3Q10 Colombia Mobile Operator Forecast, 2010 – 2014: Colombia to have 47.5 million mobile subscriber connections in 2014 with market share of Tigo decreasing to 65%

• Publication date: August 2010

Executive Summary Negative subscriber growth at Movistar Colombia in the latest quarter +2.9% industry average subscriber growth in 1Q.2010 • The industry average subscriber growth in Colombia's wireless market in 1Q.2010 was 2.9%, down from 14.7% in 1Q.2009. • Movistar Colombia had a negative subscriber growth rate (YoY) of -5.3% in 1Q.2010, down from 12.0% in 1Q.2009. • The largest operator, Comcel, also saw...

Executive Summary

Negative subscriber growth at Movistar Colombia in the latest quarter
+2.9% industry average subscriber growth in 1Q.2010

• The industry average subscriber growth in Colombia's wireless market in 1Q.2010 was 2.9%, down from 14.7% in 1Q.2009.
• Movistar Colombia had a negative subscriber growth rate (YoY) of -5.3% in 1Q.2010, down from 12.0% in 1Q.2009.
• The largest operator, Comcel, also saw its subscriber growth rate (YoY) decline from 16.5% in 1Q.2009 to 4.5% in 1Q.2010.

Negative ARPU growth at Comcel continues
-1.4% industry average ARPU growth in 1Q.2010

• The industry average ARPU growth (YoY) was -1.4% in 1Q.2010, up from -9.0% in 1Q.2009.
• Comcel's ARPU growth rate (YoY) was -5.8% in 1Q.2010, down from -4.2% in 1Q.2009.
• On the other hand, Movistar's ARPU growth rate (YoY) increased from -18.5% in 1Q.2009 to 6.0% in 1Q.2010.

Minutes of Use per Subscriber are increasing at Comcel and Movistar
+17.6% industry average MOU/Sub growth in 1Q.2010

• The industry average Minutes of Use per Subscriber (MOU/Sub) increased by +17.6% (YoY) to reach 174 minutes per month in 1Q.2010.
• Comcel's MOU/Sub remains higher than that of Movistar Colombia. Comcel's MOU/Sub increased by +14.8% (YoY) to reach 186 minutes per month in 1Q.2010. On the other hand, Movistar Colombia's MOU/Sub in 1Q.2010 was 138 minutes per month, up +25.5% from 110 minutes in 1Q.2009.

Negative EBITDA growth at Comcel and Movistar in the latest quarter
Industry average EBITDA growth of -0.5% in 1Q.2010

• The industry average EBITDA growth (YoY) was -0.5% in 1Q.2010, significantly down from 20.2% in 1Q.2009.
• EBITDA growth (YoY) at Comcel declined from 16.0% in 1Q.2009 to -0.4% in 1Q.2010.
• Movistar Colombia also saw its EBITDA growth rate (YoY) decrease from 30.3% in 1Q.2009 to -4.7% in 1Q.2010.

So what is IEMR’s Forecast?

Total wireless subscriber connections in Colombia will rise to 47.5 million in 2014

• Given the relatively low wireless penetration rate in the country (84.1% in 1Q.2010), we forecast that the number of total subscriber connections in Colombia's wireless market will increase from 40.5 million in 2009 to 47.5 million in 2014.
• Our model predicts that Comcel will have 30.9 million subscriber connections in 2014.
• We also expect that, by the end of 2014, Movistar Colombia will have approximately 11.8 million subscriber connections.

Comcel will see its subscriber market share decline over the next five years

• Although Comcel will continue to be the largest mobile operator in Colombia, we expect that its subscriber market share will be declining over the next five years. Our model forecasts that Comcel's market share will fall from 68.6% in 2009 to 65.0% in 2014.
• On the other hand, we expect that Tigo Colombia's market share will be increasing over the next five years to reach 10.2% in 2014.

ARPUs in Colombia's mobile operator space will be increasing from 2010 to 2014

• We think that ARPU declines have stopped in Colombia's wireless market. Our model predicts that the industry average monthly ARPU in Colombia will be increasing gradually over the forecast period to reach COP 18,000 in 2014.
• We think that ARPUs at Tigo will continue to be higher than at Comcel and Movistar. We forecast that monthly ARPUs at Comcel, Movistar and Tigo will be approximately COP 17,070, COP 18,730, and COP 22,300 respectively in 2014.

