Mobile phone market shrinks in Brazil

Macroeconomic factors led to a decrease in sales of nearly 7 percent in 2018, says IDC

The political and economic instability seen in Brazil in 2018 hit mobile phone sales badly, according to analyst firm IDC.

Some 46.9 million phones were sold last year, a sales reduction of 6.8 percent in relation to the prior year. However, revenue was up 6 percent at 58.1 billion reais ($14.5 billion).

Smartphones represented 44.4 million items of that total, while 2.5 million were feature phones.

According to IDC Brazil's analyst Renato Meireles, the volatility of the dollar against the Brazilian real, as well as the presidential elections and the strike of self-employed truck drivers in May 2018 were the key drivers behind the sales slowdown.

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"Investor confidence [in Brazil] diminished, and over the course of the year the debates over issues such as the social security reform and the presidential elections affected the entire technology sector," Meireles argues.

The lack of any major novelties in the mobile phone market also contributed to the decline, the analyst adds.

For 2019, smartphone sales are forecast to fall by 4.3 percent, with 42.5 million units sold, with a 6.3 percent decline in feature phones at 2.4 million.

The first and second quarters of 2019 will be weaker due to the end of incentives for mobile phone manufacturers, which will directly impact the final price of products.

"Retailers will eventually pass on that increase in costs to consumers and this will shrink the market, but there will be discussions over [reinstating incentives] later this year," Meireles says.

According to the analyst, the last two quarters of 2019 should see a better performance in mobile phone sales, with consumers feeling more confident and local manufacturers launching products with more robust specifications.