Latin America MNOs Must Restructure Existing B2C Sales Channels to Address Region’s US$1.1 Billion M2M Opportunity

Operators without plans to launch LPWA networks are especially behind the curve
05 Feb 2019

The Latin America cellular M2M market will grow to 71.3 million connections by 2023, but few Mobile Network Operators (MNOs) have implemented successful monetization strategies according to a new report by ABI Research, a market-foresight advisory firm providing strategic guidance on the most compelling transformative technologies. Latin American operators must develop new business models and move up the value stack in their solution offerings beyond just providing connectivity to drive the market forward and capture value.

“While there is a US$1.1 billion opportunity on the horizon for total IoT solution revenues, Latin American operators still lack a clear strategy of where they want to fit in the overall value chain,” said Ryan Harbison, Research Analyst at ABI Research. “These solutions require a B2B mindset and operators are fixed on B2C due to an overly saturated and competitive mobile market. Additionally, M2M connections currently represent 5% of total connections and only 1% of revenues across the region, so for most operators, the revenue per connection isn’t where it needs to be to justify increasing their M2M investments and engagements.”  

Network operators and other providers along the M2M value chain need to understand regional trends to drive impactful change and implement strategies that meet the changing market demands of M2M. Within Latin America, there are substantial inhibitors due to geopolitical and regulatory challenges. Additionally, nine network operators and their subsidiaries control virtually all the cellular M2M connections. In 2018, these nine operators accounted for 97% of cellular M2M connections within Latin America; in 2023, these nine operators will account for 91% of connections. There will be little opportunity for operators not already entrenched in these markets due to existing regulations and market conditions. However, operators such as Telefonica and Oi are working to not only spur their own M2M investment but to also spur the development of the entire M2M ecosystem across Latin America. This will further drive deployments by better enabling end-to-end solutions with stronger connected value propositions.

For network operators though, this ecosystem development might not come fast enough as non-cellular LPWA technologies have flooded the Latin American market in recent years. In 2019, there will be only a few thousand cellular LPWA solutions available outside of pilots in Latin America, while there will be 4.62 million deployed non-cellular LPWA connections. Despite extensive cellular deployments, by 2023 non-cellular LPWA connections will outnumber cellular LPWA connections by a 3-to-1 margin. Operators who don’t already have plans to launch LPWA networks are especially behind the curve.

In order for Latin American network operators to leverage M2M market opportunities, they need to take some calculated but significant risks to become more than just connectivity providers. “To be successful long term, operators will have to restructure internal resources, partner with new providers along the value chain, and revise business models that better create and capture value. There is a sizable demand for these connected solutions from both consumers and end-users that network operators can realize by going beyond connectivity to provide differentiated, value-added solutions," concluded Harbison.

These findings are from ABI Research’s Latin America Network Operator M2M Market Analysis report. This report is part of the company’s M2M, IoT & IoE research service, which includes research, data, and Executive Foresights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis of key market trends and factors for a specific application, which could focus on an individual market or geography.

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