% 41% 16% 3% 7%
Chile 73% 81% 69% 42% 2% 19%
Colombia 68% 57% 52% 28% 8% 13%
Guatemala 71% 33% 34% 20% 6% 11%
Mexico 81% 49% 59% 38% 12% 19%
Nicaragua 42% 24% 25% 15% 5% 7%
Puerto Rico 99% 99% 91% 48% 10% 14%
Note: sample size 8,000 (1,000 per market). Results shown for those who have not used the internet on a mobile
phone in the past three months. Percentages for “strongly agree” to questions regarding safety, skills, affordability etc.
as reason for non-usage. The number of non-users ranges from 129 (13%) in Brazil to 386 (39%) in Nicaragua.
The GSMA Intelligence Consumer Survey 2016 • Lack of digital skills was cited by an average
covered 54 countries from across the globe, of 56% of non-users. Affordability was also a
including eight markets in Latin America. Among significant barrier in many markets (average 56%),
the key findings in the survey from the 8,000 partly a reflection of the high levels of inequality
respondents in Latin America were the following: in the region.
• An average of 25% of respondents had not used • By contrast, as 3G coverage exceeds 90% in the
the internet on a mobile phone in the past three region and 4G is now 70%, poor coverage was
months, ranging from 13% in Brazil to 39% in cited by only 6% of non-users on average.
Nicaragua.
• The largest barrier identified was safety and
security concerns, cited by an average of 64%.

3.2
Delivering financial inclusion across the
region
Although considerable progress has been made in recent years, a large
percentage of the population across Latin America and the Caribbean
remain unbanked, and half are underserved by financial services. In
some countries, such as Haiti and Nicaragua, the preponderance of the
population is underserved.
Mobile money
can drive Half of adults are
underserved by formal
financial financial services
inclusion in
Latin America
80+20+M
and the
Ranging from
Caribbean
80% over 80% in Haiti
and Nicaragua
35+65+M
35%
To less than
35% in Brazil
and Jamaica

Over the last few years, the majority of financial regulators in the region
have understood the power that mobile money has to deliver financial
services to the underserved, combat poverty and boost the economy. Most
regulators across the region have therefore adopted an enabling regulatory
framework for mobile money, or are actively working towards adopting one
for their market.
Figure 21 Source: GSMA
Enabling mobile money regulation timeline
Bolivia Peru Colombia El Salvador Honduras
Brazil Paraguay
Uruguay
2011 2012 2013 2014 2015 2016

Regulators’ efforts are paying off and, coupled • The number of live mobile money services in the
with industry investment, mobile money services region grew from 10 to 33 during this period. At
are experiencing fast growth across all the relevant least three countries have more mobile money
metrics: accounts, agents and transaction volumes accounts than bank accounts.
and values. Latin America was the fastest growing
• Four deployments have more than 1 million active
region in terms of registered accounts in 2016.
accounts each.
• Active mobile money accounts grew from less
than 1 million in December 2011 to more than 10
million by the end of 2016.
Mobile money highlights, 2016
There are Largest regional growth of

registered accounts
33 live services
in 17 countries 23m
Mobile money is available in the 17m +35%

majority of markets in the region growth
where less than 30% of the population has
an account at a formal financial institution.
Dec 2015 Dec 2016

3.3
WeCare: supporting the Sustainable
Development Goals
The 17 UN Sustainable Development Goals, and the actively contribute to achieving the UN Sustainable
169 associated targets, represent an enormous level Development Goals. More than 48 mobile operators
of ambition for the world and the region. Successful from 14 countries have already joined the campaign.
delivery of the SDGs requires the power of mobile to They are working hand-in-hand with local
be fully leveraged by all stakeholders involved and authorities and civil organisations on joint initiatives
a commitment to innovate and collaborate for an to tackle handset theft, protect children, contribute
effective implementation. to public safety, promote the recycling of electronic
waste and develop preparedness for natural
In that spirit, the mobile operator community in
disasters, among other initiatives.
Latin America launched the WeCare campaign
back in 2014 in Brazil. It is a unique example of self- During 2017, mobile operators in Guatemala, Chile,
regulation, commitment to the community and a Peru and Ecuador joined the WeCare campaign.
powerful vehicle for the regional mobile industry to
14 1st 19 10 48
Campaign Campaign Public Areas of industry Mobile network
launches in the launched in announcements of initiatives operators
region February 2014 industry initiatives committed to the
SDGs

