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2013 Colombia - Telecoms, Mobile, Broadband and Forecasts

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Last updated: 17 Jul 2013 Update History

Report Status: Archived

Report Pages: 67

Analyst: Lucia Bibolini

Publication Overview

This report is essential reading for those needing high-level strategic information and objective analysis on the telecom sector in Colombia. It provides further information on:

  • Regulatory environment;
  • Economic trend and its impact on telecommunications;
  • Analyses of Colombia’s telecom sectors;
  • Telecoms operators – consolidations, acquisitions, new licences;
  • Company performances and ARPU statistics;
  • Spectrum auctions and regulatory issues;
  • 3G and 4G mobile broadband developments;
  • Historical and current subscriber statistics and forecasts.

Researcher:- Lucia Bibolini
Current publication date:- July 2013 (12th Edition)

Executive Summary

Five will roll out 4G LTE services in Colombia

BuddeComm’s yearly update of Colombia - Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Colombia, including the regulator’s statistics, company data, and other industry indicators to the end of 2012, as well as estimates for 2013 and expected market developments in the coming years.

Economic climate

Like other countries around the world, Colombia has been hit by the global economic slump. Reduced commodity prices and demand have affected exports, slowing GDP growth. In the first half of 2013, the country’s economy also suffered from industrial disputes and a sluggish manufacturing sector.

Regulatory framework

The main regulatory instruments in the telecom sector are the Convergence Decree and the ICT Law. The first sets out the rules attached to the Convergence Licence. It also requires telcos with dominant market position to provide wholesale services and unbundling. The second promotes universal access, ensures free competition and the efficient use of infrastructure and spectrum, and above all, it strengthens consumer protection.

Telecom market outlook

We estimate that the fastest growing sectors in 2013 will be 3G and 4G mobile services, satellite TV, and fixed broadband. The fixed-line sector will continue to stagnate or contract. The mobile telephony sector appears to be facing early market saturation: many of the wealthier citizens already have two or more mobile phones, while a large percentage of the population cannot afford even one.

Investment potential

Colombia is included in a group of up-and-coming nations (dubbed CIVETS) touted as hot markets because of their large potential returns. Hoping to attract tourism and foreign investment, the Colombian government is trying to shake off the country’s image as a trouble spot. In fact, according to some economic analysts, Colombia is becoming the hidden investment gem of South America.

Market consolidation

For several years, the Colombian telecom market has been experiencing mergers, intensifying competition, and increasing convergence. The cable TV sector, in particular, has undergone major consolidation and, as a result, two companies, Claro and UNE, together control 89% of the market. Claro and Movistar have consolidated their mobile and fixed-line businesses, and further consolidation and changes of ownership are expected, with Millicom International Cellular and municipally owned EPM involved in negotiations aimed at merging their fixed and mobile operations – respectively UNE and Tigo.

Fixed-line market

Fixed-line teledensity in Colombia is only 13.5% and well below the Latin American average, yet the number of lines in service continues to decrease steeply, with customers abandoning traditional phones in favour of mobile handsets. As in other Latin American countries, most of the existing fixed telephone lines are concentrated in the larger cities, leaving the rest of the population under-serviced.

Fixed-line operators

Colombia has about 20 local telephony providers, operating municipally, regionally, or nationally. Many of these started as private companies, but later became public concerns owned by their respective municipalities. The leading fixed-line operator in terms of lines in service is ETB, controlled by Bogotá’s local government. Telefónica’s Movistar is the second largest provider. UNE-EPM, owned by the municipality of Medellín, occupies a close third place. Telmex Colombia, which has adopted the brand name Claro, has a rapidly growing market share thanks to the growing popularity of its triple play services.

Broadband market

Colombia’s broadband penetration is far higher than would be expected based on GDP per capita, which is quite low in Colombia. ADSL is the leading broadband technology, but cable broadband has been regaining much of its lost market share, growing at a healthy rate both in subscriber numbers and in geographical coverage. The resurgence of cable modem is largely due to the growing popularity of triple play bundles including broadband, telephony, and cable TV.

Broadband players

Colombia’s leading broadband players are fixed-line operators Claro, UNE-EPM, Movistar, and ETB. Claro provides cable modem access, UNE offers both ADSL and cable modem services, while Movistar and ETB use ADSL technology.

National broadband plans

The Colombian government has launched several initiatives to increase fixed broadband penetration, including Computers for Schooling (which provides refurbished second-hand computers to schools), Compartel (which endeavours to provide every Colombian with access to telephone and internet services), Vive Digital (involving projects that subsidise internet access for schools, low-income households, and rural areas), and the National Fibre Optic Project.

Mobile market

Although below the regional average, Colombia’s mobile penetration is quite high compared with the country’s relatively low economic indicators. While the market has slowed down, it still holds significant growth potential, particularly in the mobile broadband sector where penetration is still very low. The years 2010-2013 have brought significant changes to the Colombian mobile environment, with the launch of several MVNOs and the arrival of 4G/LTE technology, among others.

Mobile Network Operators

Three Mobile Network Operators (MNOs) dominate the mobile market: Claro, Movistar, and Tigo. The leader is Claro, with a 61% market share, but its subscriber base has been gradually shrinking since 2009. Local trunking service provider Avantel serves a small number of mostly corporate customers using digital iDEN technology. UNE operates a 4G/LTE network in six Colombian cities.

Mobile Virtual Network Operators

Colombia has six Mobile Virtual Network Operators (MVNOs), with UNE being both an MNO and an MVNO. Uff! Móvil, UNE, ETB, and Móvil Éxito offer mobile voice and internet services over Tigo’s network, while Metrotel and Virgin Mobile have entered into wholesale agreements with Movistar.

Colombia’s fixed-line, broadband, and mobile statistics – 2011 - 2013

Sector

2011

2012

2013 (e)

Fixed-lines in service

Teledensity per capita

15.5%

13.5%

13.2%

Broadband

Penetration per capita

6.6%

8.3%

9.4%

Mobile telephony subscribers

Penetration per capita

98%

103%

105%

(Source: BuddeComm based on industry data)

Market Highlights

  • A highly successful 4G auction in June 2013 saw five winning bidders: Claro, Movistar, Tigo/ETB, Avantel, and DirecTV – the latter being a completely new market entrant. Licence winners are required to launch LTE services before mid-2014; Movistar plans to do so before end-2013.
  • ETB sources claim the operator will not take part in the Tigo/UNE merger, but will continue to hold a 25% share in Tigo – while the new, merged company will own 75%. The next couple of years, however, could bring changes to this scenario.
  • According to company sources, Movistar needs more cash for mobile spectrum and other expenses, and Telefónica has been looking into various ways to raise the funds – including a rights offering. The Colombian government, however, is opposed to any deal that might dilute its 30% stake.
  • The government has pledged to spend Col$300 billion (US$165 million) on a project to subsidise internet services for the country’s poor. Among others, the scheme will provide free computers and internet access to 100,000 families when they receive free government housing.
  • Virgin Mobile launched MVNO services in April 2013 targeting the youth niche market, while Móvil Éxito did so in May 2013, offering services through its Grupo Éxito retail outlets.

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

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