The Latin American telecom communication services will see new business models driving technology as participants and robust CAGR, led by digital transformation, expand their role as economic movers. The market has near term promise and infrastructure investment to support the growth. New business models are emerging as big data for telcos, mobility, mobile money, innovation-enabled monetization, software-defined networking and network functions virtualization (SDN/NFV), e-commerce, augmented reality (AR), carrier Ethernet over wide-area network (WAN), and Internet of Things (IoT) gain ground in the region. The Communications Service Providers structure must become more agile, flexible, and able to leverage an interconnected ecosystem. Across the world companies are racing to Asia, beating their heads against the wall to win a major US carrier deal, and managing the traditional slog and process to grow their European business.
Much attention has been put into highlighting the unsung up side of massive adoption of new services in Africa, much of it flying in the face of reality (there needs to be ARPU to get better than 3 G and then there needs to be capacity to boot. The clarion cry for CPaaS and other communications related providers remains mobile money and VAS not as dependent on 4 or 3 even 3 G. And to really succeed there needs to be a strong investment from the players to focus on the long game. Enter China. Latin America provides a near and mid term upside and is often less a priority for US centric solutions vendors.
Focus Latin America:
If you are selling Platforms or Services or RAN or Charging/Payments, or Network, Content or FinTech, to and through carriers Latin America is on the move.
Each of these sales and marketing areas (NAM, EMEA, APAC, etc.) are vital and each offer something more than revenue if you are trying to grow your business to the next level. God knows I have done all of the above for 25 years from Congo and Gambia and Seattle Wa. USA to South Africa. From running teleom businesses for Europe out of Paris and London to leading services and sales into the US carrier morass, successfully one of the most exciting areas is LATAM. With $6B in carrier sales and $1.2B in share holder value I've found myself on the sell side of an M&A many times. LATAM has often been on top of the revenue drivers.
Latin America has often been under recognized and misunderstood. Althogh there are 4 primary languages, Spanish, Portuguese, French, and English, forget language. As it was said about the US and UK, that we are separated by a common language, nothing could be more true about Latin America. The approach to business, problem solving, the manner in which they address business challenges and view each other, is surprisingly critical. Particularly the way they view the business practices and professional etiquette of not only each other but of Asian, US, or European vendors and how they represent themselves in the region. Look at the country and its culture to understand what drives their market knowing that from content to voice, applications to data, there are many fundamental differeneces and unique opportunities in each country. Argentina and Mexico are dramatically different from a regulatory perspective, pricing, capacity, even the players. Ecuador, Brazil, Guatemala, Colombia, Peru all have amazing up side on fixed, mobile, broadband, and TV. But they all have unique challenges.
Look at LATAM less from the telecom conglomerate perspective then you would do sales planning in Europe, US, and even Africa. Then drill down on the 4 sub regiions and their main players Norte (Mexico and Central America), Cone Sur (South Cone), Brazil (dah), and Andean (Peru, Colombia, Venezuela, and Ecuador).Latin America consists of twenty sovereign states and several territories that stretches from the northern border of Mexico to the southern tip of South America, including the Caribbean. It has an area of approximately 13% of the Earth's land surface area.
Mobile population in LATAM is estimated well over 800M mobile sub with a healthy growth rate. LATAM's combined GDP PPP is $8 TRILLION
The big 10, in order, are Brasil, Mexico, Colombia, Argentina, Venezuela, Peru, Chile, Guatemala, Ecuador, Cuba
Communications as economic driver
In LATAM, the Communications Sector will contribute as much as 5% to GDP or $400B to the economy. Telecommunications are essential to enhance the competitiveness of countries, flow of information, development, economic growth, innovation and productivity. Telecoms operators are confronted with a rapidly shifting technology landscape.
In spite of effort to drive policies to ensure economic growth, improve infrastructure, reduce costs for consumers, greater competition in the market, and extend coverage and service penetration, there are many challenges; 5G is going to be slower coming than hoped and 4.5 G is more of a reality. Increasing Penetration as urbanization rises, mobile money, and still opurtunity for 400% increase in social media participation.
Mexican and Brazilian players primarily dominate Latin America. However, experts remain bullish on the sector throughout the continent as smaller countries in the region are relatively untapped and have significant room for growth in terms of mobile and Internet penetration. Difficult economic conditions in Brazil, Peru and Chile, plus stiffer competition in Mexico that will put pressures margins accelerating the need for new business areas, moving up on the value chain, broader partnerships with CPaaS vendors. AT&T is a game changer in the region, Tigo is extremely nimble, and Vodafone has officially, finally, entered the region.
Latin American telecom players continue to invest and drive the market include big data, mobile money to leverage the large unbanked population, and mobile data and mobile enterprise applications, which will replace mobile voice as growth drivers and compel mobile carriers to enter new partnerships.
Evolving business models will have to meet the demands of different end users and diversify telco revenue streams by verticals. Some of the upcoming changes will include:
Use of SDN and NFV bring the agility to make enterprise WANs dynamic; SDN/NFV enable enterprise WAN to handle video traffic efficiently
More eCommerce has enormous upside as mobile apps, platforms, and analytics find early homes
Operator-driven IoT business models driving business providing connectivity
Summary
The market has the right balance of growth and capital, demand and coverage. Not 5G but solidly becoming ubiquitous with 4G. Engaging the market as locally as possible with a value based proposition and, some risk sharing, will yield results in 2019.
Overall watch out for companies on resurgence like TIM, Oi, and Telefonica Mexico as well as new players that bring value in the network like AT&T and Viettel. These companies are all looking outside of the box beyond connectivity and deeply assessing how to deliver value. MVNOs, particularly in Mexico, Peru, and Brazil will gain ground.
If LATAM does not represent 20% of your Sales & Marketing investment as a Telecom, Communications, Platform solution provider you may still have a chance to revisit your 2019 success plan.
Author: David John, Managing Director Americas; Sales & Operations-Telecom, IoT, Cloud, Mobility Partner at Market Street Advisors
