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Analysing oportunities in Latin America

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  • 1. Analyzing opportunities in Latin AmericaInternet Market Research & OutlookJune 2011
  • 2. Did you know?The GDP of the State of SãoPaulo is bigger than Argentina,Chile and Uruguay combined. Argentina 370 São Paulo State GDP (Billion US$) 633 GDP (Billion US$) Chile 203 GDP (Billion US$) Uruguay 40 GDP (Billion US$) 2
  • 3. Did you know?Brazil’s estimatedgrowth for 2011 is largerthan the GDP of all 281 BillionCentral America and the Central &Caribbean combined Caribbean total(That’s 19 countries!) GDP for 2011 331 Billion Brazil’s GDP Increase in 2011 3
  • 4. Did you know?Brazil’s growth in GDP for 2011 is larger thanthe growth in GDP of the rest of Latin America.Brazil 324 331 BillionGDP Increase in 2011 Billion USD USDRest of LatinAmericaGDP Increase in 2011 4
  • 5. Brazil Vs the rest of LATAM Population Internet users 34% 39% BRAZIL BRAZIL 66% 61% LATAM LATAM GDP Nominal % E-commerce Credit cards 24% 44% 39% LATAM 56% BRAZIL LATAM 61% LATAM BRAZIL 76% BRAZIL 5
  • 6. Brazil is getting TOO HOT $4.91 $41,990 $3.73 $17,555 32% 140% Big Mac Honda Civic $90.90 $3,500 $45.00 $4,700 102% -26% Taxi to/from airport in Monthly apartment rentSão Paulo and New York (75 m2) in São Paulo and New York 6
  • 7. Becoming difficult to start a new business $2,000 30.1% (Santiago) $5,000 70.0% (São Paulo) 18.8% $9,300 (NewYork) Labor taxes Monthly office rent (150 m2) 6.7% $30,000 35.1% $63,000 34.6% $73,500 Jr. Programmer annual salary Effective corporate taxes on new investments 7
  • 8. Expected growth for Latam 2010-2015 GDP – PPP E-commerce spending 2010 2010 USD 6,384 Billion USD 27.6 Billion 2015 2015 USD 8,360 Billion 70.1 Billion Net: 1976Bn – 30.1% Net: 42Bn – 154% Internet users Online ad investments 2010 2010 215 Millon USD 2 Billion 2015 2015 310 Millon USD 4.9 Billion Net: 95M – 44.1% Net: 2.9Bn – 145% 8
  • 9. Chile, probably the easiest countryto start a business"Ease of doing business" Ranking 128 62Average time to register a firm 120 22(days)Costs of starting a business $ 750 $ 460Programmer (annual) $ 63,000 $ 30,000Office (monthly for 150 m2) $ 5,000 $ 2,000Labor tax 70% 30%Effective Corporate tax on new 35% 7%investments Pre-investment (up to US$ 60,000 per project) , Human Resources No general incentives to foreign (up to US$ 25,000), Fixed AssetsTax incentives investments or e-commerce (up to US$2,000,000), R&D (35% of certified contracts and tax reductions on the remaining 65%). 9
  • 10. Latam AsiaCompared to Asia, Latam has various advantages if youwant to replicate internet business models that provedsuccessful in the US and Europe. Google the king of search Virtually the same time zone Market Share: • NY vs Sao Paulo: +1 hours USA 71%, UK 93%, Latam 90%, • London vs Sao Paulo: -4 hours China 24%, Japan 38% • NY vs Beijing : +12 hours • London vs Beijing: +7 hours Facebook the king of social networks FB Penetration: USA 39%, Europe 25%, Latam Smaller distances 20%, Asia 4% • NY to Sao Paulo (non stop): 9 hours 30 minutes Lower language barries • NY to Beijing (non stop): 13 hours 30 minutes + JET LAG! 10
  • 11. To keep in mind…Brazil looks great but look beyond:• The rest of Latam represents 54% of regional GDP• Cheaper, faster and bigger incentives to start up in ChileReal growth opportunities in all the region by 2015:• E-commerce net increase of 42 Billion USD• Online Ads Investments will grow 150% to 2.9 Billion USD• 95M net new internet users. Total present 310mmDon’t forget about Hispanics in the U.S.• 50 million Hispanics (30 million online) with buying power of 1,330 billion by 2014Business models in Latam can scale using very similartechniques due to the similarity of platform penetration(Google, Facebook, Twitter) compared to Asia andRussian internet. (Tencent, Yandex, Vkontakte, Baidu) 11
  • 12. TARJETASTELEFONICAS .COM LIDER EN TARJETAS TELEFONICAS PREPAGAS“fnbox is a Latin American technology company focused on creating global and scalable Internet businesses.” TARJETASTELEFONICAS .COM Fuente: Harabara bold TARJETAS Original banners TELEFONICAS .COM Positivo Rodrigo Teijeiro Founder and CEO rodrigo.teijeiro@fnbox.com Negativo Twitter @RodrigoTeijeiro Want to know more? Visit www.fnbox.com C 73% C 0% M 64% M 58%
  • 13. Appendix GDP (Nominal) in Billions SAO PAULO (2008) 632.70 Argentina (2010) 370.269 Chile (2010) 203.323 Uruguay (2010) 40.272 ARG + CHI + URU 613.864 13
