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The telecommunications industry in Latin America contributes 8.2% of the regional GDP, around 550,000 million dollars.
While three large corporations dominate most of the market, thousands of small and medium-sized providers face regulatory, tax and infrastructure obstacles that restrict their ability to compete and grow.
This contradiction acquires special relevance if one takes into account that it is precisely the SMEs in the sector, internet providers (ISPs), community operators and cooperatives, who serve rural and peri-urban communities that the large players discard due to low profitability.
Is the Telco sector in Latam in crisis?
By: Gabriel E. Levy B.
According to the GSMA, 225 million people in the region did not have access to mobile internet at the end of 2023, and only four out of ten households have fixed broadband, according to CAF.
This situation raises a key question for public policy: how can the region reduce its digital divide when structural market conditions limit the intervention of the actors that could contribute most to that purpose?
The Latin American mobile segment generated revenues of $71 billion in 2023, with an estimate of $84 billion by 2030, according to GSMA Intelligence.
The region has approximately 485 million unique mobile users, a penetration of 72%, and 687 million active SIM cards. However, these aggregate figures mask a highly concentrated structure.
América Móvil (Claro/Telcel), with 323 million wireless subscribers as of December 2024, has a presence in 16 Latin American countries and concentrates about 35% of regional mobile users.
Telefónica (Movistar) reported 113 million accesses in Latin America as of the second quarter of 2024, while Millicom (Tigo) reached 46 million mobile customers as of the first quarter of 2025.
The Herfindahl-Hirschman Index (IHH) estimated by The Competitive Intelligence Unit (The CIU) shows high levels of concentration: Honduras reaches 5,530 points, Bolivia 5,160, Guatemala 5,110 and Mexico 4,270, all classified as “highly concentrated”.
Even relatively more open markets such as Brazil (2,540) and Chile (2,510) exceed the limits of moderate concentration.
In nine countries in the region, a single operator has more than 50% of the subscription market: Telcel in Mexico, Claro in Colombia and Ecuador, Tigo in Guatemala, Honduras and Paraguay, ICE in Costa Rica, Antel in Uruguay and Movistar in Nicaragua.
The dynamic intensifies: in 2024, 19 M&A operations were recorded for more than 3,000 million dollars, and Telefónica began a divestment process that includes the sale of its subsidiaries in Argentina, Colombia, Peru and other markets, further consolidating the players that remain.
Obstacles that suffocate small operators
SMEs in the telecommunications sector face an adverse context on several fronts.
The first barrier is the cost of the radio spectrum.
In Mexico, spectrum values have an extra cost of up to 186% compared to the international average, according to The CIU. Mexico is also the only country in the region where the amount of spectrum allocated was reduced between 2021 and 2023, due to returns from operators such as Telefónica and AT&T that considered the costs unsustainable.
At the regional level, although the unit price of spectrum fell 64% in the last decade, the total spectrum awarded increased 51%, generating higher cumulative costs for operators, according to the GSMA.
The tax burden is a second decisive barrier.
Mobile connectivity users pay an average of 6.5% in sector-specific taxes, in addition to general taxes.
The total tax burden on the cost of connectivity reaches 51.4% in Argentina, 42.9% in the Dominican Republic and 41.5% in Brazil.
In 2023, specific taxes on mobile connectivity totaled about 4,650 million dollars in the region.
The GSMA has estimated that the sector’s tax contribution (2.8% of revenue) doubles its direct economic contribution to GDP (1.3%), a disproportion that has a greater impact on smaller operators, who do not have economies of scale to absorb this burden.
Thirdly, regulatory frameworks are mostly designed for large companies.
The level of infrastructure sharing worsens the picture.
The average in Latin America is only 1.27 operators per mobile site, an extremely low indicator according to the study by American Tower and SMC+ (2024), which forces each operator to replicate investments in towers and equipment.
The digital divide persists where SMEs are most needed
Inequality in access in the region follows evident patterns.
According to ECLAC, 77% of urban households have internet, compared to only 38% in rural areas (2022 data). The socioeconomic gap is equally marked: 46.4% of households in the poorest quintile have a connection, compared to 84.6% in the richest quintile, according to UNDP/ECLAC. At the national level, the disparity is significant: Chile exceeds 90% penetration with fixed speeds of 279 Mbps (fifth place in the world according to Ookla), while Haiti does not reach 50%.
The GSMA notes that 44 million people (7% of the regional population) do not have mobile coverage, and another 174 million live in areas with coverage, but do not use the internet due to affordability barriers, digital skills or lack of relevant content.
No Latin American country meets the affordability threshold of 2% of monthly income for the most vulnerable 20%.
It is in these neglected areas where SMEs play an essential role.
