Latin America: A hotbed of digital consumption and innovation

Latin America is rapidly becoming one of the world’s hottest regions for innovative new online products, with massive consumers markets demonstrating high engagement levels in digital goods and services. Start-ups from the region, many driven by entrepreneurs with experience of the US tech sector, are finding financing from wealthy familiy businesses and VCs in dynamic emerging economies such as Brazil and Colombia. With tech majors such as Amazon and Google paying strong attention to the region, business transfer agents are more demand for Latin American exits in segments ranging from FinTech and EduTech to CleanTech.

Rapid privatisations and liberalisations have led to a stronger regulatory telecom environment in Latin America, with telecom operators and providers looking to the region as a high-growth future market. European mobile operators and US pay-TV companies have looked to develop their market share on the continent.

The diverse and often impassable terrain found across Latin America, such as the vast Andes mountain range, Amazon jungle and the large number of islands across the Caribbean, have meant that fixed infrastructure input costs for operators is often high outside of urban centres. This significant urban/rural digital divide, which continues to exist, is being increasingly bridged by wireless options, such as mobile telephony, satellite broadband and mobile 3G and 4G networks. In turn, this is creating massive markets for mobile apps and various add-on services. Regional businesses are increasingly focusing on the delivery of data services such as money transfers, application downloads and mobile shopping. Electronic money remittance services have an especially strong pull in the region, as a large number of Mexicans, Brazilians and other Latin Americans leave the continent to find work opportunities in North America and Europe.

Government strategies focusing on the digitalisation of economies have pushed greater investment levels in broadband technology such as fibre and cable. Brazil has been the biggest investor, driven by strong economic growth and the motivation of major events held in the country, such as the Olympics and the FIFA World Cup.

However, some Latin American nations have depended on private investments to an extent that it has led to expansive monopolies. Mexico, one of the larger telecom markets in the region, is home to Carlos Slim’s America Movil and Telmex firms, which essentially control the whole telecoms sector, allegedly overcharging consumers and preventing competitors from gaining a foothold on the highly lucrative domestic market. This is creating barriers for companies in the sphere of telecom services delivery.

Nonetheless, foreign tech businesses remain captivated by local markets, with the anticipated launch of 4G practically continent-wide over 2013-2015 boosting the smartphone and wireless technology segments. Expansions in regional electronics manufacturing, in places such as Argentina, Venezuela and Brazil, will continue to drive prices for telecom equipment downwards, allowing more consumers to get connected.

 

 

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