Colombia Telecommunications Report Q3 2012

The Colombian telecommunications market is growing rapidly, based on strong foundations and bolstered by good policy, and strong economic growth. We expect Colombia to be an outperformer over our forecast period, with the government’s Plan Vive Digital increasing broadband penetration rapidly.

The Ministry of Communications won the 2012 Digital Leadership Award in February – a strong endorsement of the country’s ICT policy. Colombia was one of the first countries in the region to launch LTE services, and the first to auction the 2.6GHz spectrum. It was also one of the first countries globally to auction 700MHz spectrum and is planning to double the amount of assigned spectrum in the next three years.

This will ensure the market continues on a strong growth trajectory, despite the fact that subscriber losses were recorded in Q411. According to the latest data available from operators and MinTIC, Colombia’s mobile market totalled 46.2mn subscribers, with net losses of around 1.5mn subscribers. These losses were the result of Comcel shedding 2.38mn inactive subscribers, and they were so substantial that the market dropped back under the 100% penetration mark. This had a negative effect on the overall subscriber base, but Comcel’s ARPU benefited as a result.

The other operators in the market reported growth, although subscriber additions were relatively muted across the board. This may be a sign that operators are focusing more on value-added services. It also may mean that new MVNO UNE EPM is attracting subscribers. The company launched an MVNO in Q311.

Q212 also saw fixed-line operator ETB enter the mobile market, after its January 2012 launch was postponed due to a corporate reshuffle, and the appointment of a new president. In a similar vein to UNE, SIM cards are provided free to subscribers, and calling costs low. We believe these firms will have success capturing the low-cost market, while MNOs will focus on the high-revenue subscribers. However, in UNE’s case, the launch of an LTE network indicates that in the future it will offer high-value mobile services. Currently, the LTE offerings are for broadband connectivity only.

On March 23 2012, Colombia's Ministry of Information Technology and Telecommunications (MinTIC) formally launched the tender for four LTE spectrum licences. If completed on schedule, the auction will enable the winning licensees to keep pace with UNE EPM, which has already started deploying its 4G network and has said it aims to sign as many as 180,000 subscribers within its first year. The move also places Colombia at the forefront of LTE development in the Latin American region, according to the latest BMI forecasts.