An interesting reflection on the cell phone industry was reflected by analyst Enrique Carrier in his blog when analyzing that the turnover of all mobile phone companies has been decreasing in recent years, and between 2013 and 2021 it accumulated a drop of 42%. This arises from the report “Argentine cellular market 2022”, prepared by Carrier y Asociados. The sector's billing data is published by Enacom on its Open Data page, but at nominal value, in pesos and without considering the impact of consistently high inflation in recent years. The data, as published, give the impression of a thriving activity, whose turnover does not stop growing, but the image is reversed when updating the historical values ​​due to the inflationary effect. In this case, the drop is constant and significant.

The analysis explains that the period considered begins with the explosion of smartphones, and with them, the advance of data consumption to the point of being today practically the only variable between the prices of the different plans (measured in monthly GB), while for the most part both voice minutes and SMS are practically flat. Even so, they are no longer so relevant services. Clearly, SMS died at the hands of Whatsapp and something similar happens with voice, although not as marked because voice over Whatsapp does not have the same reliability as traditional voice. Despite this, it is increasingly common to receive and make calls via WhatsApp. On the other hand, the ubiquity of WiFi made offloading a common practice, particularly within homes and workplaces. This in turn means that subscriptions are needed with a substantially smaller number of gigabytes than those trafficked in a given month.

According to Carrier, this drop in revenue was offset by decreases in costs. Technology today is more efficient and convergence in networks allows costs to be amortized together with other services, such as broadband and pay TV, that the three operators currently offer. An aspect in which the constant deployments of fiber optics play an important role. Strong savings were also achieved in commercial and technical attention (accelerated during the pandemic) greatly impacted by digitalization and there were significant decreases in expenses in marketing and advertising, as well as in subsidies for terminals, something natural in a market that for a few years has only grown vegetatively in terms of new users. A scenario that also promoted greater sharing of infrastructure to distribute costs among more than one operator. These and other reductions allowed profitability to be maintained, although not always at previous levels.

This shrinking of the mobile business is something to be taken into account by the regulator, especially with the prospect of the arrival of 5G. The decrease in business volume, combined with a macro that makes planning and access to financing difficult, are factors to consider when imagining what the value of the spectrum could be. It is necessary to take into account that in addition to the spectrum, the arrival of 5G will require a strong investment in infrastructure, mainly in the deployment of fiber optics to interconnect a park of antennas that will inevitably have to be larger. Expectations will have to be moderated if the reference taken is the 4G tender, which also occurred at a time when 3G networks had collapsed, exerting strong pressure to decompress the networks. “We are clearly facing a scenario that explains why operators in Argentina are not very enthusiastic about talking about 5G,” Carrier concludes. “At least not for the moment.”

The global situation

Global smartphone shipments fell 11% year-on-year amid unfavorable economic conditions and slow seasonal demand in the first quarter of 2022. Samsung led the market with 24%, against 19% in the fourth quarter of 2021, having already renewed its portfolio for 2022. Apple took second place, with a strong first quarter thanks to demand for its iPhone 13 series, while Xiaomi remained in third place due to the performance of its Redmi Note series.

This was confirmed by the consulting firm Canalys on its blog. According to its analyst Sanyam Chaurasia, despite the uncertainty looming in global markets, leaders accelerated their growth by expanding device portfolios for this year, and while iPhone 13 captures consumers, the iPhone SE launched in March is becoming an important mid-range volume driver for Apple. “At a similar price to its predecessor, it offers an updated chipset, better battery performance, and adds the 5G connectivity demanded by carrier channels,” he said. “At the same time, Samsung has ramped up production of its A-series to compete aggressively in the mid-to-low-end segment as it refreshes its 2022 portfolio, including its flagship Galaxy S22 series, although Chinese suppliers still suffer from supply constraints at the lower end.

According to Nicole Peng, vice president of mobility at Canalys, the global smartphone market was slowed by an unstable business environment in the first quarter. “Markets saw an increase in COVID-19 cases due to the Omicron variant, although minimal hospitalizations and high vaccination rates helped quickly normalize consumer activity,” the executive expanded. "Suppliers face significant uncertainty due to the war between Russia and Ukraine, continued lockdowns from China, and the threat of inflation. All of this on top of traditionally sluggish seasonal demand. Suppliers must equip themselves to respond quickly to emerging opportunities and risks while staying focused on their long-term strategic plans. The good news is that painful component shortages could improve sooner than expected, which will certainly help alleviate cost pressures."