Study: Net Services Market to Explode in LatAm

FORT LAUDERDALE, FLORIDA (08/22/2000) - Improved telecommunications infrastructures, an overall economic upturn and increased use of PCs will generate monumental growth in Latin America's Internet services market in the coming years, according to a study released Monday.

ISPs (Internet service providers) generated a total of US$1.18 billion in revenue in 1999 in the region, a 67 percent increase over 1998. The market is expected to grow at a compound annual rate of 58 percent through 2005, when revenue will total $17.4 billion, according to a report from market researcher Frost & Sullivan Inc.

The spread and enthusiastic adoption of free Internet access throughout the region is forcing ISPs to generate revenue from services and sources other than access, such as Web hosting and advertising. For example, in Brazil, 90 percent of the market's revenue is expected to come from non-access sources in 2005, up from 30 percent last year, according to the report.

Although the ISP market is currently crowded with competitors, consolidation in the coming years will "continue until each country is dominated by a few major companies," the report states. Despite the consolidation, small providers will be able to survive and even thrive if they target niche segments, such as services related to e-commerce and to large corporations.

Factors that could derail the market's projected growth include future economic instability, high local phone rates, tepid e-commerce growth and political turmoil.

The number of Internet users in Latin America is growing at a 41 percent compound annual rate -- the fastest in the world -- and is expected to reach 29.4 million in 2003, according to market researcher International Data Corp.

(IDC).

The Frost & Sullivan report focused on the region's six largest Internet services market: Brazil, Mexico, Argentina, Venezuela, Chile and Colombia. Here is a breakdown of each market's Internet services revenue in 1999:Country 1999 Net services revenue Growth compared with 1998 Leading ISPsBrazil $750 million 58 percent UOL, ZAZ/Terra, MandicMexico $192 million 86 percent Prodigy/Telmex, Infosel, CompuServeArgentina $89.9 million 49 percent Advance, Arnet, Ciudad Internet, ImpSatChile $48.6 million 121 percent Entel and TerraColombia $39.7 million 90 percent EPM, ETB and TelecomVenezuela $57.1 million 113 percent CANTV and T-Net Frost & Sullivan, based in San Jose, California, can be reached at 1-408-392-2000 or at http://www.frost.com/.

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