Insights Latin America

Mobile and Internet Penetration in Latin America: Part 1


How big is the mobile market in Latin America? What kind of mobile penetration is there? What role do tech entrepreneurs have in building new applications and technologies? All of these questions are answered by Vrainz, a business accelerator focused on mobile and technology startups, and Overboosta mobile accelerator. Together, they have published fascinating content, which Seedstars World has broken down in order to create a special series for our readers. From Chile to Argentina, Colombia and Mexico, this first part will tell you everything you need to know about mobile penetration in Latin America! 


Latin America has always been a strong region in terms of adoption of mobile devices and the hiring of mobile services. In 2013, however, it reached a milestone that didn’t seem possible a few years before, when in only ten years it duplicated its revenue, reaching a market size of 107 billion dollars per year. This way, our region, which makes up for little over 8% of the world’s total population, started to account for the 10% of the world’s mobile market. But to understand the way this industry behaves in our region, it is important to understand a few figures in order to see what countries have developed more advanced markets and learn the unique characteristics that each of them have. This is why today we will review eight distinct characteristics of the mobile industry in Latin America.


Latin America has Become the Third Region in the World in Terms of Mobile Penetration

With a mobile penetration that reaches 104%, Latin America now only follows Eastern and Central Europe, where this metric reaches 154%, and Western Europe, where it reaches 129%. According to the US Census Bureau, if we divide the region in two, South America reaches a number as high as 124%, and Central America still surpasses the global average of 85% by reaching a solid 89%.

While these figures indicate there’s more than one active line per inhabitant, subscriber penetration reaches 52%, which means that only little over half the people have one or more active lines. This means there are 632 million lines, belonging to 319 million unique users, over a population of 610 million, which suggests there is still a wide margin for growth.

However, when compared to other services, access to mobile phones is widely extended in the region, especially in some of its markets. One of the services that contrasts the most with mobile is banking service.

Mobile Penetration

According to World Bank data, in Argentina – one of the biggest markets in the region – mobile penetration reaches 145%, which implies there are almost one and a half active lines per person, whereas only 33% of the country’s inhabitants have access to some form of banking services, and only 22% to credit cards. Something similar happens in Chile, where mobile penetration reaches 152%, and bancarization only 42%. In different proportions, this phenomenon can be observed throughout the whole region. (Source: World Bank)


By 2015, the Mobile Industry will Produce 4% of the Region’s GDP

Over the past ten years, the mobile industry has managed to consolidate itself as one of the most important in the region. In 2012, its contribution generated 3.7% of the entire region’s GDP. This figure has grown to 3.8% in 2013, and is expected to keep growing at a 0.1% rate a year until it reaches 4% in 2015. As a reference, in Argentina, the construction sector (one of the most important in terms of employment and production) produced 7% of the country’s GDP in 2013.

The mobile industry is also a very strong player in terms of job creation. In 2013 it was accountable for 350,000 direct jobs at the regional level. At the same time, throughout its existence, it has produced over 39 billion dollars in terms of taxes which have been paid to the different countries in the region. These figures are expected to keep growing at a fast pace over the next ten years.


Between 2008 and 2013 $48 Billion were Invested in Infrastructure

Between 2008 and 2013, carriers throughout the continent invested roughly 48 billion American dollars in infrastructure. This investment was destined to the construction of towers, the deployment of antennas, and the development of the different 2G and 3G services.

Implementing the new 4G LTE technology will require an even higher investment. It is estimated that these companies will have to invest about 64 billion dollars between 2013 and 2017 to make it available throughout the entire region. However, the introduction of 4G networks is also bound to the development of the proper regulation, which in some countries is still lagging behind, as governments haven’t assigned or approved the usage of the proper bands and frequencies to the operators.


Chile Leads in Terms of Smartphone Penetration

At a global scale smartphones have reached an average penetration of 43%. These devices have been having higher rates of adoption every year, replacing basic dumb, and feature phones, which provide basic web browsing, social networking, and instant messaging capabilities.

In terms of smartphone adoption, Latin America is lagging behind, with only a 22% average penetration throughout its different markets. Unlike what happens in Europe and the US, feature phones are the most important segment in the region, where smartphone penetration will only reach the current average in 2017.

