Venezuela Telecommunications Report Q4 2011

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Venezuela Telecommunications Report Q4 2011 Published on August 2011

Report Summary The mobile market in Venezuela continues its decline this quarter. According to Q111 data, there are 28.753 mobile subscribers in the country, which marks a decrease from Q410. The number of active subscribers totalled 27.192mn, a 2.4% decrease from Q410. These decreases reflect several quarters of subscriber losses for all operators in the market besides Movilnet, which reported marginal growth this quarter. This reflects Movilnet's continued drive to increase penetration among low income segments of the Venezuelan population. In Venezuela, operators have to constantly discount unused SIMs, as users switch to different networks to take advantage of appealing tariffs and promotions. Movistar reports increasing net losses in subscriber numbers. The mobile penetration rate in Venezuela has reached more than 100%, which means the protracted growth trend is likely to remain. Operators will have to identify new ways to generate revenue besides reliance on organic growth, which explains Movistar's push for more data services, and the resulting increase in ARPU this quarter, despite the inflationary pressures pushing down the value of Movistar revenues. Although there is little data available, BMI believes Digitel is also continuing to target high 'end subscribers. BMI believes future revenues for Digitel and Movistar are likely to continue growing as a result, but we worry that by focussing so strongly on low-income consumers, Movilnet is likely to miss out on the high revenue segment of the population and such a strategy is unlikely to sustain revenue growth. The fixed-line market grew this quarter, but we do not expect this trend to continue indefinitely. Like other Latin American markets, fixed-line telephony is being replaced with mobile telephony. We therefore expect to see some quarters of negative growth in the fixed-line market this quarter. Mobile services will be the driver of telephony in the long term. Broadband continues to grow at an exceptional pace, with more than 120,000 new broadband connections in the country in Q111. BMI expects Venezuela will join its neighbours, with mobile broadband services taking off and driving growth. However, fixed-line incumbent CANTV, which owns Movilnet, has yet to push its 3G services and particularly mobile broadband. This is a concern for BMI as the operator has the potential to be a major driver of broadband connectivity over mobile networks, considering its strong status as the largest operator and its push into more rural areas. Following reports of President Hugo Chรกvez's illness this quarter, there is much uncertainty over the future business environment of Venezuela and the markets have rallied in the hope of an improvement in business environment should the president step down. However, BMI believes such moves are too premature to mark an improvement in the business environment. We continue with our bearish view for the economy and expect foreign investment in the telecoms sector to continue to be protracted.

Table of Content Executive Summary 7 SWOT Analysis 8 Venezuela Mobile SWOT Analysis 8 Venezuela Wireline SWOT Analysis .. 9 Venezuela Political SWOT .. 10 Venezuela Economic SWOT 11 Venezuela Business Environment SWOT 11 Business Environment . 12

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>> Get this Report Now by email! Latin America Business Environment Ratings . 12 Venezuela 14 Table: Q411 Business Environment Rankings 15 Industry Forecast Scenario ... 16 Mobile .. 16 Table: Venezuela Telecoms Sector ' Mobile ' Historical Data And Forecasts, 2008-2015 16 ARPU ... 18 Table: Telecoms Sector ' Mobile ARPU ' Historical Data And Forecasts . 18 Fixed Line 20 Table: Venezuela Telecoms Sector ' Fixed Line ' Historical Data And Forecasts, 2008 - 2015. 20 Internet 21 Table: Venezuela Telecoms Sector ' Internet ' Historical Data And Forecasts, 2008-2015 ... 21 Market Data Analysis 23 Mobile .. 23 Table: Venezuela Wireless Market, Q111 ... 25 Table: Venezuela Wireless Market, Net Additions 'Q410-Q111.. 26 Subscriber Mix 26 ARPU AND MOU ... 27 3G ... 29 Mobile Contract Wins . 32 Table: Venezuela ' Selected Recent Contracts Awarded 32 Mobile Content 33 Country Outlook . 33 Value-Added Services Timeline... 35 Table: Venezuela ' Selected Recent Contracts Awarded 35 Mobile Operator Data . 36 Table: Venezuela Mobile Market Overview 36 Table: Digitel .. 36 Table: Movilnet (CANTV) ... 37 Table: Movistar .. 38 Fixed Line 39 Table: Venezuela Local Market, Q111 40 Table: CANTV Fixed-Line Revenue Breakdown (VEFmn) . 41 Pay-TV 42 Table: Venezuela Pay-TV Market 2009-2011 . 43 Broadband ... 44 Table: Venezuela Internet Market 2010-2011 By Connection Type ('000) .. 45 Triple Play .. 46 Mobile Broadband .. 46 Telecentres And CybercafĂŠs 47 Submarine Cables ... 47 Table: Venezuela Wireline Developments ... 48 Regulatory Environment... 49 Division of Regulatory Responsibilities In Venezuela .. 49 Table: Venezuela Regulatory Bodies And Their Responsibilities .. 49 Regulations . 50 Industry Developments ... 51 Competitive Landscape 53

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>> Get this Report Now by email! Key Players .. 53 Table: Key Players ' Venezuelan Telecoms Sector . 53 Table: Selected Operator Financial Indicators ... 53 Company Monitor .. 54 Table: Pace Annual Financial Results (£mn).. 54 Operator Profiles ... 57 Compañía Anónima de Teléfonos de Venezuela (CANTV) .. 57 Telefónica Móviles Venezuela (Movistar) ... 61 Corporación Digitel 64 Regional Telecommunications Penetration Overview ... 66 Fixed Line 66 Table: Regional Fixed-Line Penetration Overview . 67 Internet 68 Table: Regional Broadband Penetration Overview 68 Table: Regional Internet Penetration Overview.. 69 Mobile .. 70 Table: Regional Mobile Penetration Overview ... 70 Country Snapshot: Venezuela Demographic Data . 71 Section 1: Population ... 71 Table: Demographic Indicators, 2005-2030 ... 71 Table: Rural/Urban Breakdown, 2005-2030 .. 72 Section 2: Education And Healthcare .. 72 Table: Education, 2002-2005 . 72 Table: Vital Statistics, 2005-2030 ... 72 Section 3: Labour Market And Spending Power .. 73 Table: Employment Indicators, 2001-2006 . 73 Table: Consumer Expenditure, 2000-2012 (US$) ... 73 Glossary Of Terms 74 Table: Glossary Of Terms ... 74 BMI Methodology .. 75 How We Generate Our Industry Forecassts. 75 Table: Key Indicators For Telecommunications Industry Forecasts 75 Telecoms Business Environment Ratings . 77 Risk/Reward Ratings Methodology . 77 Ratings System 77 Indicators 77 Table: Ratings Indicators ... 77 Weighting 79 Table: Weighting Of Indicators .. 79 Sources ... 79

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