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Venezuela Telecommunications Report Q1 2011

Venezuela Telecommunications Report Q1 2011

Table of Contents

Management Report
Published: November 2010
Pages: For full details, please email keithw@cmsinfo.com
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 331.25  Buy Now!
Research from: Business Monitor International
Sector: Networks & Infrastructure

Forecasts for the Venezuelan telecoms market have been extended to 2015, giving a view at the market’s future development now it appears to be reaching maturity. The biggest surprise comes from the mobile market and the number of internet users with the latter growing much faster than BMI had expected. Growth in internet usage is a useful indicator of possible future trends in broadband subscriptions and strong growth is a good sign for operators in the market seeking to grow their customer bases. Not all internet users will become subscribers, with several limitations preventing all from entering the market. However, the greater availability of telecentres and the internet in offices, government and educational institutions will see a greater number of internet users in the future. Forecasts for the Venezuelan telecoms market have been extended to 2015, giving a view at the market’s future development now it appears to be reaching maturity. The biggest surprise comes from the mobile market and the number of internet users with the latter growing much faster than BMI had expected. Growth in internet usage is a useful indicator of possible future trends in broadband subscriptions and strong growth is a good sign for operators in the market seeking to grow their customer bases. Not all internet users will become subscribers, with several limitations preventing all from entering the market. However, the greater availability of telecentres and the internet in offices, government and educational institutions will see a greater number of internet users in the future.

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.

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