“The explosion in emerging markets is set to revolutionise the competitive environment of the ICT sector”

Telefónica - Press Office - Press room home - “The explosion in emerging markets is set to revolutionise the competitive environment of the ICT sector”:

Barcelona, 28 February 2012.- “The explosion in emerging markets will radically alter the current competitive environment in the ICT sector, and companies with a strong presence in these markets are set to play a pivotal role in unlocking this huge potential. This is a huge challenge and a huge responsibility.” It was with these words that Santiago Fernández Valbuena, Chairman of Telefónica Latinoamérica, concluded his speech at today's keynote session entitled “Mobile Operator Strategies in Developing Markets” at the Mobile World Congress in Barcelona.

This anticipated revolution spearheaded by emerging countries is supported by the data of industry analysts. Forecasts indicate that at some point in the next five years there will be more smartphones in developing countries than in the developed world[1]. Moreover, IP traffic is set to post a sevenfold increase in Latin America over the next five years, the world's highest average growth rate (+48%)[2].

Fernández Valbuena, who focused largely on Latin America – where Telefónica has been present for two decades – indicated that the sector is changing rapidly and that opportunities in the area are huge.

At a time when these countries are not only growing, but have achieved robust levels of development and confidence, to the benefit of their social structures, with an ever larger and ever stronger middle class, average forecast growth rates for the ICT market are almost 8% per annum (ahead of GDP)[3]–, and “broadband (fixed and mobile) and the services based on this connectivity will be the main source of growth in the years ahead.” In fact, he added “the future of the region and of the sector depend on the ability of operators to foster this market,” in particular wireless internet.

Telefónica spearheads the ‘sector revolution’

Telefónica, which is already spearheading the data revolution in Latin America and capturing growth, associates the explosion of this market with several key factors. According to Fernández Valbuena, one pivotal factor is “the rapid spread of smart devices, especially of smartphones, in a region with a huge appetite for technology”. Moreover, the company is opting for products focused on service and not on unlimited use – moving away from flat rates –, “guaranteeing the most groundbreaking combination in bundles, and segmenting and adapting our proposal to the needs of a highly diverse market.” In addition, and finally, the ability of the sector to implement M2M solutions in the business fabric is an opportunity in itself and essential to boost productivity in the region.

Thanks to its strategy, Telefónica already has over 24 million broadband accesses in Latin America, of which 16.3 million are MBB accesses, including smart devices and dongles, and in the last three years Telefónica Latinoamérica has increased by 10pp both the weighting of data revenues as a percentage of mobile service revenues, and the contribution of non-voice revenues to total fixed telephony revenues. The objective to 2013 is to almost triple current MBB accesses and for mobile date revenues to account for one third of mobile service revenues. The company has also significantly increased its provision of connectivity-based services, which are driving improvements in productivity and forging a new profile for the company as a provider of mobile financial services, especially for unbanked segments, e-Health solutions, which help to universalise healthcare - especially in remote areas-, and cloud services for businesses.