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Analysis of the Colombian Telecommunications Services Market : Mobile Data Services and Internet Remain Important Engines of Growth

  • November 2014
  • 238 pages
  • Frost & Sullivan
Report ID: 2470296

Summary

Table of Contents

Key Findings

•The Colombian telecommunications services market grew x% in local currency in 2013, reaching $xmillion in revenue.
•For lines in service (LIS), the market grew x% in 2013, reaching x million.
•Among the factors impacting the market are companies investing in pay TV services operations and integrating fixed and mobile operations to offer converged services.
•The main drivers for growth are the positive economic outlook; intensifying competition; investments by competitors to offer triple, quadruple, and quintuple-play bundles; and investments to implement and expand 3rd-generation (3G), long-term evolution (LTE), gigabit Ethernet, fiber to the home (FTTH), and other networks.
•Restraints, however, for the development of the Colombian telco services market are commoditization that results from extreme competition and leads to decreasing margins and a low return on investments (ROI) in the infrastructure network in distant areas and small cities.
•In terms of regulatory issues, Colombia's Ministry of Information Technologies and Communications (MinTIC) launched its Vive Digital Colombia project in 2010 to enlarge the use of information technology services among people, businesses, and the government. The main goal of Vive Digital was to provide broadband connectivity toxmillion people by the end of 2014. In May 2014, however, MinTIC announced the plan had already reached its goal ahead of its deadline.
•In December 2010, Act 1430 was approved, which eliminates the charge of value-added tax (VAT) to Internet services for users in the 1, 2, and 3 social strata.
•Additionally, in 2013, MinTIC conducted the largest spectrum auction in Latin America for 4G: x megahertz (MHz) in the advanced wireless service (AWS) band and x MHz in the x gigahertz (GHz) band, for a total of $xmillion. Claro, Telefónica/Movistar, Avantel, DIRECTV, and a consortium formed by Empresa de Telecomunicaciones de Bogotá (ETB) and Tigo were awarded spectrum to deploy 4G services. Mexico's Azteca 4G failed to win a license. The auction required the winners to have a formal, commercial offer within a year (2014). By the first half of 2014, the main 4 mobile operators (Claro, Telefónica/Movistar, Tigo, and Avantel) had launched 4G offerings in the country.
•Market concentration is expected to intensify as all operators are increasing their capabilities through mergers and fusions of their formerly separate divisions. Such is the case of América Móvil that merged its mobile operations, Comcel, with Telmex under the brand Claro and with the consolidation of Telefónica and Movistar. After these efforts, América Móvil heldx% of the total Colombian market, followed by Telefónica S.A. with x%.
•Further, UNE merged with EPM Bogotá and completed the merging process with Millicom in August 2014.

A CEO’s Perspective

Mobile migration and new technologies are driving the decline of fixed telephony; however, bundling is proving successful in restraining the decay.
3G and 4G services are driving growth in mobile services, and infrastructure investments are the main focus of operators.
Pay TV and fixed broadband services are gaining representation and are key opportunities to increase revenue in Colombia.
To retain users, intense competition and potential new participants will lower prices and force operators to focus on content, VAS, and revolutionary technologies.
With Colombia’s favorable economic situation, the LB segment has been growing. The SMB segment will likely drive growth in the data communications services and fixed VoIP services.

Key Questions This Study Will Answer

Is the market growing? How long will it continue to grow and at what rate?
Which telecommunications services present the highest growth opportunities from 2014 to 2019?
What are the trends in the market regarding technology, competition, consumer demands, and the economy?
What are the most important regulatory issues impacting telecommunications services in Colombia?
What are the main industry challenges that operators will face through 2019?
Are existing competitors structured correctly to meet customer needs?

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