Countries that have launched WeCare campaigns and SDG-related

initiatives NICARAGUA
HONDURAS
GUATEMALA
DOMINICAN
REPUBLIC
MEXICO
COSTA
RICA
EL
SALVADOR
COLOMBIA
ECUADOR
PERU
BRAZIL
CHILE
BOLIVIA
ARGENTINA
The initiatives announced in

countries around the region
ENVIRONMENTAL
CARE
REDUCING
HANDSET THEFT
MOBILE
PRIVACY
contribute to achieving the
following Sustainable
Development Goals of the
DISASTER DIGITAL MOBILE
United Nations
RESPONSE INCLUSION & HEALTH
CONTRIBUTION TO SMS SPAM CHILD

For more information on the WeCare campaign, please visit:
PUBLIC SAFETY CONTROL PROTECTION www.gsma.com/latinamerica/wecare

4
Designing policies
for the digital
ecosystem
The converging digital ecosystem is highly dynamic, In this context, businesses are expanding beyond
fast-paced and modular.14 In this new competitive national borders, and transnational data transfers
reality, markets are volatile as innovation thrives are increasing with the need to host and process
and consumer preferences change quickly.15 Smart data in multiple jurisdictions. Rising consumer
mobile devices have increasingly become a relevant demand for data requires new technologies
part of everyday life. As users communicate, share and significant investment. At the same time,
content, make purchases or search for information the industry is moving forward to connect the
online, they create an enormous pool of data that unconnected and to serve the nascent IoT industry.
can be used to better tailor offers of digital services
All of these issues pose regulatory and policy
to consumers. With the increasing adoption of
challenges for the present and future digital
smartphones, 9 out of 10 people connected to the
ecosystem. With that in mind, the following are
internet in Latin America had a smart mobile device
important policy issues that must be considered
as of 2016.16
by policymakers seeking to support and enable the
digital ecosystem.
14. For more on the converging digital ecosystem, see: A new regulatory framework for the digital ecosystem, GSMA/NERA, 2016
15. For more on competition in the digital ecosystem, see: Resetting competition policy frameworks for the digital ecosystem, GSMA, 2016
16. “9 out 10 people connected to internet in Latin America have a Smartphone”, ComScore, October 2016
42 Designing policies for the digital ecosystem

4.1
Fit-for-digital policies are necessary to
boost innovation, investment and regulatory
certainty
The sustainability of the mobile industry can either challenge of striking the right balance of future-
be supported by an adequate regulatory framework proof regulation based on incentives that speeds
and forward-looking policies or be hampered by innovation, brings long-term efficiencies, enables
the unintended effects of legacy regulation. In investment and provides regulatory certainty.
this context, regulators and policymakers face the
New dynamics of the digital economy
DYNAMIC
waves of
investment and
technology
QUALITY BIG DATA

more important as a key
to consumers competitive
than price factor
BROADER
MARKETS
with traditional
boundaries NETWORK
blurring
MULTI-SIDED EFFECTS
markets and and economies of
platforms scale for digital
services
Designing policies for the digital ecosystem 43

