2013-09-14 09:27:40 - New Fixed Networks research report from Business Monitor International is now available from Fast Market Research
BMI View: The auction of five blocks of wireless 4G spectrum took place in June 2013, with two of them being awarded to new players. This is a positive development for the market which has seen strong demand for mobile demand in recent years and marks the country out as a regional outperformer in this respect. However, risks remain as a Senate Committee voted against a bill to reduce Claro's dominant market share with new measures. This puts the two new entrants to the market, DirecTV and Avantel at a disadvantage when they eventually launch services in Colombia and possibly creates a competitive environment which is too crowded among the smaller operators. The same is true in the fixed line
and broadband markets, which require economies of scale. Consolidation has begun in these sectors, with Une EPM acquiring ETP and we expect this trend to continue.
Full Report Details at
- www.fastmr.com/prod/670995_colombia_telecommunications_report_q4 ..
* We lowered our mobile forecasts this quarter, following the deactivating of 2.7mn subscribers from Claro. We forecast net decline in 2013 and 55.8mn connections by 2017.
* Mobile internet continues to outpace growth in wireline broadband connections. Year-on-year growth totalled 15.3%, according to MinTIC's figures.
* Fixed-line subscribers grew slightly in the quarter bucking the overall downward trend. However, we do not believe this is the beginning of a turnaround and have left our forecasts the same for the quarter. According to MinTIC, there were 6.339mn fixed-line subscribers in Colombia at the end of Q113.
Key Trends And Developments
The Colombian Ministry of ICT (MinTIC) has awarded five operating licences in its 4G spectrum auction. The agency raised a total of COP771bn (US$400.8mn) in exchange for the licences and additionally, received commitments from participating operators to provide tablet devices to low-income students, coverage to municipal administration centres and the migration of police and military networks to 4G. The winning bidders were Claro, Movistar, a joint bid fromTigo and ETB and two new entrants, DirecTV and Avantel. A sixth company, Azteca, submitted a bid but was not awarded any spectrum. BMI is cautious that the new entrants can have significant success in the market given its dynamics but recommends certain strategies which could have an impact.
Medellin municipal operator Une EPM has reached an agreement to acquire fellow operator Empresa de Telecomunicaciones de Pereira (ETP), marking a further stage in the consolidation of the country's telecoms market. While BMI advocates strong competition for market growth and to ensure subscribers get the best service, Colombia's fragmented fixed-line and broadband sectors need consolidation in order to develop, in our opinion. An acquisition by EPM will have limited impact on market dynamics as the operator has only the third largest fixed-line subscriber base in Colombia and the second largest broadband base. ETP, in comparison, is a minor player in the market with restricted geographical coverage and will have limited impact on growth potential.
In May 2013, Exito Group launched its MVNO operations in Colombia. The retailer will operate over Tigo's network and will likely target its existing customers.
A Colombian Senate committee has voted 6-3 against a bill designed to reduce the dominance of America Movil's unit Claro in the mobile market. The bill looked to restrict any operator from holding more than 30% of mobile subscribers, which would have severely damaged the position of Claro, which controls a market share of roughly 59.5%, as of Q113. We believe Claro will maintain its dominant position over the short to medium term as its strong financial position has resisted previous attempts to encourage competition.
MinTIC calculated in April 2013 that 50% of Colombians use IT to communicate with local and regional government; by 2014, the government has set itself a target of raising this figure to 75%.
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