3G Penetration

However, there are some markets in our region where smartphones have more predominance than in others. Such is the case of Chile, where they account for 26% of the total active devices, making it the first country in the region in terms of adoption. The second place goes to Argentina, where smartphone penetration reaches 23%, followed by Uruguay, Mexico, and Venezuela, countries in which it has surpassed the 20% mark.

According to GSMA, by 2020 there will be more than 605 million active smartphones in the region, that will account for 80% of the entire mobile market.


Argentina is the Only Country in the Region where Value Added Services Produce more Revenue than Voice

There is a visible trend in developed markets: Value Added Services like data, text, and others have become more significant in terms of revenue for mobile carriers than basic services like voice. However, In Latin America this trend is barely starting to become visible. In Mexico and Venezuela, two of the largest markets in the region, for example, Value Added Services account for 37% and 35% of total revenue.

Argentina, on the other hand, is a unique case. In this country, these kind of services have reached higher penetration levels in the market allowing companies like Telefonica’s Movistar to obtain 49% of its revenue from VAS in this market, and Personal (Telecom Argentina’s carrier) to obtain 58% of its revenue from it. Personal’s case is paradigmatic, as this company has been working for years in positioning itself among higher end segments, where VAS are its main differentiators.
In the mid term it is expected the Argentine case to replicate in other countries of the region, where mobile carriers acknowledge that offering voice only plans and services will no longer be sustainable in the long term, so we should expect to see a significant growth in the VAS offering even in least developed markets.


82% of the Lines in the Region are Prepaid

Despite the proliferation of smartphones which, as we mentioned before, account for 22% of the devices in the region, 80% of the SIM connections remain subscribed to prepaid services. Prepaid lines are not tied to a monthly plan, giving the user the freedom to recharge credit whenever she pleases, and by whatever method (credit card, home banking, or in cash in an affiliated commerce).

Data on Revenue

These type of plans usually involve higher fees -for every service, including voice, text, and data- than postpaid plans, in which users pay for a certain amount of minutes, KBs, and text messages every month. However, prepaid services have the big advantage of not forcing users to be tied to a contract, which is very convenient for different segments of the population like the youth and lower classes.

It was thanks to prepaid plans that huge masses of users were able to acquire mobile services, even when they have no access to other basic services like banking and financial services and, sometimes, even running water or electricity. For this reason, in spite of the big growth the mobile user base has experienced over the past ten years in the region, postpaid lines have only managed to grow 1% (in terms of proportion over the entire user base) every two years.

Phone Contract:Prepay

However, even within the region, the unique characteristics of each individual market has produced some variations in the prepaid-postpaid ratio in every country; with the two extremes occurring in two Central American countries: Costa Rica, where postpaid makes up almost 40% of the total active lines, and Honduras, where it makes up barely 6%.

Besides these two examples, it is worth noticing that in countries that display a more developed market, like Argentina, Chile, and Uruguay, postpaid lines tend to make up a higher percentage of the whole universe, whereas in less developed markets like Bolivia, Guatemala, and Panama, things are the other way around.

As the markets throughout the region evolve into a more consistent development, postpaid will most likely grow, and prepaid will undoubtedly decrease.


Mexico and Colombia are the Most Concentrated Markets in the Region

While Haiti, Jamaica and Nicaragua, with two carriers in each country, are the countries with the least competition in the mobile industry, there are two notoriously larger markets where only one company controls over 60% of connections in term of subscriptions. We are talking about Mexico and Colombia.

In the first of these countries, Telcel, America Movil’s carrier, concentrates 69.3% of the entire market. Besides Telcel, other three carriers operate in Mexico. They are Movistar (Telefonica), which is the second in terms of subscriptions; Isuasell and Unefon (both belong to Televisa and Grupo Salinas); and Nextel.

In Colombia, America Móvil (this time under the brand “Claro”, used in most countries in the region), concentrates 60.1% of the entire market. With less than half the clients, Telefonica’s Movistar occupies the second position, followed by Tigo. It should be noted that, curiously enough, this is one of the countries where more carriers offer their services, with 9 active operators during 2013 (4 of them virtual), and 3 more ready to launch throughout 2014.

