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Latin American Pricing Takeaways From ITW

Final month, the TeleGeography staff joined scores of ICT infrastructure professionals in Nationwide Harbor, Maryland for Worldwide Telecommunications Week.

One of many many subjects mentioned was value erosion in Latin America. The primary pattern possible comes as no shock: costs hold falling. However there may be nuance to how value erosion is happening in several markets.

Let’s discover the context in additional element.

The Battle of Aggressive Wavelength Pricing

Connectivity to Latin America has traditionally been way more costly than in additional established areas, such because the trans-Atlantic. And whereas capability providers in Latin America nonetheless have a tendency to return at a premium, that distinction has shrunk.

In accordance with our Wavelengths Community Pricing Database, in Q1 2023, the weighted median 100 Gbps value on Miami-Sao Paulo ($18,000) was simply 3 times costlier than London-New York. That is down from 6.6 occasions costlier in 2018.

Within the determine beneath, you’ll be able to see how costs for 100 Gbps wavelengths on a number of different outstanding routes in Latin America have fallen in recent times. Since 2020, the typical value for 100 Gbps on these key routes has fallen 30%, compounded yearly.

Weighted Median Monthly Lease Price (USD)Supply: © 2023 TeleGeography

There are a number of elements contributing to the speedy tempo of abrasion.

One issue talked about at ITW was market disruption. Some particular examples that we heard cited embrace the creation of Cirion Applied sciences from Lumen’s former Latin America belongings, the creation of V.Tal within the wake of Oi’s chapter course of, and normal personal fairness funding within the area. This elevated competitors would possibly assist clarify pricing developments in affected markets.

Pennies on the Greenback for IP Transit

One other wholesale product with costs plummeting in Latin America is IP transit. And in some markets, the decline has been sharp.

Utilizing knowledge from our IP Transit Community Pricing Database, the determine beneath reveals simply how rapidly IP transit costs have fallen in key Latin American cities.

$/Mbps per Month (USD)Supply: © 2023 TeleGeography

Whereas IP transit value erosion is definitely noteworthy throughout a number of markets, costs in Brazil have been a sizzling matter at ITW. That’s as a result of the Q1 2023 weighted median value for a ten GigE port in São Paulo was $0.35—a drop of 39%, compounded yearly, since 2020.

Within the submarine cable-friendly Rio de Janeiro and Fortaleza, pricing is reported even decrease, with weighted median prices of $0.31 and $0.27, respectively.

Though the Brazilian market has traditionally had considerably extra aggressive IP transit pricing than different Latin American markets, over the previous yr, erosion has introduced its IP transit pricing in step with main hubs in the US. ITW attendees we spoke with attribute this to cable launches, extra competitors within the market, and the rise of caches in Brazil.

The Seek for the Subsequent Scorching Market

In previous months, Colombia caught our eye as an more and more interesting place to put money into telecommunications infrastructure. That’s nonetheless the case, however community operators have turned their heads to different markets as effectively.

One such place is Peru, the place the not too long ago launched South Pacific Cable System/Mistral additional connects an space gaining consideration from carriers and traders alike. With techniques like South America-1 and South American Crossing approaching retirement, the potential for an infusion of extra bandwidth looms on the horizon. This might lead costs in Peru—sometimes a bit larger than in neighboring nations like Colombia and Chile—to fall at an accelerated tempo.

Additional north, we proceed to listen to about Querétaro, Mexico as a booming marketplace for funding—each for knowledge facilities and the fiber wanted to attach them. In reality, knowledge middle progress has elevated a lot that there are considerations over whether or not the vitality provide is enough to maintain additional enlargement.

All through Latin America, the state of affairs stays related: dynamic markets with costs that hold falling.

All through Latin America, the state of affairs stays related: dynamic markets with costs that hold falling. ITW 2023 was a useful likelihood to test in with contacts all through the area and assess the place the remainder of 2023 may be headed for a rising area.


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