2011 Colombia - Telecoms, Mobile, Broadband and Forecasts

Competition livens up in Colombia’s promising telecom market

Colombia’s telecommunications could offer substantial returns for investors willing to take on emerging market risks. The outlook is promising for the country’s economy, which is forecast to grow by an average of 4.5% annually during the 2010-2020 decade.

The Colombian telecom market has been experiencing intensifying competition, increasing convergence, and the emergence of a rapidly growing broadband sector. A single Convergence Licence allows companies to offer fixed-line telephony, Internet access, broadband, and other value-added services.

During 2011, radical transformations are expected both in terms of market consolidation and in the provision of new services, with fixed-line operators ETB and Emcali seeking strategic partners and/or investors, and sister companies Telmex and Comcel combining their fixed and mobile operations.

In Colombia, both the number of fixed lines in service and the national teledensity have been decreasing. Most of the fixed telephone lines are concentrated in the larger cities, so that facilities are quite poor in small urban centres and rural areas. Nevertheless, while lower than average for South America, Colombia’s fixed-line teledensity measures up favourably with the country’s low economic indicators.

The country has some 30 local telephone providers, partly private, and partly owned by the municipalities where they operate. Indeed, the participation of private capital in local telephony is relatively small, though companies are gradually selling shares to private investors.

The erstwhile fixed-line market leader, Telefónica Telecom, has been overtaken by ETB in terms of fixed lines in service. The third largest operator is municipally owned UNE, which has seen an increase in fixed-line customers and has been particularly active in offering bundled services. The fourth place is occupied by Telmex Colombia, which is also steadily increasing its fixed-line market share thanks to triple-play packages.

Long-distance services were liberalised in mid-2007. To operate, long-distance providers need a Convergence Licence and a multicarrier access code.

Although the Colombian mobile market has slowed down, it holds significant growth potential, particularly in the areas of mobile broadband and value-added services. América Móvil’s Comcel is the leading mobile operator, followed by Telefónica’s Movistar and Millicom-controlled Tigo. Avantel uses iDEN technology to serve a small number of subscribers in the corporate market. UNE-EPM is the country’s fifth mobile operator, but intends to focus on mobile broadband rather than voice services.

Helped along by a regulatory framework that encourages competition and by government efforts to reduce the ‘digital divide’, broadband is growing strongly in Colombia. In fact, this is one of the few Latin American countries where dominant telecom operators are obliged to provide local loop unbundling and wholesale services.

ADSL is the leading broadband technology, but cable broadband continues to grow both in subscriber numbers and in geographical coverage due to the popularity of triple-play solutions.

The cable-TV sector has undergone major consolidation and, as a result, two companies, Telmex and UNE, together control 90% of the market. In the satellite-TV sector, Telefónica Telecom has succeeded in gaining more than one third of the market in only three years since launching services.

Colombia’s 3G data or mobile broadband market took off in 2009, but penetration is still only about 2%. Unlike other Latin American countries, Colombian operators advertise their 3G data services as high-speed mobile Internet rather than mobile broadband due to regulations on minimum broadband speeds (1,024Kb/s download and 512Kb/s upload).

Market highlights:

• Two state-owned companies are up for sale: ETB, with about 26% of the country’s fixed lines in services, and Emcali, with about 7%.
• Competition will receive a further boost from number portability, to be implemented in July 2011.
• The government is raising the spectrum cap from 55MHz to 60MHz per mobile operator.
• The year 2011 promises to be a lively one for spectrum bidding. An auction will be held for 30MHz in the 1.9GHz band (to be used for 3G services), and there are tender plans for spectrum in the 1.7/2.1GHz and 2.5GHz bands.
• Having won 50MHz of spectrum in the 2.5GHz-2.69GHz band, fixed-line operator UNE is rolling out Latin America’s first 4G network using long term evolution technology. Launch is expected by September 2011
• More than 45 companies have received access codes for long-distance telephony. New entrants have managed to secure about one-third of the international telephony market but have only eked out a minuscule share of the domestic long-distance market.
• Despite two failed auction attempts in November 2009 and in August 2010, the Colombian government still hopes to award a contract for the construction of a Ku-band satellite called Satélite Colombiano (Satcol), and expects to have it in orbit by 2013.
• IPTV, offered by UNE-EPM, is attracting a rapidly growing number of subscribers.

Colombia Internet, broadband, fixed-line, and mobile statistics – 2007 - 2010

(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.

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

• An analysis of the telecom market and general industry outlook;
• Spectrum cap increases and spectrum auctions in Colombia;
• The arrival of UNE on the mobile market scene;
• The rise and fall of WiMAX;
• Wholesale services and local loop unbundling;
• The success of triple-play solutions.

The Colombian telecom market is favourable towards foreign investors and has a regulatory framework that favours competition. This report covers trends and developments in telecommunications, mobile, Internet, broadband, pay TV, and converging media. Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures, and statistics;
• Government policies and regulatory issues;
• Historical information;
  • Telecom infrastructure;
  • Major players, revenues, subscribers, ARPU;
  • Internet, VoIP, IPTV;
  • Mobile voice and data markets;
  • Broadband (DSL, cable modem, WiMAX, mobile broadband, etc);
  • Convergence and triple-play solutions;
  • Pay-TV market;
  • Scenario forecasts for the fixed-line, mobile, and broadband markets.