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Colombia's mobile market surprised in Q109 with a decline in subscriptions. The top two operators, Comcel and Movistar, reported a loss of 598,000 subscribers between them which Tigo's 42,000 additions barely countered. Comcel referred to the loss as the disconnection of 'low use' subscribers while Movistar gave no explanation. Colombia's high growth rate has led BMI to believe that there is a considerable number of inactive subscribers in the market and that it has been due for a correction. While the losses led to a decrease in market share for the two companies BMI believes these lost subscribers will be regained and we forecast a good growth rate for 2009, albeit downgraded from earlier expectations.
The broadband market continues to report strong growth in services although the majority of connections are supplied by just four operators. However, growth seems to be picking up in smaller towns and cities as Bogotá and MedellÃn account for a smaller proportion of total lines in service. While these two cities retain the bulk of connections smaller markets are seeing faster growth. This bodes well for further expansion of broadband services as more subscribers connect outside the largest towns and cities.
However, the low penetration rate does indicate that services remain costly and the expense of owning a PC or laptop continues to impede the expansion of the market.
Another key area for broadband operators will be the speeds available over their networks. Offering a greater range of services, including IPTV, is reliant on more bandwidth becoming available. Regulatory figures show 16,535 IPTV subscribers at the end of 2008, with Une-EPM accounting for the largest portion of these. The largest portion of subscribers were in the department of Antioquia where Une-EPM is the municipal telecoms operator. Bogotá follows close behind and is likely to see the highest proportion eventually given the relative wealth of subscribers and the larger population of the city.
Colombia moved up one place in our Business Environment Rankings for Q409 after BMI improved the country's Independence of Regulator score. This was improved on the basis of the new telecoms and IT law that has been approved as well as the focus on Comcel's strong position in the mobile market. The CRT also seems set to introduce number portability (NP) quickly helping to improve competition in the telecoms market. While Colombia moved up its Telecoms Market score decline on the back of continually falling ARPU rates that have not shown much sign of a recovery. This will weigh on the operators' results once growth slows further.
Colombia Telecommunications Report Q4 2009: http://www.companiesandmarkets.com/r.ashx?id=96LY4QX5X169572
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