Comcel will continue to enjoy higher level of profitability than Movistar and Tigo over the next two years

• We forecast that the industry average EBITDA margin (calculated as EBITDA/service revenue) will remain at approximately 45% over the next eight quarters.
• At the operator level, Comcel will continue to enjoy higher EBITDA margins than Movistar and Tigo. We expect that EBITDA margins at Comcel, Movistar and Tigo will be approximately 54%, 35% and 24% respectively over the next two years.

Telecommunication Services Industry in Colombia

Companies Covered in this Country Mobile Operator Forecast
Comcel (America Movil S.A.B de C.V.)
Movistar Colombia (Telefonica S.A.)
Tigo Colombia (Millicom International Cellular S.A.)

Annual Results & Forecasts for each of the above operators is covered in this report for: CY 2001-CY 2014. Quarterly Results & Forecasts are covered for: March 2003 - March 2012

PREPAID AND POSTPAID SUBSCRIBERS
SUBSCRIBER GROWTH (YoY)
SUBSCRIBERS BY OPERATOR
SUBSCRIBER GROWTH BY OPERATOR (YoY)
NET SUBSCRIBER ADDS BY OPERATOR
NET SUBSCRIBER ADDS GROWTH BY OPERATOR
MONTHLY CHURN BY OPERATOR
POST-PAID SUBSCRIBERS BY OPERATOR
POST-PAID SUBSCRIBER GROWTH BY OPERATOR (YoY)
PREPAID/WHOLESALE SUBSCRIBERS BY OPERATOR
PREPAID/WHOLESALE SUBSCRIBER GROWTH BY OPERATOR
POST-PAID % OF TOTAL SUBSCRIBERS BY OPERATOR
PREPAID/WHOLESALE % OF TOTAL SUBSCRIBERS BY OPERATOR
POST-PAID NET ADDS BY OPERATOR
POST-PAID ADDS GROWTH BY OPERATOR (YoY)
PREPAID/WHOLESALE NET ADDS BY OPERATOR
PREPAID/WHOLESALE ADDS GROWTH BY OPERATOR
MONTHLY ARPU BY OPERATOR
MONTHLY ARPU GROWTH BY OPERATOR (YoY %)
DATA % OF SERVICE REVENUES BY OPERATOR *
MONTHLY DATA ARPU BY OPERATOR *
DATA ARPU GROWTH BY OPERATOR (YoY) *
MONTHLY VOICE ARPU BY OPERATOR
VOICE ARPU GROWTH BY OPERATOR (YoY)
VOICE REVENUE PER MINUTE BY OPERATOR **
VOICE REVENUE PER MINUTE GROWTH BY OPERATOR (YoY) **
MOU PER SUBSCRIBER BY OPERATOR (MINUTES/MONTH) **
MOU/SUBSCRIBER GROWTH BY OPERATOR (YoY %) **
SHARE OF TOTAL SUBSCRIBERS BY OPERATOR
HHI INDEX BY SUBSCRIBER SHARE
SHARE OF NET ADDS BY OPERATOR
SHARE OF POST-PAID NET ADDS BY OPERATOR
SHARE OF PREPAID/WHOLESALE NET ADDS BY OPERATOR
SHARE OF SERVICE REVENUE BY OPERATOR
HHI INDEX BY SERVICE REVENUE SHARE
YoY CHANGE IN REVENUE SHARE BY OPERATOR
REPORTED REVENUE BY OPERATOR (REPORTING CURRENCY)
SERVICE REVENUE BY OPERATOR (REPORTING CURRENCY)
EBITDA BY OPERATOR (REPORTING CURRENCY)
CAPEX BY OPERATOR (REPORTING CURRENCY) *
SERVICE REVENUE GROWTH BY OPERATOR (YoY)
EBITDA GROWTH BY OPERATOR (YoY)
EBITDA/REPORTED REVENUE BY OPERATOR
EBITDA/SERVICE REVENUE BY OPERATOR
EBITDA/INCREMENTAL SERVICE REVENUE BY OPERATOR
CAPEX/REPORTED REVENUE BY OPERATOR *
CAPEX/SERVICE REVENUE BY OPERATOR *
(EBITDA-CAPEX)/REPORTED REVENUE BY OPERATOR *
EBITDA MARGIN EXPANSION/CONTRACTION BY OPERATOR
REPORTED REVENUE BY OPERATOR (USD)
ARPU BY OPERATOR (USD)
DATA ARPU BY OPERATOR (USD)
VOICE REV/MINUTE BY OPERATOR (USD)
SERVICE REVENUE BY OPERATOR (USD)
EBITDA BY OPERATOR (USD)
CAPEX BY OPERATOR (USD) *

* Not available for this country forecast
** Available only for Comcel and Movistar Colombia
*** Available only for Movistar Colombia