2012 Venezuela - Telecoms, Mobile, Broadband and Forecasts

Smartphone sales soar as Venezuelans flock to social networks

Substantial improvements in Venezuela’s telecom infrastructure have made service availability relatively high compared with the rest of Latin America. The country’s telecom market is expected to grow by at least 10% in 2012, led by 3G including both mobile broadband and phone-based internet browsing. The outlook for 2013 is less promising, as Venezuela’s petroleum-dependent economy leaves it vulnerable to sudden booms and busts tied to the global oil market, and oil prices are on the way down. After the October 2012 general elections, an economic slowdown is probable, and this would temporarily put a break on telecom market growth.

Despite a sustained increase in the number of fixed lines in service, Venezuela’s fixed-line revenues account for a shrinking portion of total telecom revenues, while the share of mobile, internet, and pay TV revenues has been rising. A number of private operators compete in all telecom sectors, but CANTV, the country’s state-owned telecom incumbent, dominates the fixed, mobile, and broadband markets.

Venezuela’s teledensity is one of the highest in Latin America, having almost doubled since 2005. In the local telephony market, four companies compete with CANTV: NetUno, Inter, Movistar, and Digitel. NetUno and Inter are primarily cable TV companies, while Movistar and Digitel are primarily mobile operators. NetUno and Inter provide fixed-line services over their cable TV network as part of triple play packages (including pay TV, broadband, and fixed-line telephony). Movistar and Digitel offer local phone services using fixed-wireless technology.

Venezuela’s fixed broadband penetration and speed are lower than the regional average and less than would be expected based on GDP per capita, which in Venezuela is higher than in Latin America as a whole. Partly due to the economic slowdown and partly to the rising popularity of mobile broadband, growth in the fixed broadband market has slowed.

CANTV is the country’s exclusive ADSL provider. A few cable TV companies offer cable modem access and there is one WiMAX provider. The Venezuelan government has launched a National Fibre-Optic Backbone project to guarantee a uniform distribution of high-speed internet access throughout the national territory. CANTV is in charge of implementing the project. The government intends to lease capacity on the National Fibre-Optic Backbone to cooperatives and small companies.

Pay TV is the fastest growing telecom sector in Venezuela after mobile broadband, and accounts for 15% of all telecom revenue in the country. The market leaders are DirecTV, Inter, SuperCable, NetUno, Movistar, and CANTV.

Mobile penetration in Venezuela is about 7% below average for South and Central America. The mobile market is recovering from the downturn it took during Venezuela’s economic recession, but estimated growth is small compared with previous years.

Despite the slump in mobile subscriber growth, the volume of data traffic has been increasing exponentially. Spurred by the huge popularity of social networks in Venezuela, the country has experienced an unanticipated surge in the demand for 3G and smart phones. Indeed, Venezuela is the number one country in Latin America for Blackberry handsets.

Three major players operate in the Venezuelan mobile market: Movilnet, the market leader and mobile subsidiary of state-owned CANTV; Movistar, the Venezuelan unit of Spain’s Telefónica; and Digitel, a locally owned private company.

Key developments:

• Venezuela’s fixed-line teledensity has been increasing at a faster pace than any other Latin American country;
• telecom revenue as a percentage of GDP has shrunk in the past few years;
• internet sales (including fixed and mobile broadband) are the fastest growing telecom revenues;
• driven by Twitter and Facebook, smartphone penetration in Venezuela is one of the highest in the region;
• in the five years since it was renationalised, CANTV has increased the country’s fibre-optic backbone infrastructure by 48%;
• a new Chinese-built satellite for Venezuela (Miranda) is scheduled for launch in October;
• Movilnet, Movistar, and Digitel have been allocated additional spectrum;
• mobile operators are having to invest in their networks, which suffer from severe congestion;
• Digitel, Movistar, and MovilMax (a WiMAX provider) plan to deploy 4G/LTE networks in 2013/2014;
• more than one third of Venezuela’s mobile subscribers still use CDMA technology;
• Venezuela continues to have the region’s highest mobile ARPU;
• the National Fibre-Optic Backbone project aims to build a 6,940Km network;
• Venezuela ranks third in the world for Facebook users as a percentage of internet users;
• Venezuela’s pay TV market suffers from rampant signal theft;
• in 2011/2012, two more companies entered the Venezuelan satellite TV market: CANTV and Inter.

Venezuela’s fixed-line, broadband, and mobile statistics – 2010 - 2012

(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 development of Venezuela’s fixed-line, mobile, broadband, and pay TV sectors together with industry outlook and forecasts.
• Company performance, ARPU, and spectrum awards.
• An analysis of Venezuela’s broadband sector.
• The government’s ICT projects.
• The development and expansion of mobile broadband in Venezuela.
• How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the years to 2020.