Colombia Telecommunications Report Q2 2008

The Colombian telecoms market continues to grow, as international operators invest in the broadband and mobile markets in particular. January 2008 saw the launch of the country's first 3G network as Comcel beat its rivals to offer the newest services. Although limited to major cities at present, the roll out of these services has been planned. Rivals Movistar and Tigo have requested additional spectrum in order to launch their own 3G networks, not wishing to let Comcel increase its market share. Overall growth in the mobile market has slowed and operators are seeing this as an opportunity to concentrate on acquiring postpaid subscribers, which will help drive ARPUs up and increase revenues in the long term. However, this is likely to see the market slow even further, unless the regulator decides to licence MVNOs which would be a real boost to the sector. Second-ranked Movistar has completed the restructuring of its debt with an IDB loan and a cash injection from parent company Telefnica.

Colombia's broadband market remains underdeveloped, but is increasingly a focus for fixed-line operators which are seeing their traditional revenue streams falter as the market moves slowly into decline. State-owned ETB has recognised the importance of the broadband market to its future revenues and intends to invest COP1.5trn (US$748mn) over the next five years in wireless internet and the leasing of additional submarine cable capacity, in order to extend its reach and offer IPTV services. The operator intends to launch IPTV in Colombia in Q308, with a launch budget of US$30mn.

International operators are also looking to broadband services for future revenues and several, including Telmex and Telefnica, have launched triple-play services in order to capture the market. Telmex acquired three cable operators which contributed to its high revenue growth in 2007. At present we have left forecasts unchanged while new services and additional investments begin to make their mark on the broadband market.