2009 Venezuela - Telecoms, Mobile, Broadband and Forecasts

While basic telephony stagnates in the rest of the region, Venezuela has been reporting double-digit growth figures for its fixed-lines in service. Teledensity has risen from levels that used to be abysmally low, given the country’s other economic indicators, to somewhat higher than average for Latin America. State-owned CANTV has been undertaking social programs for the disadvantaged sections of the population and has been expanding the reach of its telephone network to rural areas with poor or nonexistent telecom services.

Venezuela’s mobile penetration is one of the highest in the region, with subscribers still growing strongly even while preparing to cross the 100% penetration barrier. Venezuela is also a regional leader in terms of SMS traffic, the number of text messages surpassing the number of minutes the average Venezuelan talks on a mobile phone. The country remains one of the last bastions of CDMA in Latin America, but the two leading mobile operators, Movilnet and Movistar, are finally turning to GSM.

Prepaid services have become popular in fixed-line telephony and broadband as well as in the mobile market. As a result, prepaid has been largely responsible for the rapid growth of mobile services in the country. After being a major driver in Venezuela’s mobile market, however, the tide is changing, with the proportion of prepaid mobile users beginning to ebb in favour of postpaid accounts.

Unlike mobile telephony, Venezuela’s broadband penetration is lower than average for Latin America. CANTV dominates the market with its ADSL service; in fact, lack of competition has made ADSL expensive compared with neighbouring countries, and the speeds are slow. However, new technologies such as WiMAX and BPL are proving successful in Venezuela, and convergence solutions are also popular.

Venezuela, one of the world’s top ten oil-exporting countries, has the highest GDP per capita in Latin America bar a few Caribbean islands. But after years of oil-funded growth, the country faces plummeting oil prices as a result of the global financial crisis. The government believes it can weather the downturn thanks to large international reserves.

Depending on the severity of the slowdown for Venezuela, the fixed-line market may flatten, albeit only temporarily. Broadband may also suffer as companies cut their ICT spending and residential customers shift their focus to the most essential everyday needs. The mobile sector may be close to reaching maturity, although market leader Movilnet’s new GSM network should help to buoy the market in 2009/10.

Key highlights:

·         By installing new lines and consolidating all state-owned fibre optic networks, including those of Telecom Venezuela, power utilities Cadafe and Edelca, and state oil company PDVSA, the renationalised CANTV expects its fibre optic installed capacity to reach 15,400km by 2010, up from 7,700km in 2006.

·         Venezuela launched its first satellite, called Venesat-1 or Simon Bolivar 1, in October 2008. The government said Venesat-1 would be used for telemedicine and e-education programs, as well as to provide telephony, high-speed Internet, and TV services to isolated areas.

·         Venezuela saw its first 3G UMTS mobile services in December 2008, launched by Movistar. The other two mobile companies expect to launch services in 2009.

·         Movilnet finally launched a GSM network in December 2008 with coverage over selected less-densely populated areas; major cities such as Caracas would have to wait well into 2009 to receive services. The GSM network will function alongside Movilnet’s CDMA platform.

·         CANTV plans to launch IPTV at the end of 2009 or early 2010, and has chosen ZTE as the system integrator for its IPTV platform.

Venezuela Internet, broadband and telecoms statistics – 2005 - 2008

(Source: BuddeComm based on industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

For those needing an objective and high-level strategic analysis on Venezuela, this report is essential reading and gives further information on:

·         Telecom market analysis and review following the renationalisation of the telecom incumbent CANTV, including government programs aimed at bridging the digital divide.

·         Mobile market outlook and developments, including spectrum awards, network launches, and operators’ future plans.

·         The start of 3G UMTS services in Venezuela.

·         Broadband market status, including ADSL, cable modem, the WiMAX services offered by MovilMax, and the BPL services offered by EDC.

·         The triple play models of cable TV companies NetUno and Inter.

·         How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the ten years to 2018.