Latin America’s Telecom Market Impacted By Economic Downturn – Slower Growth In 2001 And 2002

MIAMI, FL – NOVEMBER 28, 2001 – The Latin American telecommunications market will experience a significant slowdown in 2001 after record growth in 1999 and 2000. According to IDC Latin America's study, Telecommunications Network Services in Latin America: Forecast and Analysis 2000 – 2005, the telecom market in Latin America is expected to exhibit 2% and 3% growth in 2001 and 2002, respectively.

 

Amounting to approximately US$64 billion in revenues during the year 2000, the market is forecast to recover from the flat growth of 2001 and 2002 to become an US$85 billion industry by 2005. Strongest growth over this time period is expected to come from the Internet, data and mobile segments. Local telephony is expected to grow modestly over this time period and the long distance market is forecasted to show declining growth.

The study also revealed that despite expansionary efforts by fixed-line operators and strong growth in mobile services in Brazil throughout the year, the Brazilian market is expected to fall by 7% in 2001, in US Dollar terms. "The Brazilian market was impacted by currency devaluation and a weakening macroeconomic environment," according to Marc Alexander, research analyst at IDC Latin America, "The strength of revenue growth in local currency should not be lost in the overall market performance, however, as results would have been positive without the currency impact."

Mexico's telecom market, which together with Brazil accounted for 55% of the entire Latin America telecom market in 2000, is expected to continue to grow at a healthy 12% in 2001. Despite the continued dominance of Telmex in the mobile, long distance and local telecom markets, competition has gotten much stronger in 2001 with Telefonica, Vodafone, Verizon, AT&T and Worldcom each solidifying their presence in the region's second largest market.

The number of fixed lines in service in Latin America is expected to reach 20 lines for every 100 inhabitants by the end of 2001, compared to a mobile penetration of 16% in that same year. Overall penetration of fixed telephony lines is expected to be surpassed by mobile penetration in 2003 as prepaid service plans and calling party pays pricing schemes make mobile services an attractive alternative to fixed local telephony services.

"Continued liberalization of telecom markets in Latin America, coupled with investments throughout 2000 and 2001 have changed the face of the telecom industry in Latin America. Given probable slowdown in capital investment on the part of their multinational parent companies, we expect operators in the region to focus on growth that is sustainable at profitable levels," said Alexander, adding, "While the impact of the current market could impede overall proliferation of telecom services to rural and underserved areas in the short term, the strategies being followed are designed to ensure the longer term financial strength and health of this industry as a whole."

For more information regarding the study, Telecommunications Network Services in Latin America: Forecast and Analysis 2000 – 2005, or to purchase the complete study, please contact Barbie Cordero of IDC Latin America bcordero@idc.com or at (305) 351-3131.

About IDC Latin America

IDC Latin America has established an unrivaled reputation for analysis of the IT, Internet, and Telecom markets in Latin America. Its research group is comprised of over 90 analysts in Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela who are devoted to generating the most authentic and up-to-date information on these markets. Following a commitment to excellence, IDC has pioneered primary research in the countries of Costa Rica, Dominican Republic, Ecuador, Guatemala, Panama, Peru, and Puerto Rico. This distinctive local presence results in the most comprehensive and trustworthy market coverage of the Latin American region. For more information, visit http://www.la.idc.com or call 305-351-3131.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.