New GSMA Study Finds That Mobile Industry Accounts for 5 Per Cent of Latin American GDP
Latin America’s mobile ecosystem generated 5 per cent of GDP last year, according to a new GSMA study. The 2017 Latin America and Caribbean edition of the GSMA’s Mobile Economy series, published today at the GSMA Mobile 360 Series – Latin America event in Bogotá , calculates that mobile technologies and services contributed $260 billion in economic value to the region in 2016 (5 per cent of GDP1 ). The report noted that mobile’s contribution to the regional economies has been driven by rapidly rising 4G and smartphone adoption.
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“Latin America’s mobile ecosystem is a key contributor to economic growth and social development across this diverse region, building a platform for innovation, investment and entrepreneurism,” said Michael O’Hara, Chief Marketing Officer at the GSMA. “Local operators are set to invest nearly $70 billion in their networks by the end of the decade to expand 4G coverage across the region, which will allow greater mobile data usage as consumers migrate to next-generation networks.”
4G Networks Reach Critical Mass
At the end of 2016, there were 451 million unique mobile subscribers2 across Latin America, concentrated in markets such as Brazil (33 per cent of total), Mexico, (20 per cent), Argentina (9 per cent), and Colombia (7 per cent). Around 60 million new subscribers are due to be added by the end of the decade, by which point more than three-quarters of the region’s population will be mobile subscribers, up from 70 per cent in 2016.
The region’s subscribers are migrating rapidly to smart devices and networks. Smartphones accounted for 59 per cent of Latin American connections3 in the first half of 2017 and are forecast to make up 71 per cent of the total by 2020. Meanwhile, after a slow start, 4G networks have now reached critical mass in the region, providing coverage to 70 per cent of the population. As of June 2017, Latin American mobile operators had launched 108 4G networks in 45 markets; 4G is on track to account for 42 per cent of connections by 2020, bringing it on par with the global average. The first commercial 5G networks in the region are expected to be switched on in 2020 and are forecast to provide coverage to 50 per cent of the population by 2025.
Building A Platform For Innovation And Growth
Latin America’s mobile ecosystem is expected to be a growing contributor to the region’s economy over the next few years, forecast to contribute $320 billion in economic value in 2020, equivalent to 5.6 per cent of GDP, up from 5 per cent in 2016. The sector also supported 1.7 million jobs last year, directly and indirectly, and makes an important contribution to the funding of the public sector, with almost $34 billion raised in 2016 in the form of general taxation, including VAT, corporate taxes and employment taxes.
As a result of rising smartphone adoption and 4G usage, the mobile ecosystem in Latin America provides a large, scalable platform for entrepreneurs and innovators. Venture capital and private equity funding has been especially strong in 2017, with more transactions in the first half of 2017 than in all of 2016, which itself was a record year.
With nearly 350 million mobile internet subscribers, the Latin American market is larger than the US and contains some of the world’s most advanced and engaged mobile internet users. However, around 300 million people remain digitally excluded and are currently unable to take advantage of the socioeconomic benefits made possible by access to the mobile internet. These citizens are predominantly in rural and remote areas, with lower income and require special government policies that can stimulate a collaborative approach between the public and private sector to effectively address them.
“Despite progress made to date, too many people across Latin America and the Caribbean are still digitally excluded, and the mobile ecosystem must address a range of challenges if it is to connect these people,” added O’Hara. “Mobile operators are playing a key role in reaching out to these citizens as well as tackling the barriers to mobile internet adoption such as a lack of digital skills and affordability challenges.”
The new report ‘The Mobile Economy: Latin America 2017’ is authored by GSMA Intelligence, the research arm of the GSMA. To access the full report and related infographics, please visit: www.gsma.com/mobileeconomy/latam .
About the GSMA
The GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with more than 300 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces industry-leading events such as Mobile World Congress, Mobile World Congress Shanghai, Mobile World Congress Americas and the Mobile 360 Series of conferences.
1 GDP contribution includes direct mobile ecosystem contribution (1.0% of GDP); indirect contribution (0.6%); and productivity improvements (1.8%).
2 A unique mobile subscriber represents an individual that can account for multiple SIM connections
3 There were 675 million connections (excluding M2M) in Latin America at the end of 2016, forecast to rise to 771 million in 2020
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