The arrival of new players to the telecommunications market in Colombia is ruffling some feathers. In particular the arrival of the new operator WOM has driven down mobile phone plan prices by 50% compared to last year. Elsewhere, larger players like Movistar are actively investing to try to improve services in other areas such as fibre connectivity.
A telecommunications technology specialist in Bogotá gave his view of the market, “There is great expectation / uncertainty around WOM’s arrival, and there is some speculation around the strategies that the dominant operator in the country (Claro) may deploy. The other telephone companies are trying to be competitive too by betting on improved infrastructure to offer a better service.”
WOM is a Chilean telecommunications company owned by London-based Novator Partners. There have been some grumblings around how WOM entered the Colombian market, according to a telecommunications lawyer in Colombia, “WOM participated in the 2019 auction but then returned spectrum because they couldn’t comply. Then in 2020 WOM bought Avantel out of bankruptcy but there are some rumours that the acquisition had already been agreed beforehand. That could have legal consequences.”
“In 2020 WOM bought Avantel out of bankruptcy but there are some rumours that the acquisition had already been agreed beforehand. That could have legal consequences.”
Telecommunications lawyer, Colombia
A number of other market players have Claro in their sights, an executive at an established competitor reported, “We are betting on: high-speed internet, accelerating digital transformation, developing the MSMEs market to win new customers, offering a better service experience to customers, and growing and monetising the infrastructure already deployed in Bogotá. In the longer term, we have the goal of reaching other large cities where we believe that due to pricing we could unseat Claro.”
In addition to increased competition, market players must contend with a daunting regulatory landscape where industry lawyers have been calling for a loosening of regulations to increase investment. Key agencies here are the Communications Regulation Commission (“CRC”) that is in charge of regulating issues such as network rental prices, and the Ministry of Information Technologies and Communications (“MinTIC”) which has seen several key personnel changes recently with the aim of streamlining its operations.
Finally, there is the issue of 5G to navigate. Colombia has 50 ongoing pilot tests which are being developed by Huawei and Movistar. President Iván Duque wants to complete the deployment of the 5G network before the end of his presidential term in August 2022 and he has personally told regulators to speed up legislation to call for 5G infrastructure tenders by the third quarter of this year.
“Colombia is not prepared for 5G. It will require a lot of investment, and the return on that investment is not clear today.”
Telecommunications executive, Colombia
An industry executive explained that the government’s plans were ambitious, “Colombia is not prepared for 5G. It will require a lot of investment, and the return on that investment is not clear today. Maybe Claro has enough purchasing power to participate, but Telefónica is scaling back in Latin America and Tigo does not have the capacity to participate.”