Information and Communications Technology

An Expert's View about IT and Telecommunications in Argentina

Posted on: 24 May 2012

Argentina’s information technology (IT) market, including hardware, software, and services,
reached US$ 5 billion in revenues in 2011, a 15 percent increase from 2010 and is expected to
increase an additional 12 percent in 2012. IT Services are growing in Argentina as outsourcing
of IT-related solutions continues to be the main practice for companies worldwide. Total
revenues of this subsector reached almost US$ 1.5 billion in 2011 (30 percent of total sector
revenues) in which the outsourcing of software development, network infrastructure, and
management-related services played key roles.
Argentina’s internet penetration is twice as high as the world average and close to that found
in European countries. Its broadband penetration on the other hand is less than half of
Europe’s, although it is on a par with Chile’s, the highest in the region.
Argentina’s telecom market grew by 18% in 2011, and sales are expected to reach more than
US$10 billion in 2012. As in other Latin American countries, fixed-line revenues account for a
decreasing portion of total telecom revenues, while the share of mobile and data/internet
revenues continues to rise. Argentina has adopted a single license system (Licencia Única),
which telecom companies must obtain regardless of the services they wish to provide. The
country’s regulatory framework encourages competition and supports smaller telecom
players. Both fixed and mobile number portability are scheduled for implementation in March
The continuing increase of broadband access (fixed 21 percent and mobile 150 percent)
combined with the increased sale of notebooks and the record sale of smartphones and USB
modems were highlights of 2011. This contributed significantly to the sale of broadband
services over cellular and fixed networks and is expected to continue throughout 2012.

Sub- Sector Best Prospects
In the IT market, high-end branded PCs, notebooks, netbooks and minibooks, printers,
servers, and multi-user systems are the major source of hardware imports. In addition, other
consumer electronics, such as smart phones, digital cameras, MP3, MP4, other PDAs, digital
storage devices, GPS, and portable and fixed gaming products are expected to see increased
demand for the next year.
Since locally assembled PCs account for over 70 percent of the market, PC components will
continue to be in high demand. Local assembly targets the residential/small and home-office
PC segment. In the corporate segment, the cost benefit from local assembly does not
outweigh the guarantee offered from an original vendor. The Argentine Government passed a law in 2009 imposing a 30 percent increase on taxes for electronics imported, manufactured,
or assembled outside the Free Trade Zone of Tierra del Fuego. This law is expected to
increase the market share of locally assembled products vis-à-vis imported products.
In hardware, servers and multi-systems present good opportunities. In 2011, the United States
was the major exporter of servers with 40 percent of total imports, followed by Brazil (25%)
and Mexico (12%). Servers account for 3 percent of total hardware revenues.
The IT Services sub-sector offers major opportunities for U.S. companies in network
implementation, management and maintenance, legacy applications, wireless LANs, RTE (real
time infrastructure) implementations, remote operation processing, back-up, critical mission
services, disaster recovery systems, internet and network security systems, document
digitalization, digital asset management, storage, utility computing, and information systems
for rural areas (traceability, RFID, etc). Cloud computing and virtualization-related services
will see high demand during 2012. The outsourcing of software development and call/contact
centers will continue to realize investments, exports, and increased sales in the domestic
Regarding software, large projects in the areas of security solutions and business intelligence
will present opportunities in 2012.
In the Telecom sector, best prospects for 2012 are broadband internet access (fixed and
mobile); broadband wireless access networks (including point-to-point, point-to-multipoint,
Wi-Fi, Wireless LANs, and Wi-Max); data transmission over cellular networks; SMS (short
messaging services); broadband and multimedia content; and applications for cellular
services, smartphones and 3G USB modems, IP Phones, VoIP networks, VPNs and IP VPNs, NGN
and network security products. Blackberry/RIM was by far the best selling smartphone,
followed by, Nokia, Motorola, Samsung, Sony and iPhone products.

The main factors will keep demand for IT hardware, software, and services high with an
increased competition in 2012:
• new investments in the country in a number of industries (e.g., tourism)
• the majority of the systems installed need upgrading
• the growth of Internet access (fixed and mobile)
• the increasing complexity and convergence of technologies
• highly educated and tech-savvy population
• new mobile number portability law
• tendering of remaining frequencies to offer mobile services
• nationwide extension of fiber optic lines under Argentina Conectada Program
In the telecom sector, investments in 2012 will be focused in three areas, the deployment and
enhancement of the cellular GSM network (3G+), the expansion of broadband Internet access
(via ADSL, cable modem, Wi-fi, Wi-Max, 3G USB modems and smart phones), the expansion of data transmission/ broadband and content over cellular networks, and the continuing
migration to IP networks (NGN) and triple play.

Read the full market research report

Posted: 24 May 2012

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