Rate Reductions See Colombia's Mobile Market Grow Significantly in 2008

A new report is claiming that while the Colombian mobile market showed signs of fatigue in 2007, it appears to have undergone a transformation witnessing significant growth over the first half of 2008. The study, from ReportBuyer says that this is due to a number of factors, including the alteration in counting active subscribers introduced in 2007 that saw Movistar report strong subscriber losses. However, authors of the report believe the 50% reduction in mobile termination rates enforced from December 2007 has been the primary reason for the increase in mobile use.

Whilst termination rates reduction saw operator average revenue per user (ARPU) fall sharply, operators maintain their focus on reaching more prepaid subscribers in order to drive their customer growth. Despite significantly upgrading their forecasts going forward for mobile subscriptions, the report asserts that the market will not hit 100% penetration before 2012. However, the market is now expected to pass 80% penetration before the end of 2008, and a slow growth in beginning of next year is anticipated.

The fall of ARPU had a negative effect on Colombia's position in BMIs Business Environment Rankings, and as a result it fell for the first time below Venezuela. This score will improve again as operators begin to report growing ARPUs and the data from Telefonicas Movistar enables more careful analysis of the market. Additionally the introduction of 3G services should also help boost ARPUs. Market leader Comcel has already launched 3G services and Movistar and Tigo have confirmed their commercial launches will be ready before the end of 2008.

The 61-page report expects that the introduction of triple-play services will bring temporary relief to the stagnating fixed-line market, which saw minimal growth at the start of 2008. Declining fixed-line subscribers and revenues has led to talk of mergers in the Colombian market, with the three municipal telecoms operators, Empresa de Telecomunicaciones de Bogot (ETB), Emcali and Une-EPM discussing a partnership or potential merger in order to fend off the growing threat of internationally backed rivals.

Consolidation may be a trend across more developed markets, however smaller operators in Colombia are struggling to compete. A tie-up between the three operators may be a strategic move allowing for combined bargaining and lowering costs, enabling the companies to operate at the same level as larger rivals.

Posted to the site on 1st December 2008