Countries such as Argentina, Brazil and Colombia and paving the way for new areas of business, such
are starting the process of modernising their as IoT, big data and 5G.
regulatory frameworks. This includes the
Over the last couple of years, countries in the
implementation of measures that facilitate
region have begun discussing the opportunities and
deployment of infrastructure and incentivise
advantages that would come with the constitution
infrastructure sharing; the design of a regulatory
of a digital regional market, with the Pacific
agency for the converging ecosystem; the use of
Alliance taking the lead. Latin America has not
public buildings for the installation of antennas; a
constituted a supranational institutional structure
rethink of privacy frameworks; and the discussion of
that could form the basis for establishing policies
policies for IoT.
and mechanisms towards digital integration,
However, these are small steps towards a as in the European Union. However, countries
comprehensive future-proof policy that must be gathered in different forums – mainly the Pacific
continually re-examined and be flexible enough to Alliance and eLAC – have identified key areas in
suit changes in consumer preferences, markets and which policies and regulation could be regionally
technology over time.17 harmonised, allowing Latin American countries to
take advantage of economies of scale and scope.
For example, most countries in the region lack
The key areas include spectrum harmonisation,
a regulatory framework that provides flexibility,
roaming, taxation, e-government, cross-border data
incentives and low risks for investment in network
transfer, international trade and e-commerce. To
expansion. Such frameworks should be targeted
allow these initiatives to grow and have a tangible
at infrastructure sharing, efficient spectrum
positive impact, countries and stakeholders in
management, local administrative effectiveness,
the region need to move beyond intentions and
independent regulators and ex-post regulation.
work on initiatives that include precise objectives,
At the same time, rather than limiting operators’
performance indicators, deadlines for actions and
ability to innovate commercially with restrictions
benchmarking, based on realistic and feasible
on the segmentation of commercial offers or the
working programmes and budgets.
application of fair-use policies, modern frameworks
should incentivise innovative business models for all
ecosystem players, avoiding regulatory distortions
17. GSMA has developed a series of policy recommendations to establish principles-based, flexible regulatory frameworks in Argentina, Brazil and Colombia.

4.2
Closing the digital divide requires policies to
make coverage economically sustainable
Extending the reach of mobile networks is the municipalities have retained high levels of
first step towards closing the digital divide in Latin autonomy, which slows infrastructure rollout.
America. While 2G networks cover most of the
In the past, regulators have relied on public
population, 7.4%18 of Latin Americans still lack access
interventions such as collecting universal service
to a mobile broadband (MBB) capable technology
fund (USF) levies, stringent coverage obligations or
(3G or 4G). Despite being the developing area
deploying wholesale networks to extend coverage.
with the highest level of coverage, more than
However, these initiatives have unintended negative
50% of the rural population remains uncovered
effects that often outweigh the benefits, on top of
by a MBB capable network.19 This coverage gap is
the extra public expenditure they generate. Before
the consequence of a basic economic challenge:
considering this type of intervention, regulators
deploying infrastructure in remote areas can be
should optimise their regulatory framework to
twice as expensive compared to urban areas, while
improve the profitability of extending coverage,
revenue opportunities can be just a tenth. Achieving
thus creating a natural incentive for operators to
economically sustainable coverage of these rural
invest in rural areas. This can be accomplished by
areas requires a concerted approach between
reducing unnecessary regulatory costs, offering
industry and government. Setting an overarching
more harmonised spectrum – especially the 700
broadband policy must incentivise network
MHz band – and giving operators the flexibility to
investment and engineer institutional governance
optimise their operations, such as through network
to allow for agency collaboration. In Latin America,
sharing agreements.
18. GSMA Intelligence data for June 2017; Latin America 3G population coverage 92.6%
19. Estimated using GSMA Intelligence and World Bank data

4.3
Licensed spectrum is key for digital inclusion
and next-generation networks
Spectrum continues to be a vital asset for mobile spectrum policy and a long-term spectrum roadmap
operators. As business models adapt to reflect the play a key role, helping the industry secure the
rising level of competition in markets as well as investment needed to further expand mobile access
technology developments, consumer preferences and enhance the quality, range and affordability of
also continue to change. An example is the growth services. Although there has been an improvement
in demand for data, which has continued to in the amount of spectrum assigned to mobile
accelerate in recent years, growing by 64% in 2016 industry over the last five years, there is still a need
and forecast by Cisco to grow 45% per year through for more timely and affordable spectrum to meet
to 2021.20 consumer demand and improve quality of service.
To meet this increasing demand and continue Countries in Central America such as El Salvador,
along the path towards universal broadband Guatemala and Panama need to get up to speed in
access, operators need affordable and fair access assigning spectrum for mobile services, as they are
to sufficient, harmonised spectrum. Effective behind the regional average.
Licensed mobile spectrum by country in Latin America