  • 14. Appendix GDP (nominal) Country 2010 2011e Increase Brazil 2,090.31 2421.63 331.32 Country 2011e GDP (nominal) Dominican Republic 54.912 Guatemala 46.383 Costa Rica 40.297 Panama 29.799 El Salvador 23.169 Trinidad and Tobago 22.466 Honduras 17 Jamaica 14.976 The Bahamas 7.787 Haiti 7.724 Nicaragua 7.05 Barbados 4.224 Belize 1.468 Antigua and Barbuda 1.174 St. Lucia 1.04 Grenada 0.728 St. Vincent and the Grenadines 0.593 St. Kitts and Nevis 0.557 Dominica 0.392 Central America & the Caribbean 281.739 14
  • 15. Appendix Country 2010 2011 Increase GDP (nominal) 2010-2011 Brazil 2,090.31 2,421.64 331.323 Mexico 1,039.12 1,167.12 128.003 Argentina 370.269 456.817 86.548 Colombia 285.511 307.845 22.334 Venezuela 290.678 294.271 3.593 Chile 203.323 231.302 27.979 Peru 152.83 167.846 15.016 Ecuador 58.91 65.032 6.122 Dominican Republic 51.626 54.912 3.286 Guatemala 41.471 46.383 4.912 Uruguay 40.272 43.265 2.993 Costa Rica 35.78 40.297 4.517 Panama 26.778 29.799 3.021 El Salvador 21.7 23.169 1.469 Bolivia 19.373 22.778 3.405 Trinidad and Tobago 20.59 22.466 1.876 Paraguay 18.475 22.143 3.668 Honduras 15.347 17 1.653 Jamaica 13.694 14.976 1.282 The Bahamas 7.538 7.787 0.249 Haiti 6.632 7.724 1.092 Nicaragua 6.551 7.05 0.499 Barbados 3.963 4.224 0.261 Suriname 3.682 3.889 0.207 Guyana 2.215 2.397 0.182 Belize 1.396 1.468 0.072 Antigua and Barbuda 1.105 1.174 0.069 St. Lucia 0.985 1.04 0.055 Grenada 0.674 0.728 0.054 St. Vincent and the 0.561 0.593 0.032 Grenadines St. Kitts and Nevis 0.531 0.557 0.026 Dominica 0.376 0.392 0.016 REST OF LATAM     324.491 15
  • 16. Appendix Big Mac prices HONDA Civic LX Country US$ Country US$ Brazil $ 4.91 Brazil $ 41,990 United States $ 3.73 Argentina $ 27,050 Argentina $ 3.56 Chile $ 24,480 Chile $ 3.34 Mexico $ 21,550 Mexico $ 2.50 USA $ 17,855 Taxi Fares Average Apartment (75 m2) City From/to Airport US$ City US$ Sao Paulo $ 90.00 New York $ 4,700.00 New York $ 45.00 Sao Paulo $ 3,500.00 Buenos Aires $ 37.00 Buenos Aires $ 960.00 Santiago $ 24.00 Santiago $ 650.00 Mexico City $ 15.00 Mexico City $ 650.00 16
  • 17. Appendix Office (150 m2) Country Labor tax Effective City US$ (excluding Corporate personal Taxes on new New York $ 9,300.00 income tax) investments Sao Paulo $ 5,000.00 Argentina 41.0% 43.1% Buenos Aires $ 2,500.00 Brazil 70.0% 35.1% Chile 30.1% 6.7% Santiago $ 2,000.00 Mexico 41.0% 17.5% Mexico City $ 1,700.00 USA 18.8% 34.6% Country City Jr. Programmer Manager* New York $ 73,500 $ 179,000 Sao Paulo $ 63,000 $ 157,500 Mexico City $ 31,500 $ 118,000 Santiago $ 30,000 $ 110,000 Buenos Aires $ 27,000 $ 79,000 *For US the average wages are for COO positions. *Other countries are average wages for a Country Manager 17
  • 18. AppendixSourcesSlide 2Instituto Brasileiro de Geografia e Estatística (IBGE). Regional accounts 2004-2008. http://goo.gl/eUIS2International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbSlide 3International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbSlide 4International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbSlide 5Internet World Stats.U.S. Census Bureau. International Database. http://goo.gl/sbMOGInternational Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbAmericaEconomia IntelligenceSlide 6International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbThe Economist. Big Mac Index. http://goo.gl/bbmvEHonda International sites 18
  • 19. AppendixSourcesSlide 7Payscales.comCato Institute. New Estimates of Effective Corporate Tax Rates on Business Investment.http://goo.gl/pDGOQSlide 8Doing Business (World Bank Group):Chile. http://goo.gl/W2xKcBrazil. http://goo.gl/ei7xpApexBrasil. http://goo.gl/DhMiAInvest Chile (Corfo). http://goo.gl/NKqjESlide 9Internet World StatsInternational Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbeMarketer. The Global Media Intelligence Report 2010Slide 10Socialbakers. http://goo.gl/i9HqS 19
  • 20. Data sources http://1.bp.blogspot.com/_dr3S8zqPnj4/TTVmjYCaGhI/AAAAAAAATjw/pHzIthd47NE/s1600/market-share-large-1024x768.png http://www.searchenginebite.com/google-has-90-share-in-search-market-of-latin-america.html/ http://oxstones.com/latin-america-will-see-the-highest-e-commerce-growth-worldwide-through-2015/ http://www.imf.org/external/pubs/ft/weo/2011/01/weodata/weorept.aspx?pr.x=59&pr.y=14&sy=2009&ey=2016&scsm=1&ssd=1 &sort=country&ds=.&br=1&c=205&s=NGDPD%2CPPPGDP&grp=1&a=1 http://www.etforecasts.com/products/ES_intusersv2.htm 20

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