COLOMBIA
髇: 26/06/06
P醙ina 1 de 27
Revisado por:
JPH/CXB
Fecha revisi髇: 26/06/06
Revisi髇 No. 1
Aprobado por: Director Ejecutivo
Fecha de vigencia: 01/02/05
COLOMBIA
COMISI覰 DE REGULACI覰 DE TELECOMUNICACIONES
1
(CRT)
DEVELOPMENTS IN THE TELECOMMUNICATION SECTOR
1.
CURRENT SITUATION
Consolidation in telecommunications sector companies in Colombia, was common in 2005;
throughout the year, operators showed a growing need for modification of their existing business
schemes.
For the first time, there was discussion about integration between large local fixed telephony
companies, their joining forces in the long distance and Internet businesses, as had already taken
place with PCS in mobile telephony. Company moves can be explained by increased competition
and the need for ways to promote economies of scale and efficiency in network operations.
As business groups consolidate, management processes can be optimized and a series of
efficiencies are generated. These can lead to an increased service offering as long as competitive
conditions persist among service providers.
1.1
Investment in Telecommunications
After the energy sector (51%), the telecommunications sector is the second largest investor in
infrastructure in Colombia (22% of total investment). This sector has presented this privileged
position only since 1997, which can be explained by the growth of fixed telephony during those
years and the introduction of mobile telephony in the country.
Graph 1. Infrastructure Investment
1
For all of your questions regarding the information contained in this document, you can contact Mr. Orlando Garc閟 in the
Comisi髇 de Regulaci髇 de Telecomunicaciones (
orlando.garces@crt.gov.co
)
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C O M I S I O N D E R E G U L A C I O N D E T E L E C O M U N I C A C I O N E S - R E P U B L I C A D E C O L O M B I A
ITU WOKSHOP ON THE FUTURE OF VOICE
Information about the Telecom Sector in Colombia
CCN-Mercadeo
OG
Fecha actualizaci髇: 26/06/06
P醙ina 2 de 27
Revisado por:
JPH/CXB
Fecha revisi髇: 26/06/06
Revisi髇 No. 1
Aprobado por: Director Ejecutivo
Fecha de vigencia: 01/02/05
Source: DNP (National Planning Bureau), 2005
In spite of the positive effect produced by the development of new services including mobile and
internet services, investment began to slow down in 1999, in part due to the economic recession
and to stagnation in the traditional telephony business. Nevertheless, these waves of investment
and disinvestment are common in telecommunications, as they correspond to the processes of
expansion of new technologies and their subsequent stagnation. This can only be overcome by
innovation and deepening competition.
From the perspective of the CRT, 2005 was dedicated to recovery, in response to three main
factors: i) the competition which brought
Telef髇ica de Espa馻 to the mobile services market, ii)
the efforts made by fixed telephony operators in terms of migrating their networks towards IP
technologies and increasing infrastructure to provide broadband, and iii) the increasing importance
of the value added sub sector, due to data transmission and broadband services combined with the
increasing importance of cable television.
Investment estimates were calculated for 2005 based on the most important investment
announcements made by mobile, fixed telephony and value added companies
2
, assuming that 2004
investment levels remain constant for the rest of sector companies.
Graph 2. Investment Prospects in Telecommunications
Source: CRT estimates based on DNP (National Planning Bureau) and Global Insight 2005.
As shown in the previous graph, a new wave of expansion in sector infrastructure is expected;
consequently, the long-term trend of increased investment in infrastructure is expected to continue.
Therefore, in spite of the investment situation of the last three years, the sector is responding
positively to a complex period originated at the end of the 90`s and generalized in the overall
global telecommunications market.
This response has not been gratuitous. One of the main reasons for this sustained growth in
investment has been competition in the mobile services market, the introduction of new market
players, the deployment of new services, and a recent wave of innovation with the participation of
incumbent companies.
2
Based on the most salient investments in this sub sector according to
Bussines News Americas
.
500,000
1,000,000
1,500,000
2,000,000
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1991
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C O M I S I O N D E R E G U L A C I O N D E T E L E C O M U N I C A C I O N E S - R E P U B L I C A D E C O L O M B I A
ITU WOKSHOP ON THE FUTURE OF VOICE
Information about the Telecom Sector in Colombia
CCN-Mercadeo
OG
Fecha actualizaci髇: 26/06/06
P醙ina 3 de 27
Revisado por:
JPH/CXB
Fecha revisi髇: 26/06/06
Revisi髇 No. 1
Aprobado por: Director Ejecutivo
Fecha de vigencia: 01/02/05
The Recent Mobile Expansion
Recent investment waves have been closely associated with consolidation of the mobile industry in
the hands of large international players. The arrival of these companies took place with two-sided
efforts geared at both increasing coverage and modernizing networks in order to provide more
services.
Graph 3. Investment in TMC [Mobile Cellular Telephony]
Source: CRT estimates based on Anti-trust Superintendency [Supersociedades] data.
Introduction of Competition
The arrival of new players in telecommunications markets always includes investment in new
infrastructure. Although new companies use the existing infrastructure, they need to install a
minimum quantity of new equipment in order to provide their services and compete with
incumbents.
More than any other, new infrastructure investment made during the last five years and the arrival
of the third mobile telecommunications services provider stand out, together with the consolidation
of cable companies and the arrival of new companies in the value added sub sector.
Graph 4. New Infrastructure (Net Property, Facilities and Equipment)
Source: CRT estimates based on Anti-trust Superintendency [Supersociedades] and National General Accounting Office
[Contadur韆 General de la Naci髇] data.
0
100,000
200,000
300,000
400,000
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700,000
1999 2000 2001 2002 2003 2004 2005
N
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consolidates
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1999 2000 2001 2002 2003 2004 2005
N
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0
100
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600
700
Flycom-2002
Teledatos-2002
TV Cable del Pac韋ico-2004
TV Cable Promisi髇-2000
Cablecentro-2001
Diveo-2000
Telmex-2003
VivaVoz-2004
Colombia M髒il-2003
Infrastructure 2004 (COP$ (000) mill)
0
100
200
300
400
500
600
700
Flycom-2002
Teledatos-2002
TV Cable del Pac韋ico-2004
TV Cable Promisi髇-2000
Cablecentro-2001
Diveo-2000
Telmex-2003
VivaVoz-2004
Colombia M髒il-2003
Infrastructure 2004 (COP$ (000) mill)
0
100
200
300
400
500
600
700
Flycom-2002
Teledatos-2002
TV Cable del Pac韋ico-2004
TV Cable Promisi髇-2000
Cablecentro-2001
Diveo-2000
Telmex-2003
VivaVoz-2004
Colombia M髒il-2003
Infrastructure 2004 (COP$ (000) mill)
C O M I S I O N D E R E G U L A C I O N D E T E L E C O M U N I C A C I O N E S - R E P U B L I C A D E C O L O M B I A
ITU WOKSHOP ON THE FUTURE OF VOICE
Information about the Telecom Sector in Colombia
CCN-Mercadeo
OG
Fecha actualizaci髇: 26/06/06
P醙ina 4 de 27
Revisado por:
JPH/CXB
Fecha revisi髇: 26/06/06
Revisi髇 No. 1
Aprobado por: Director Ejecutivo
Fecha de vigencia: 01/02/05
As shown in the previous graph, the arrival of new players in different communications service
fields has been significant, even in non-traditional sectors such as the value added, Internet and
cable TV sectors, alt