(MHz accumulated)
AVERAGE AMOUNT OF LICENSED
SPECTRUM ACROSS REGION
67%
62% 223 MHZ 336 MHz
61% 2012 2017
57% 58%
180
51% 50%
48%
47% 46% 47%
42%
38%
280 34%
280 300 130 32%
28% 220 190 27%
160 150
454 120 130 100
180 134 120 60
60 20
210 182 250 11%
150 160 180 170 170 165 150 160 160 126
110 135 135 164
Brazil
Chile
Mexico
Argentina
Uruguay
Costa Rica
Peru
Nicaragua
Honduras
Ecuador
Colombia
Paraguay
Bolivia
Dominican Rep.
Venezuela
Panama
Guatemala
El Salvador
2G/3G 4G 4G % of total
20. Cisco VNI Mobile Forecast Highlights, 2016-2021

Governments play a key role in the development impact consumers through more expensive, lower
of mobile communications. For example, those quality mobile services. High prices can also lead
countries that use spectrum to maximise state to spectrum going unsold, which means a valuable
revenues (by adopting policies that inflate spectrum state asset goes unused and fails to benefit the
prices) risk driving up the cost and reducing the digital economy. Spectrum pricing best practice
quality of mobile services. In 2016, the cost of relies on the following:
spectrum amounted to 12.8% of mobile service
• Establishing reasonable reserve prices and
revenue, which is around twice the level seen in the
annual fees
US and other developed markets.21 Furthermore,
the amount of spectrum that is assigned to mobile • Licensing spectrum as soon as possible, thus
services varies widely in Latin America. avoiding the creation of artificial scarcity
Spectrum prices22 – mainly through reserve prices – • Avoiding policies that create risks for mobile
are increasing in the region, making extremely high operators leading them to overbid for spectrum
prices more and more common, mostly because • Publishing long-term management plans
of national political factors. Similarly high ongoing including a spectrum roadmap that prioritise
annual fees, such as in Mexico, also contribute social and economic benefits over short-term
to the rising cost of mobile spectrum. Evidence income for the state.
shows that high spectrum prices can negatively
Spectrum for 5G23

Significant, new and widely harmonised mobile spectrum is needed to ensure 5G services meet
future expectations and deliver the full range of potential capabilities. 5G needs spectrum within
three key frequency ranges to deliver widespread coverage and support all use cases: sub-1 GHz, 1–6
GHz and above 6 GHz.
Technology-neutral spectrum licences are essential since they allow bands currently used for existing
mobile technologies to be easily refarmed for 5G, thus ensuring spectrum is used more efficiently.
Three key frequency ranges for 5G
Sub-1 GHz 1–6 GHz Above 6 GHz

Will support widespread Offers a good mix of Supports ultra-high
coverage across urban, coverage and capacity broadband speeds
suburban and rural areas, benefits envisioned for 5G
and help support IoT
Includes the 3.5 GHz IMT Focus on above 24 GHz
range, which is likely to be including 26 GHz and/or 28
the basis of many initial 5G GHz bands
services
Some interest in exploring
bands in the 6–24 GHz range
21. Supporting Mexican digitisation: Effective mobile spectrum management and pricing, Coleago Consulting, 2017
22. See Effective Spectrum Pricing, GSMA, 2017
23. See 5G Spectrum Policy Position, GSMA, 2017