Brazil represents the paradigmatic case: it has more than 20,000 registered ISPs, of which about 9,500 are small providers according to Anatel.
These providers account for more than 60% of FTTH connections and more than half of the country’s fixed broadband accesses.
In Argentina, more than 1,500 SMEs and cooperatives provide telecommunications services, and the Chamber of Cooperatives (CATEL) launched the virtual mobile operator Imowi to expand coverage in small towns.
5G, LEO satellites and fibre: opportunities at risk of exclusion
The region’s technological projections are dynamic but ambiguous for SMEs. The deployment of 5G is progressing with 76 million connections by the end of 2024 and more than 30 commercial operators in 13 countries, according to GSMA and 5G Americas.
It is predicted that between 53% and 55% of connections will be 5G by 2030.
However, 5G spectrum auctions demand investments that are inaccessible to small operators: Argentina raised $875 million and Colombia more than $370 million in its 2023 auctions.
Fiber optics shows a more integrative scenario.
FTTH technology already accounts for 69% of fixed broadband subscriptions in the region, and the emergence of neutral wholesale networks (such as V.tal and FiBrasil in Brazil) makes it possible for small ISPs to access shared infrastructure without making excessive investments. The arrival of Starlink, with 264,883 subscriptions in Brazil and a presence in 28 countries, constitutes a direct competitive threat to small rural operators, although projects such as Amazon Kuiper are exploring partnerships with local ISPs.
Mexico presents encouraging regulatory signs: its new Telecommunications Law of 2025 recognizes for the first time the legal figure of small operators and contemplates reductions of up to 50-60% in payments for spectrum in exchange for coverage in areas without service.
Peru created the figure of the Rural Mobile Infrastructure Operator (OIMR) in 2013, and in May 2025 the Latin American Telecommunications Alliance (ALT+) was formed, which brings together associations of independent operators from Mexico, Argentina and Brazil to articulate common interests.
The role of small ISPs
In a continent where only four out of ten rural Latin Americans have connectivity options, compared to 71% in urban areas according to the World Economic Forum, wireless internet service providers (WISPs) have become indispensable actors in bridging the digital divide.
These small operators use radio frequency technology, point-to-point and point-to-multipoint links, to bring fixed connectivity to communities where the deployment of fiber optics or copper is economically unfeasible.
In traditional internet provisioning schemes for rural areas, the numbers simply do not add up: the low purchasing power of the population, the high investments demanded by conventional networks and the slow return on investment make large operators discard these areas.
As providers of unlimited wireless internet service, fixed and home, they are the main protagonists of a real and palpable reduction of the digital divide in rural areas that the large operators do not serve.
The model is especially powerful because of its scalability and low cost of entry. Unlike traditional providers that rely on expensive fiber optic or copper cabling, these companies use radio frequency technology to bridge the digital divide, allowing rural communities and remote areas to enjoy a stable connection.
Starlink Mini The investment in infrastructure is made progressively as demand grows, without the need to wire 100% of the territory covered.
The emergence of Starlink has further enhanced this ecosystem.
Many entrepreneurs use an enterprise Starlink kit as the foundation of their network, receiving the satellite signal and redistributing it locally via long-range terrestrial antennas to dozens of Starlink Mini homes, thus reducing the cost per user.
Cases such as Bolivia, where communities like Atahuallpani replaced an expensive and unstable 3G connection with a point-to-point community wireless network with better service and lower cost, illustrate the transformative potential of this model.
One of the great strengths of the WISPs is that they have begun to form associations in most Latin American countries, joining forces to identify and document their needs.
Organizations such as WISPMX in Mexico, CAPPI in Argentina, and multiple associations in Colombia and Brazil articulate the voice of thousands of entrepreneurs who, with modest antennas and towers, are connecting those who have been left behind by the formal market. The future of Latin American rural connectivity is, to a large extent, wireless.
Conclusions, The reduction of the digital divide in Latin America depends decisively on the sustainability of its thousands of small operators. CAF estimates that reaching OECD levels of digitalization would require an additional $160 billion, 60% more than projected.
Although operators plan to invest some 90,000 million dollars between 2024 and 2030, this figure is insufficient if it is not accompanied by reforms that democratize access to the market.
Three structural actions are emerging as priorities: the reduction of sector-specific taxes, which, according to the GSMA, would make the service accessible to an additional 30 million people and could increase tax collection by up to 9,700 million dollars per year, the implementation of differentiated regulatory regimes for small operators such as those adopted in Mexico and Peru, and the strengthening of infrastructure sharing schemes that allow SMEs to compete without replicating investments.
Without these changes, the promise of 5G and fiber optics will mainly favor those who are already connected, deepening the inequality that the sector should help to reduce.
