Pyramid Research Predictions 2014
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In the mobile market there was a surprise second quarter of shrinking subscriptions with the locallyowned operators feeling the pinch this time around. The figures, based on totals from the regulator show a loss of 115,000 subscribers in Q210, bringing the half-year decline to 413,000. We believe this to be a correction in the market and expect to see some growth take place later in the year. However, in a market so heavily dependent on prepaid subscriptions, it is not unsurprising that there are a number of inactive connections in the market. Discounting these will help to clarify the market’s true position and the potential for continued growth in Venezuela. BMI expects growth to pick up again and we believe that 3G services and mobile broadband in particular could be the major causes behind this.
Having jumped up the Business Environment Ratings in Q410, Venezuela fell back to eighth place this quarter. Despite strong Country Rewards and Country Risk ratings, Venezuela is held back by its Rewards and Risks scores for Industry. A lack of clarity and independence on the part of the regulatory lower the Industry Rewards score while counting only active subscribers, as defined by the regulator, only serves to lower the potential growth rate for services. It was a decline in the Industry Rewards rating that brought Venezuela back down the ratings.
With little information available about 3G services in Venezuela, it is difficult to get a grip on the number of subscribers in the market. BMI believes there to be a small number, although we see great potential for growth should incumbent CANTV’s Movilnet finally launch a GSM-based 3G service that would compete with rivals Digitel and Movistar. As Movilnet has already made a big deal of lowering prices to reach more remote and less wealthy customers, we expect the operator to be a key driver in pushing 3G services to a wider range of Venezuelans. We also believe that mobile broadband has strong potential to become a major force in the wider broadband arena and provide good revenue growth for operators as existing mobile services continue to produce lower ARPUs.