BMI's Executive Summary

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As planned, Colombia's Ministry of Communications has ordered the creation of a universal concession licence for long-distance telephony and internet services from August 2007. New operators will not be required to have a certain number of lines installed or to accredit minutes a year ahead of applying for a licence. Liberalisation of both the long-distance and internet markets should lead to greater investment in infrastructure and falling tariffs. There is other encouraging news that Mexico's Telmex will be allowed to merge its Colombian cable TV operations, under certain conditions. The biggest concern for Telmex is that it must sell one of the three brand names used in the capital Bogota, although it is not clear which brand this is. Telmex would be reluctant to dispose of the TV Cable brand, as it is the best known in the city. But the move is a positive step both for Telmex and the market, which desperately needs outside investment to boost next-generation technologies and services such as triple play.

The broadband market in Colombia remains seriously underdeveloped, with newly released data from the ITU indicating broadband take up at YE06 was not as high as we had thought, with penetration at 1.4%. However, we continue to expect strong growth in 2007 and beyond and have left forecasts unchanged for the time being. In contrast, internet usage was slightly ahead of BMI's analysis, with some 6.7mn regular internet users at YE06, penetration of 14.5%. We have upgraded forecasts and now expect internet penetration will reach 18% in 2007 and near 25% in 2011. There are encouraging signs of investment at the fixed-line operators, especially Telefónica Telecom, which has trailed the pack in terms of broadband development, and by Telmex in the triple play market, which should drive strong growth. However, with Telefónica Telecom recording two quarters of falling fixed-line subscriber numbers in H107, we have revised forecasts downwards. We now believe the fixed-line market will rise by only 0.5-1% in 2007 before beginning to decline in 2008, a year earlier than originally forecast. However, we continue to believe penetration will fall to 15% by YE2011 as the population grows to over 50mn people.

Growth in Colombia's mobile market remains sluggish given the relatively low penetration, and we have maintained forecasts that 18% growth in 2007 will raise penetration to just under 70%. Market leader Comcel is sticking to its policy of focusing on the postpaid segment to improve ARPU and usage levels, with its quarterly net additions around a quarter of what they were in 2006. Movistar is faring even worse as it discounts users signed up in aggressive promotions in 2006. It was the worst performer in Q2, with promotions associated with the anniversary of the Movistar launch in April having attracted prepaid users and GSM take-up slowed. Third-ranked Tigo continues to perform worse than we had expected following the injection of new capital and expertise in the form of Millicom in mid 2006. Only if Comcel abandons its efforts to focus on the prepaid sector, Movistar and Tigo see dramatic improvements, or if the regulators decide to allow MVNOs to provide greater competition in the sector, do we expect growth rates will be any quicker.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-line

Table: Colombia Telecoms Sector – Fixed lines – Historical Data & Forecasts

Internet

Table: Colombia Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table: Colombia Telecoms Sector – Mobiles – Historical Data & Forecasts

Chapter 3 - Macroeconomic Climate

Growth Set To Smooth Out

Table: Economic Activity - Historical Data And Forecasts

Chapter 4 - Country Snapshot: Colombia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 - Business Environment

Latin America

Colombia

Colombia Telecoms Industry SWOT Analysis

Chapter 6 - Competitive Landscape

Competitor Analysis

Table: Key Players: Colombia Telecoms Sector

Table: Selected Operator Financial Parameters

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-Line

Table: Colombian Fixed-Line Market , Q206

Table: Colombian Long-Distance Market (2005-6)

Table: Colombian ILD Market (2005-6)

Internet

Mobile

Table: Colombian Wireless Market, Net Additions, 2005-6

Table: Colombian Wireless Market , Q206

Table: Colombia Mobile Subscriber Mix, 2004-06

Industry Developments

Chapter 7 - Company Profiles

Colombia Telecomunicaciones

Comcel

TEM Colombia (Movistar)

Colombia Móvil (Ola)

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Latin America Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Latin American Telecommunications Sources

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BMI's Latin American Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: