Smartphone Adoption is Boosting Postpaid Subscriptions in Latin America

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By the end of 2013 Latin American cellular subscriptions are expected to grow by 3.9% to reach 709.4 million. An expanding population base and positive economic indicators for a number of Latin American markets means the region continues to stimulate the interest of foreign and regional telcos and investors.

At the end of 3Q-2013, while the prepaid ratio stood at 79.5%, the smartphone user base was just 16.1% but is growing at a CAGR of 31.7% between 2013 and 2018.

"Smartphones are presenting mobile carriers with an opportunity to upgrade prepaid subscriptions to postpaid subscriptions," commented Jake Saunders, VP and practice director at ABI Research.

An example of this can be seen with Telefónica Brazil, an operator with 76.6 million subscriptions. In the past year, total subscriptions have been essentially static; however, the ratio of postpaid customers, driven by smartphone upgrades, has increased by 23% year-on-year, to 22.2 million.

Smartphones continue to come down in price - especially in emerging markets. Chipset manufacturers like MediaTek and Qualcomm are working with handset manufacturers to provide cheaper smartphones aimed at emerging markets. In April 2013, smartphones produced in Brazil with a retail price below US$750 benefitted from a waiver in welfare tax, which is boosting smartphone consumption in the country.

With such initiatives from government and handset manufacturers, ABI Research expects that Latin American smartphone subscriptions will reach 453 million-54.6% of the total subscriptions -- by the end of 2018.

"Smartphone adoption will also contribute to LTE subscriptions. In Latin America, LTE subscribers will grow from just 0.3% of total subscriptions at the end of 2013 to 12.5% by 2018, or 104 million," added Marina Lu, research associate.

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