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December 2008 brought good news for all of Venezuela's mobile operators. Market leader Movilnet, the mobile arm of incumbent CANTV, finally launched its GSM network in two states, eight months after it had intended to launch the new platform. The operator's president, Jacqueline FarÃas, indicated that the roll-out would continue at a slow pace in order to guarantee that the network coverage and quality was on a par with its existing CDMA network. The operator also announced its intention to offer 3G services over its new network by the end of 2009.
Venezuela joined the list of Latin American mobile markets to have seen 3G launches in 2008 when Telefónica's Movistar launched a UMTS/W-CDMA network in the greater Caracas area. The initial services available are predominantly mobile broadband and data based, but Movistar has said it will expand the applications available as it moves its network coverage outside the capital. A total of VEF280mn will be invested over the first two phases of introduction, a considerable investment for Movistar. However it now has the advantage of being the first to bring 3G value-added services to the market and this will do nothing but improve its reputation. While the operator's market share improved in Q308, BMI does not believe that Movistar will necessarily try to compete directly with Movilnet. The government-owned operator is heavily focused on increasing telecoms usage for lower income subscribers, leaving the high end of the market open to operators such as Movistar and Digitel. Movistar has introduced a pay-TV service which is clearly aimed at the high end of the market.
Meanwhile Digitel received 10MHz of spectrum in December 2008, for which it paid US$26mn, allowing it to improve services in the eastern and western regions. The operator had been awarded the spectrum in May 2008 but had to wait to the end of the year for delivery. The company's results, based on regulatory data, show a slight decline in market share and still the highest prepaid subscriber base in the country. However, Digitel has stated its intention to launch 3G services before the end of Q109, which will be beneficial in improving its subscriber mix and boosting its revenues.
Developments in the mobile market mean that we have maintained our optimistic view of mobile market growth for Venezuela. Following the introduction of new mobile data services analysis we have left fixed-line and broadband data untouched over this quarter and will give a full update in the next report.
A lower regulatory score and a fall in its country risk rating has seen Venezuela drop to 10th place in our rankings, one place lower than previously. Venezuela faces a number of political and economic threats, with the drop in oil prices likely to impact the economy in the near future. We have also lowered the regulatory score for Venezuela following the nomination of CANTV's president as Minister of Communications. BMI had held off decreasing the rating as the change had no immediate impact on the market, but we have since seen no indication of any moves towards promoting competition.
Venezuela Telecommunications Report Q2 2009: http://www.companiesandmarkets.com/r.ashx?id=7F7258PO483538
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