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Colombia Móvil (Ola) plans investment to expand its reach in 2004

4 Mar 2004

Colombia’s newest cellular operator Colombia Móvil, which operates under the banner Ola, has announced plans to pump COP600 billion (USD224 million) into the expansion of its network and services during 2004. The company said it hoped that the investment would enable it to deal more effectively with demand in the 140 cities where it already operates, as well as expand its coverage to a further 40 cities before the end of the year; it plans to cover 200 cities by mid-2005. The majority of the money is being provided by Ola’s parent companies – fixed line operators ETB and EPM – with the rest being derived from loans. ETB and EPM invested USD30 million to launch Ola in November, and initially pledged to invest USD250 million during its first three years of operations. Demand has been higher than expected, however, and they have been forced to bring the investment forward.

In Colombia’s mobile market Ola competes with BellSouth – which operates via three separate units, Costa, Occidente and Oriente – and América Móvil, which controls regional operators Comcel, Occel and Celcaribe. The existing operators have felt threatened by the arrival of Colombia Móvil, and throughout 2002 they struggled to delay the government’s auction process. As well as arguing that the USD55.9 million asking price was far lower than the amount they had paid for licences in 1994, BellSouth sued the MoC for compensation in August, claiming that the government had failed to match the promised economic projections made when it acquired its licence. However, the case was dismissed and the newcomer proceeded with its launch. At the end of 2003 it had managed to sign up around 500,000 subscribers, rapidly gaining ground on BellSouth and América Móvil, which had 1.92 million and 3.67 million. The mobile penetration rate, which stood at 14% at the same date, is expected to rise considerably in 2004 as demand increases further.

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