Colombia - Telecommunication Services: Highly promising, yet price conscious (Strategy, Performance and Risk Analysis)
This report provides an in depth analysis of the Colombian telecommunication market, exploring both the company landscape and patterns found in the different segments. It will also provide a forecast analysis on expected trends of the market, using reliable and current data available to predict future patterns in terms of subscriber and revenue growth. The Colombian market is considered highly promising for future investors, yet remains price conscious, all of which will be further detailed within the report.
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Limited internet accounts indicates high potential
In 2016, 74% of the total population were internet users, of which only 12% had dedicated internet accounts. Fixed-broadband penetration stood at 19.4% during this year, offering a scope for development. This demonstrates high potential for growth. Telefonica selected Comarch, a Poland-based vendor to support the transformation of its transport network in five Latin American countries, including Colombia.
Customer retention remains a challenge
Telecom operators are finding it difficult to retain their customers due a lack of differentiation in service offerings. Colombia has a churn rate of 58.8% as compared to the Latin American and global averages of 52.7% and 45.2%, respectively. Similarly, peer countries recorded comparatively lower rates: Argentina (34.6%), Chile (53.7%), and Brazil (57.3%). Although, aggregate MOU by operator increased from 200 minutes per month in 2012 to 211 minutes per month in 2016, mobile ARPS decreased from US$10.7 to US$5.9 per month during the same period. Colombia’s churn rate is decreasing annually; however, compared to the regional and global average it is high.
Mobile data to lead the market
It is expected that mobile voice revenues will dominate data revenues until 2018. From 2019, mobile data will lead the market. Growth will be driven by the increasing use of the internet on handheld devices and the deeper penetration of smartphones. In contrast, mobile voice revenues declined from US$4,777.8 million in 2012 to US$2,391.8 million in 2016, at a review-period CAGR of 15.9% and will post a forecast-period CAGR of 4.7% to reach US$1,880.5 million in 2021 due to alternative modes of communication and cheaper call rates.