2010 Venezuela - Telecoms, Mobile, Broadband and Forecasts

Venezuela’s GDP per capita is the highest in Latin America bar a few Caribbean islands and yet, although poverty and income inequality have decreased substantially since 2002, still about one fourth of the population is poor. The re-nationalised incumbent, CANTV, has been undertaking social programs for the disadvantaged sections of the population, expanding the reach of its telephone network to rural areas with scant or nonexistent telecom services.

While basic telephony stagnates or recedes in the rest of the region, Venezuela’s fixed lines in service increased at a Compound Annual Growth Rate of 13% between 2006 and 2009, pushing teledensity well above the regional average, from levels that used to be abysmally low compared with the country’s economic indicators. Provided CANTV avoids bureaucracy and corruption, state-ownership appears to be beneficial for teledensity due to the infrastructure-intensive nature of the fixed-line sector.

The country’s Internet and broadband penetration, however, are below average for Latin America and much lower than would be expected, based on the country’s GDP per capita. There exists no wholesale market for broadband in Venezuela. State-owned CANTV has a monopoly in the provision of ADSL. There are no ISPs in the country even acting as resellers of its ADSL service. The only broadband market competition comes from cable modems, wireless broadband, and satellite. As a result, ADSL in Venezuela is slower and more expensive than in other Latin American countries.

If the government were to introduce Local Loop Unbundling, and allow private operators to lease bandwidth from CANTV for broadband services, competition would bring down prices and improve quality (and speed), and we could expect to see a boom in the country’s broadband and ICT sector. CANTV would be able to focus on infrastructure, recovering its investment costs from lease income, rather than trying to operate as a cumbersome, vertically integrated company.

Venezuela’s mobile penetration has passed the 100% milestone, positioning itself well above the Latin American average. The mobile industry has reached a high level of maturity and remains a dynamic, competitive market with three operators vying for market share. Mobile broadband is becoming an attractive alternative for Internet users, as well as an important source of revenue for companies faced with a near-saturated market.

Venezuela is the regional leader in terms of SMS traffic, the number of text messages being about double the number of minutes the average Venezuelan talks on a mobile phone.

Market highlights:

·         While Venezuela’s economy contracted in 2009, its telecommunications industry registered a 10% growth, performing better than any other sector.

·         The telecom market outlook is reasonably promising for 2010, but more uncertain for 2011. Laws and decrees perceived as undermining to private property rights have lessened foreign capital inflow. Indeed, telecom investment has come primarily from public spending; galloping inflation and energy shortages may erode Venezuela’s international reserves and force budget cuts in the telecom sector.

·         Mobile broadband has taken off in Venezuela, and is becoming an attractive alternative for Internet users, as the country’s fixed-line broadband suffers from slow speeds and unavailability.

·         Cable TV operator NetUno is deploying Venezuela’s first FttH network to connect new housing developments in Caracas.

·         Mobile operator Movistar plans to deploy LTE infrastructure in Venezuela’s major cities in the second half of 2011, but is waiting for the necessary mobile spectrum.

·         CANTV plans to launch IPTV in the second half of 2010, but before it can do so it will need to increase the speeds and drop the prices of its ADSL service.

Venezuela – key telecom parameters – 2008 - 2009

(Source: BuddeComm based on industry data)

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

·         The repercussions of re-nationalisation on Venezuela’s fixed-line, mobile, and broadband sectors, and future industry outlook.

·         Government projects in the ICT sector.

·         An analysis of Venezuela’s broadband market, particularly ADSL, cable modem, and WiMAX.

·         The success of triple play solutions in Venezuela, which has helped to boost the cable TV sector and allowed cable TV companies to offer some competition with the incumbent.

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