Low-End Latin America Wireless Market Is A Huge Opportunity.

The Latin American wireless market has quickly reached saturation in the high-end segment. According to the Yankee Group report, Counter to Intuition, the Low End of the Wireless Segment Has Lofty Potential, operators see an enormous pent-up demand in the low-end segment. However, given the lack of prepaid fixed-telephony services, the only alternative
for these users is prepaid mobile services. As they join, revenue per user is pushed down, and operators wonder if it is worthwhile to grow the customer base with this segment.

“Given the poor income distribution in Latin America, prepaid users with limited purchasing power represent the majority of the total mobile user base,” says Luis Minoru, senior analyst, Wireless/Mobile Latin America.

“In addition, the high-end income tier is saturated. To keep growing, operators must attract the high-end users of their competitors, which has a high acquisition cost, and attract new users.”

Low-income users have limited access to telephony services and are a large potential market for mobile operators. Fixed-line operators have avoided prepaid services, fearing postpaid-to-prepaid churn would affect subscription revenue. Low-income populations spread far from the expensive metropolitan areas. Theoretically, these individuals spend less time at home and more time in motion, commuting to and from work.

“There is no doubt about the size of the low-end segment in Latin America,” Minoru says. “However, offering services successfully to this segment depends on a close control of costs. Otherwise, although market share increases, the bottom line could be negative. Another perspective on low-end strategy is subscriber lifetime NPV compared to the lifetime
NPV of low-end consumers, a three-fold difference that must be recognized.”

For more information at http://yankeegroup.com