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Venezuela Telecommunications Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: April 2008 Product Code: R302-2789 Description One of the largest developments in the Venezuelan telecoms market has been the renationalisation ofincumbent CANTV.Returning to state ownership is unheard of in the global telecoms industry and couldpotentially be disastrous for CANTV if profitability suffers in the long term. However, the state-ownedoperator has made increasing telephony services coverage one of its main focuses, which has boostedsubscriber growth in both the fixed and mobile markets. In President Chávez’s most recent shake up ofhis ministers, CANTV’s president was made the Minister for Communications but there has been noindication thus far of him leaving his role at CANTV. The fixed-line market showed strong growth for the first nine months of 2007, reaching 4.7mnsubscribers as the market continues to defy regional trends with penetration rates rising. We have raisedforecasts for this market to take into account the increase and the government’s projects to bringtelephony services to rural areas. We now expect penetration to peak at 18.6% in 2011 before slowlydeclining in 2012. BMI estimates that penetration was 17.5% at YE07. The internet and broadband markets grew slower that previously forecast by BMI. Despite CANTV’sintention to increase broadband subscriber numbers by up to 104%, the market grew by 60.1% in 2007,behind our own forecasts. Internet users increased to 19.4% penetration adding 1.1mn users in the firstnine months of 2007.We made slight adjustments to our forecasts to take into account this slightly lowerthan expected growth, but we continue to monitor government projects to increase internet usage in ruralareas. Broadband growth is unlikely to increase dramatically unless prices are reduced drastically. Thiscould still happen given the new government ownership of CANTV, but penetration rates for the yearwere 3.1%. The Venezuelan mobile market showed exceptional growth in 2007, with penetration rates passing 80%in Q307. We have revised forecasts upwards as mobile net additions continued to be high. WhileMovilnet and Movistar continue to lead the market, Digitel is increasingly taking market share fromboth operators and is the sole GSM-only operator in the country. The proportion of prepaid subscribers inthe market continues to increase. Movistar launched its GSM network and reports that 62% of netadditions are GSM subscribers. GSM now makes up 28% of its subscriber base. Movilnet has finallyannounced the launch of its GSM overlay, which will operate alongside its CDMA network and will belaunched in May 2008. Both operators were granted additional spectrum in November 2007, while Digitelhas requested spectrum in the 900MHz and 2100MHz bands. We expect mobile penetration to reach98.5% by 2012. Table of Contents
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