The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
The Venezuelan mobile sector reported positive net additions in Q311 (latest data available) following two quarters of declines, and the mobile market had a total of 28.6mn subscribers at the end of Q411. While this is a return to growth, the market has been in steady decline through 2010 and 2011. Movistar reported losses this quarter, although its postpaid base is growing, following heavy promotion of its postpaid services.
From news reports on data for Movilnet and Digitel at the end of 2011, it seems as if Digitel is gaining market share from the state-owned giant. However, as Conatel has yet to release market data for Q411, we are unable to say exactly by how much. Movistar lost subscribers in Q311, despite making gains in the postpaid sector. This indicates that the company is fiercely promoting its higher income contract plans. While Digitel revealed investment plans for 2012, BMI notes that the Venezuelan market is still one of the most difficult in which to do business and is likely to remain so through 2012. Problems for operators stem from the deteriorating economic situation in the country. Hyperinflation, questionable government policies and the precarious business environment are putting increased downward pressure on the currency. As a result, capital controls and restrictions on imports are enacted to stem the outflow of foreign reserves and maintain a stronger currency. This has resulted in a number of challenges for operators, who received complaints because of frequent cuts in service and slow connection. Digitel blamed the problem on difficulties it had obtaining importation certificates for necessary equipment in 2011, although it said the problem should improve in February 2012. However, BMI believes problems will continue for the company as handset imports are also restricted.
Telefónica enjoyed bumper profit in Q311, but is unable to repatriate these to home market Spain, where much of its euro-denominated debt is reaching maturity and Telefónica is desperate for funds. The company reported OIBDA of EUR345mn in Q311, a 56.1% rise y-o-y. BMI believes it is unlikely that Telefónica will be allowed to repatriate any significant sum prior to the October 2012 elections, as we are more likely to see the capital controls in the country getting tougher rather than more lenient. A devaluation of the bolivar fuerte is unlikely to occur as oil revenue, investment from political allies and such capital controls will buoy the balance of payment until after the election.
During Q311, the number of fixed lines in Venezuela grew to 7.286mn, a y-o-y growth rate of 3.4%, slightly below Q211growth rate of 3.5%. The growth rate has fluctuated in Venezuela over several quarters and appears to have dropped significantly over the past year. BMI does not expect the market to experience rapid growth as fixed lines are becoming gradually replaced by mobile telephones. We expect occasional quarters of decline as the market slows to almost minimal increases, as seen in other markets. Venezuelan internet usage has again grown at a reasonable pace, recording 20% y-o-y expansion in broadband subscribers, finishing Q311 with 2.728mn subscribers. Internet penetration is still relatively low in Venezuela, with 37.4% of the population using the internet at end-2011. However, growth continues as internet awareness is promoted, through government telecentres and the increasing availability of broadband connections for subscribers. Many users will not have their own internet connection, but will be one of several users on a single connection, although the rise of mobile broadband may go some way to providing users with their own personal connections.
However the price of PCs is high in Venezuela, and therefore few people can afford them. As an alternative, BMI believes mobile broadband likely to outpace growth in the fixed-line sector. The 3G market is beginning to take off in Venezuela, as all operators now offer 3G services. Given the falling cost of low-end smartphones, and government subsidies for Movilnet, there has been an increase in the availability and affordability of mobile broadband. Conatel estimates that mobile broadband subscriptions in Q311 reached 994,948 subscribers.
Click for Report details:Venezuela Telecommunications Report Q2 2012