Just Released: "Colombia Telecommunications Report Q1 2014"

There is considerable potential for growth in Colombia, but some of this is being missed owing to market domination in the mobile sector and fragmentation in the fixed broadband sector. Government and regulatory moves to address these challenges are needed, but some proposals have seemed heavy-handed and likely to limit the market's growth over the long term. BMI is wary of regulatory interference in the market, particularly in the form of a government-owned network that operators buy capacity from. Positive developments in the form of mergers between smaller players in the fixed and broadband market offer potential for expansion, but BMI believes Colombia will follow the emerging market trend of being a predominantly wireless communications market over the medium to long term.

Key Data

* Mobile forecasts remained unchanged as operators sought to rebuild after Q113's sharp losses
* Total broadband figures revised to highlight the weaker growth in dedicated mobile broadband services.
* Fixed-line subscribers grew slightly in H113, bucking the overall downward trend. Our long-term projections for the segment remain unchanged.

Full Report Details at
- http://www.fastmr.com/prod/752015_colombia_telecommunications_report_q1_2014.aspx?afid=303

Key Trends And Developments

A Colombian senator proposed the creation of a state-owned company to manage the country's telecoms infrastructure assets. Two of Colombia's largest mobile operators, America Movil's Claro and Telefonica's Movistar will have to renew their operating concessions in 2014, making the discussion an opportune moment to consider the future of the Colombian telecoms market. BMI believes a single state-controlled network operator has few advantages in the long term for consumers and would ultimately leave operators less willing to invest in the market.

State-owned fixed line operator Empresa de Telecomunicaciones de Bogota (ETB) outlined its major investment strategy for 2014. It includes transitioning from a mobile virtual network operator (MVNO) to operating over its own network, as well as an investment of US$600mn to upgrade its fixed-line network, rolling out fibre-to-the-home (FTTH) and IPTV services. ETB's financial difficulties have been well-documented and BMI believes the launch of its own mobile network would be a risky proposition. Early data on MVNOs in Colombia's market show these newcomers are beginning to make their presence felt. These players will bring down overall ARPUs in the market, but we believe the boost to competition is beneficial for subscribers.

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