4.4
Policies must be forward-looking in the era
of the data economy, big data and IoT
Privacy
Privacy and data flows are a key policy issue for planning. Privacy frameworks should not only allow
the digital ecosystem. Many countries in Latin big data but also encourage its use, while ensuring
America are seeking to create forward-looking appropriate protections for users are in place.24
rules that are consistent with the reality of the
Latin America should ramp up its efforts to make
digital ecosystem, by rethinking existing laws and
greater use of big data to make better public policy
regulations or seeking to create or implement new
decisions. To ensure trust in the data ecosystem,
privacy frameworks. Latin American countries
aspects should be addressed such as accountability
should take advantage of these processes to create
and transparency, which involves coordinated action
comprehensive data policies and regulations that
between relevant stakeholders. An example is the
boost innovation, consider the digital ecosystem’s
project “Big Data for measuring and fostering the
dynamism and allow for more sustainable, advanced
digital economy” by the United Nations Economic
and inclusive services.
Commission for Latin America and the Caribbean
For example, big data can improve decision-making (ECLAC), which aims to boost use of big data to
in areas that are critical for development, such as support policy-making at the national and regional
health, natural disaster management and urban levels.
Cross-border data flows
International flows of data bring technical benefits circumstances. Regulations applying to cross-border
and play a crucial role in innovation, competition data transfers must be risk-based (to ensure data is
and socioeconomic development. In running handled appropriately and with due safeguards) and
a mobile network, large batches of data are interoperable across the region (to achieve greater
generated, and operators are able to store and legal certainty and enable a scalable solution that
process large amounts of data in multiple countries. allows companies to take advantage of economies
This allows them to offer a wide range of services of scale and scope).
and advanced solutions to consumers while also
Several countries in Latin America, such as
building economies of scale. Since data centres
Argentina and Mexico, restrict cross-border transfers
are sometimes located in countries other than that
of personal information to those countries that
of the source of data, cross-border data flows are
are not deemed to provide “adequate” protection.
crucial for the provision of innovative and advanced
These countries rely heavily on consent to allow
services.
data transfers to jurisdictions that are deemed
From a legal and economic standpoint, this has “inadequate”. This solution, however, from a
several implications ranging from the applicable practical perspective, should not be the only basis
jurisdiction, to balancing the protection of the right for the international transfer of data. Policymakers
to privacy with legitimate business purposes and should consider the importance and validity of other
pro-consumer benefits. To address these matters, instruments such as binding corporate rules (BCRs),
restrictions on international data flows must be legitimate interest and voluntary certification.
legitimate, proportionate and applied only in limited
24. See Mobile Privacy Principles, GSMA, 2016

Internet of Things
Many governments and regulators recognise constantly being developed. The creation of new
the tremendous impact and value that mobile approaches can be heavily affected by legacy
operators and the wider IoT ecosystem can deliver. regulation – particularly because services in IoT are
However, IoT is still a nascent industry, and, as such, fundamentally different to traditional services.
innovative technologies and business models are
IoT is fundamentally different from traditional telecoms services
Traditional services IoT
Level of maturity High Low
Connected elements Handsets All types of device
Correlated to number Correlated to number

Connections
of people of devices
Core service Connectivity Many types of application
Connectivity ARPU High Varies
Business model B2C or B2B B2B2C or B2B2B


Digital identity
Countries such as Argentina and Peru are ramping social, cultural and economic inclusion. To fully meet
up their digital identity initiatives. These entail these objectives, the initiatives must be based on
making e-government services available for citizens open standards, provider- and technology-neutral,
through multiple electronic devices and platforms, and voluntary.
and are focused on achieving greater financial,
4.5
Policies and objectives must be aligned with
the fourth industrial revolution
The changes underway in the digital ecosystem are Before the end of 2018, many countries in Latin
sweeping and profound. If the goal of government America will undergo national elections. If
intervention in the economy is to identify and governments want to make the digital revolution a
remediate shortcomings in market outcomes, thus priority, a forward-looking digital strategy should be
enhancing social and economic welfare, policies put forward that can effectively and positively shape
that fail to achieve that should be redesigned or the digital agenda in each country as well as in Latin
reconsidered. Legacy policies designed when America. This means creating a clear, transparent,
competition was less intense and markets were not predictable and business-friendly environment that
so dynamic and interrelated often end up distorting allows growth in terms of investment, innovation
markets and inhibiting competition and innovation. and productivity, thus leveraging the fourth
This means rethinking policy and regulations for the industrial revolution.
digital revolution to ensure they boost competition
and are both light and flexible.

