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Latin America PDF Print E-mail

Market Entry Considerations

Latin America is an "untapped" region of the world for many companies. Most countries, but especially Brazil, Chile, Mexico, Argentina and Colombia continue to invest heavily in their wireless services and technologies. This continent, only 10 years ago, was mostly TDMA. Today, GSM has replaced most TDMA networks with the exception of a few CDMA licenses. Many operators are also offering 3G services in some areas.

An "in market eco system" consisting of the required distributors, system integrators and / or value added resellers is an important part of a company's market entry assessment. Usually, for each country, a customized market entry plan needs to be developed which includes the identification of the "market eco system. " This market entry plan is essential for a company's successfully securing orders for products and services. These "eco system partners" must also have access to the wireless operators and / or appropriate government agencies that will be issuing RFIs and RFPs, when they are required. It is the responsibility of the consultants and/or agents to make sure that inputs from their partners are forwarded to the authors of the RFIs and RFPs for consideration.

Emerging Trends and Requirements

Mobile telephony in Latin America had a somewhat late start compared with the rest of the world, and only really took off in 1999-2000, when the major mobile markets in the region experienced an explosive growth. Prepaid services played an important role the sector's success, as they made cell phones available to millions of low-income users.

Mobile penetration in Latin America surpassed fixed-line penetration in 2001. By end-2005, cellular subscribers had overtaken their fixed-line counterparts in every Latin American country except Cuba. Paraguay leads the trend, with more than twelve mobile phones for every fixed line in service in early 2008.

By early 2008, mobile penetration in all of Latin America was over 66%, well above the world average of around 46%. With 375 million people owning a mobile phone in early 2008, Latin America and the Caribbean holds approximately 12% of the world's mobile subscribers. There are, however, vast differences in cell phone development throughout the region.

Latin American companies have started rolling out the region's first 3G networks. A 3G mobile auction in Brazil proved a huge success. All the mobile operators in Chile, Argentina, Uruguay, Colombia and Mexico are offering 3G services.

Market Summary and Challenges

  • Market: nascent, embryonic, especially for data services
  • Customers are early adopters
  • Services: Embryonic market requires complimentary services from vendors to maximize the value and efficiency (Sales ECO System)
  • Challenges / risks:
    • Selling a new solution in a new market
    • Identification of the right "eco system partners"
    • Banking Relationships and Credit Instruments to successfully export money
    • Some countries have steep tariffs and/or duties on imported products unless they have "local content"
      • This forces some companies to consider local manufacturing or assembly partners, especially if there are competitors who have "invested locally"