On the other side, the least concentrated markets in the region are Brazil, where Telefonica’s Vivo leads the market with a market share of 23.8%, not too far from TIM, and Claro, its two closest competitors in a landscape of 7 operators. Argentina, the second least concentrated market, is led by America Movil’s Claro, with a market share of 33.5%, which is pretty much the same than Telefonica’s Movistar, and Personal, the second and third carriers in terms of subscriptions in the country, where only one carrier (Nextel) and two virtual operators, lag far behind.


Video Watching Consumes 33% of the Carrier's’ Bandwidth

One of Latin Americans favorite activities when it comes to using their mobile devices is video watching. According to IDC, in 2012 33% of the total data transmitted to and from cellular phones was used with this end. This figure is expected to reach 50% by 2015. The growth of services such as Netflix, Spotify, and the massive popularity of YouTube in the region explain this phenomenon.

However, it should be pointed out that video watching is not the most time intensive activity people do in Latin America with their phones. Instant messaging, and Social Networking still beat this activity in terms of time spent per user, however they consume far less data than watching a video, which means that combined, they take up 17% of the bandwidth. Something similar happens with web browsing, which today takes up 24% of the bandwidth and is expected to go down to 20% by 2015.

In 2012, the total data traffic in the region was 55 thousand Terabytes per month. This figure is expected to grow at a 67% annual rate over the next 5 years, reaching 723 thousand TB a month by 2019. Such growth will unequivocally turn data into the highest source of revenue for carriers throughout the entire region, and will open up the doors for thousands of new online mobile business.

As we have seen, Latin America has become a very big market, where we can start to observe some of the trends that, until not too long ago, were unique to the developed markets. However, its huge growth potential, the lack of the definitions in terms of regulations, and the huge investments required to take technology to the next step, make up a series of challenges that governments, carriers, manufacturers and users alike will have to face in the years to come.

Stay tuned for Part 2 of this special series!



Vrainz Company Builder

Founded in 2009, Vrainz is a business accelerator focused on mobile and technology startups that focus on the Latin American market. Unlike other accelerators in the region, it funds, mentors, and provides tools and resources to startups whose product has been developed and validated, and it uses its wide network of partners within the telecom industry to potentiate those projects. For more than 15 years, the group of entrepreneurs and investors behind Vrainz have been providing services to the mobile sector through different ventures, the most notorious of which was Opticom, a mobile aggregator which became a leader in its sector in the Argentine market, where it was known for its permanent innovation. During that time the company began working with brands and NGOs like UNICEF to provide content, especially through Differential Value Added Services such as SMS. But even back then it started to become clear that the true differential lied in new products in the tech sector. That is why they put together a team, led by Javier Guevara, to bring that innovation to the mobile sector, in the form of what later became a business accelerator or, more specifically, a company builder.

Overboost Acceleration

Overboost is a mobile accelerator founded by Antonio Peña and his team, that summarises their decades of experience in the mobile world, and helps new startups launch their product to market, and become revenue positive in the short term. Rather than following the classic accelerator model, Overboost reaches out to Startups it considers to have a fit with, and becomes involved in its daily operations. Its team works side by side with the founders in order to refit the business plan, and to adequate the product to fit existing opportunities, which are developed in partnership with a network of mobile operators such as Telefonica Movistar, America Móvil, and others in the region; OEMs; Agencies; and major brands.

About the author

Vrainz & Overboost


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  • Very good article about the situation in Latin America. I’ve always considered as mobile tech as a key factor in the development of our region. Anyway, I’m a little surprised about the situation of Ecuador in 3G development maybe you could find updated information in Ecuador’s regulator website ( Regards and congratulations for your work!

  • Thanks for such an in depth review.
    The postpaid-prepaid issue I believe that’s co-related to how advanced a market because, I can only tell for the case of Ecuador but I believe it might be the same case in other countries, it’s linked to the access to credit cards: having a postpaid contract with a telco here and not having a credit card can be a huge hurdle and that’s where fintech solutions will start to find a way to disrupt the market for real (but it also depends on the telco themselves).