Amid Economic Woes, Digital Life Presses On in Venezuela - eMarketer
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Amid Economic Woes, Digital Life Presses On in Venezuela

There were 16.3 million internet users, 30.3 million mobile connections in Q1 2015

June 30, 2015 | Advertising & Marketing | Mobile | Telecom

Venezuela is the sixth-largest country in Latin America by population, trailing Peru closely. Venezuela’s census bureau, the Instituto Nacional de Estadística (INE), projected the country’s population would reach 30.6 million in 2015—roughly half a million less than Peru, according to Peru’s Instituto Nacional de Estadistica e Informatica (INEI). According to World Bank estimates, however, Venezuela ranked fifth by population (ahead of Peru by just 30,000) in the region in 2013 and fourth by GDP ($438.3 billion in current US dollar terms)—trailing only Brazil, Mexico and Argentina.

Internet Users in Venezuela, Q1 2014-Q1 2015 (millions)

Venezuela’s finances are closely tied to oil exports (oil rents represented 20.0% of its GDP between 2010 and 2014, compared with 0.9% in the US) and took a hit when crude oil prices dropped from roughly $110 per barrel in June 2014 to $52 the last day of 2014. As a result, annual GDP growth took a 4.0% dive in 2014 and is expected to drop an additional 5.1% this year, according to the World Bank. Estimates from the International Monetary Fund (IMF) are even bleaker, predicting a full-blown, long-lasting recession that would bring down Venezuela’s GDP 7.0% this year and 4.0% in 2016.

And yet, digital life is pressing on in the Bolivarian Republic. According to a May 2015 Comisión Nacional de Telecomunicaciones (CONATEL) report, the number of internet users in Venezuela reached 16.3 million—or 61.3% of the population—in Q1 2015, a 23.5% annual improvement.

eMarketer does not produce individual estimates for Venezuela, but putting the CONATEL calculations against the other six countries we track (Argentina, Brazil, Chile, Colombia, Mexico and Peru), Venezuela would rank fifth by total internet users and third by internet user penetration of the population.

CONATEL found that mobile communications were also on the upswing, with 30.3 million mobile connections in use in the country during Q1 2015. More than a third of those connections, or 11.6 million, were tied to a smartphone, representing a 26.1% year-over-year gain in smartphone users.

Smartphone Connections in Venezuela, Q1 2014-Q1 2015 (millions)

Put against the background of individual countries tracked by eMarketer in Latin America, Venezuela would rank fifth by absolute smartphone users, ahead of Chile and Peru, in 2015.

Smartphone uptake—and that of other connected devices, too—in Venezuela may look very different to developed countries or even from other Latin American markets, though. To counter runaway inflation and depleting US dollar reserves, multilevel exchange rate controls have been put in place by the Venezuelan government in recent years. As a result, flagship devices from virtually any manufacturer are beyond the means of most consumers in the country. (A recent Bloomberg article estimated the cost of an iPhone 6 at $47,678 in Venezuela.) For those with the necessary disposable income, social unrest makes the purchase of high-end smartphones a risky proposition.

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