Extending the benefits of the digital age
ACCESS TRUST
Consumers and businesses need Consumers and businesses must have

connectivity that is available, confidence that their data and
dependable, reasonably fast and transactions are secure, and that they
affordable. can control how their personal
information is used.
POLICY LEVERS POLICY LEVERS

Set a broadband policy Set data security & privacy rules
that encourages network investment without stifling innovation
Support infrastructure rollout Encourage the use of digital IDs
and remove administrative barriers to enable the digital economy
Plan spectrum transparently Build digital finance systems

ITY CONN to enable e-commerce and mobile money
to increase investment certainty
CTIV EC
DU T
IO
O
PR
N
CHO
NIENCE
ICE OPP
VALUE TO CITIZENS
NVE
AND SOCIETY
CO
OR
T
UN
T
ITY EN
ENTERTAINM
INCENTIVES INNOVATION
Consumers need basic digital skills Consumers and businesses benefit

and compelling reasons to subscribe from new products and services that
to broadband access, including flow from a healthy and competitive
relevant content and local services. digital economy.
POLICY LEVERS POLICY LEVERS

Promote digital literacy Modernise telecoms regulation
and lifelong learning to fit the digital age
Push m-government services Apply regulation consistently
to increase efficiency and engagement in a technology-neutral way
Support local content Support digital enterprise
and services in local languages and the digitalisation of industry

gsma.com
To download the full report please visit
the GSMA website at www.gsma.com
GSMA HEAD OFFICE

Floor 2
The Walbrook Building
25 Walbrook
London EC4N 8AF
United Kingdom
Tel: +44 (0)20 7356 0600
Fax: +44 (0)20 7356 0601

The Mobile Economy - Latin America and The Caribbean 2017

Uploaded by

Copyright:

Available Formats

The Mobile Economy - Latin America and The Caribbean 2017

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Mobile Economy - Latin America and The Caribbean 2017

Uploaded by

Copyright:

Available Formats

How is the mobile market evolving in Latin America and the Caribbean?

How is the mobile market evolving in Latin America and the Caribbean?

What role does mobile play in driving economic growth and innovation in the region?

What role does mobile play in driving economic growth and innovation in the region?

Latin America and the

Copyright © 2017 GSM Association

2 MOBILE DRIVING GROWTH AND INNOVATION ACROSS THE REGION 20

3 MOBILE’S ROLE IN ADDRESSING SOCIAL CHALLENGES IN 34

4 DESIGNING POLICIES FOR THE DIGITAL ECOSYSTEM 42

5G to arrive in earnest in mid-2020s

Data usage growing, with data revenues powering

Operators continue to invest in 4G coverage

Mobile ecosystem is a major contributor

Mobile provides a large, scalable

Investment in startups in the

Mobile’s role in addressing

Designing policies fit for the

2016 451 million

Accelerating Mobile broadband connections Smartphone adoption

Data growth Operator total revenues

Public funding Employment

North America Global

SUBSCRIBER SMARTPHONE SUBSCRIBER SMARTPHONE

2016 2020 2016 2020 2016 2020 2016 2020

80% 84% 78% 81% 66% 72% 51% 66%

28% 43% 45%

Latin America and the Caribbean

2016 2020 2016 2020

70% 76% 55% 71%

Figure 1 Source: GSMA Intelligence

Unique subscriber growth

Unique subscribers (end-2016) Subscriber growth (2016–2020)

451 million Venezuela 4% 60 million

Table 1 Source: GSMA Intelligence

Subscriber and connections penetration by country

Subscriber penetration Connections penetration

Source: GSMA Intelligence

The eight largest markets1

70% 74% 70% 81%

2016 34% 2016

69% 76% 55% 72%

SUBSCRIBER PENETRATION SUBSCRIBER PENETRATION

SUBSCRIBER PENETRATION SUBSCRIBER PENETRATION

SUBSCRIBER PENETRATION 16% SUBSCRIBER PENETRATION

46% 2016 52%

2016 Q2 2017 2020

Technology migration Brazil leads the region in 4G

3. Q2 2017, GSMA Intelligence

Mobile data growth

2016 2021 CAGR

5. Cisco Mobile VNI, 2016 and 2017

Data growth has fuelled a turnaround in revenues

Revenue turnaround in 2017

2014 2015 2016 2017 2018 2019 2020

Driven by recovery in major countries

-10% Latin America

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Capex to remain strong as 4G networks are built up