Latin America depends on family remittances to sustain local consumption. The heavy flow of immigrants to the US and Europe over the last twenty years created a virtual bridge of capital from the host countries to Latin America, and in some cases the flows exceed 10% of nominal GDP. In addition, this transfer of money has been a very profitable industry for companies, such as Western Union, and to local banks as well. The flow of remittances has dramatically changed the economic structure of certain countries that rely heavily on the capital sent by these workers. El Salvador, for example, dollarized its economy in 2001 because the US dollars circulating were enough to cover their monetary base.
In 2009, the flow of family remittances to Latin America totaled $58.8bn, a decline from US$69.9bn in 2008 due to the financial crisis. However, the size of the flow is as large as the total mobile revenues generated in 2009 and will likely stabilize as the developed economies regain growth. We believe that remittances represent a large opportunity for mobile operators in Latin America to generate incremental revenues and reduce churn.
Published monthly for each of the world’s most dynamic regions, Telecom Insiders are packed with trend analysis, industry best practices, market sizing and forecasting, competitor analysis, and case studies, providing you information you can leverage to make better business decisions. For more information about Telecom Insiders, please contact us via email at info@pyr.com or telephone at (617) 747-4100.
