The greatest surprise in BMI’s Business Environment Rankings for Q408 was Venezuela, previouslybottom in our table, overtaking Colombia, previously in the sixth-place position. However, the addition ofseven new markets pushed Venezuela into ninth place. Venezuela saw a slight increase in its telecomsmarket rating, which helped to move it above Colombia in the rankings. Despite Venezuela’s size,smaller markets such as El Salvador, Belize and Guatemala are rated higher owing to a higher rate ofregulatory independence and stronger country risk scores. In fact, Venezuela’s rating increased despite alower country structure score and its high penetration rate and low regulatory score are likely to hold itback in terms of investment opportunities.
May 2008 was supposed to see the launch of Movilnet’s GSM network after its parent company, thefixed-line incumbent CANTV, announced that it had invested in the necessary infrastructure for thelaunch. Nevertheless, there has been no indication that the network has been launched commercially,leaving the market’s leading operator still using its CDMA network. This puts it at a considerabledisadvantage as its smaller rivals benefit from the availability of cheaper GSM handsets. Digitel, thethird-ranked operator, has seen consistent increases in its market share and is the only operator toexclusively use a GSM platform.
Despite second-ranked Movistar’s launch of its GSM network, the operator still managed to lose marketshare in 2007. Some of this market share was seized by a revived Digitel, but the company’s first-rankedposition was assumed by Movilnet in Q307. Movistar also performed badly in Q108, losing 123,000subscribers (all prepaid), further denting its market position. Additionally, ARPU data, released by parentcompany Telefónica Móviles Venezuela (TM Venezuela) for the first time, reveals that the operator sawa decrease in ARPU in Q108. An expanding postpaid subscriber base, however, will help to pull upARPUs.
The fixed-line market continues its upwards trajectory in defiance of regional trends as incumbentCANTV expands its network and lowers prices as part of the government policy of enabling poorerVenezuelans to have access to telecoms services. The growing fixed-line market will help to boostbroadband subscriptions, and CANTV’s new prepay broadband should see subscriptions increase to1.2mn in 2008. Growth in the fixed-line market in 2007 was faster than in 2006 but we do not forecastthis to continue; we anticipate that growth will gradually slow down over the next few years, to reach lessthan 1% by 2012.
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