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Colombia Telecommunications Report Q1 2012
Business Monitor International, Dec 2011, Pages: 92
Business Monitor International's Colombia Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's telecommunications industry.
The Colombian mobile market grew strongly in Q211 and reached 46.3mn subscribers at the end of June 2011. Net additions have been strong since Q409 and BMI does not expect growth to decline massively in the short term. However, as the penetration rate reaches 100%, subscribers will become increasingly difficult to secure – BMI does not expect strong growth to continue indefinitely, but to begin slowing down. Not all operators experienced growth in Q211. Movistar reported a second consecutive quarter of net losses, finishing June 2011 with 9.95mn subscribers. However, this is due to the discounting of unused SIMs, and gains can be seen in ARPU figures as a result.
BMI increased its forecasts in 2011 as growth for other operators exceeded expectations. The further auction of mobile spectrum in August 2011 has also increased the capacity to provide for the growing demand for data services. Local mobile operator Comunicación Celular (Comcel) and Luxembourgbacked Colombia Movil (Tigo) managed to get 5MHz each in band A, while Telefónica-backed Movistar was awarded 5MHz in band D and 10MHz in band E.
Mobile interconnection fees were cut this quarter by the regulator. This meant ARPUs may fall in future quarters. However, the two operators which report ARPUs, Movistar and Comcel, experienced increases this quarter. This follows stronger demand for data services. The regulator has started to report data for the new MVNO in the market, Uff! and BMI expects it will begin to take a greater share of the prepaid market and allow the MNOs to expand their postpaid bases. The fifth operator offering 4G capable services, Une-EPM, acquired spectrum in June 2010 and is expected to launch Latin America’s first commercial LTE network in Q112.
During this quarter there were moves towards consolidation within regions and subsectors of the telecoms market. Firstly, the Colombian finance minister requested that the joint venture between the Colombian government and Telefónica, Colombia Telecom, could merge with other companies in the sector. The move comes after a financial weakening of the company and following the continued loss of fixed-line subscribers. It is expected that the merger will be with Telefónica, which currently owns a 52% stake in the company. Both stakeholders would inject capital into the company in proportion to their stakes, aiming to merger later.
Meanwhile, the mayors of Bogota, Medellín and Cali have signed a Memorandum of Understanding, the first step towards a merger between the three regional telecoms operator Empresas de Bogotá (ETB), Empesas Publicas de Medellín (UNE) and Empresas Municipales de Cali(EMCali). BMI welcomes this move towards consolidation in one of the most divided telecoms markets in Latin America, which demonstrates that its view of consolidation through the regional telecoms market is playing out. BMI believes the synergies from the union will bring great benefits in terms of economies of scale and efficiency for all three companies, and will improve services for Colombians. It would also provide a viable solution for ETB, which has been struggling to identify a strategy to reverse its decline.
The fixed-line segment reported gains in Q211, reversing the steady decline it experienced through 2010 and Q111. Telmex and EPM reported gains in fixed-line subscribers, as did some of the smaller operators in the market, although the bigger players such as Telefónica and ETB continued on the downward trajectory.
The rapid increase in the use of mobile internet is putting pressure on the market's fixed broadband operators to maintain their appeal as the market expands. Data show how mobile broadband users are quickly catching up with fixed broadband subscriber numbers, and with the launch of LTE technology, this is likely to gain pace. Government initiatives such as removing VAT on domestic broadband connections, will boost demand and BMI has revised up its forecasts this quarter following strong performance in the broadband market.
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