Telecoms investment in 2013 met only ‘60% of demand’, report claims; handset sales down by ‘over 40%’

7 Jan 2014

A Venezuelan telecoms source quoted by newspaper El Nacional claims that the level of investment in the network operating sector in 2013 was restricted by the country’s foreign currency shortage to the extent that total CAPEX reached just 60% of the minimum needed to satisfactorily meet the growing demand for services – with around USD600 million spent compared to ‘between USD1 billion and USD2 billion’ of required annual investment. The decline in the availability of foreign currency ‘significantly limits the execution of infrastructure works required by the market to provide good service’, the anonymous source added. TeleGeography notes that the report is in contrast to repeated announcements from Venezuela’s largest foreign-owned telecoms operator Movistar that it was actually raising CAPEX in response to recent and potential future local currency devaluations, rather than see its cash – which is ‘trapped’ in Venezuela by restrictions on foreign firms repatriating their profits – lose its value. However, the cellco, part of the Spanish Telefonica group, may have run into delays in implementing its infrastructure investment plans due to foreign currency and import restrictions, which have certainly slowed down the network expansion and upgrading programmes of Movistar’s main domestically-owned rivals CANTV/Movilnet and Digitel, the latter of which has recently flagged up such delays caused to its 4G LTE network build-out and device availability.

As cited by El Nacional, the latest available currency settlement records of Venezuela’s Committee on Administration of Foreign Exchange are for 2012, which nonetheless illustrate a trend by showing that the Central Bank of Venezuela registered foreign exchange in the telecoms industry of USD240.72 million that year, down by 48.97% from 2011’s figure of USD471.80 million.

In separate but related news, Venezuela’s mobile phone sales were reportedly down year-on-year by between 40% and 50% in 2013 due to foreign currency and import restrictions, according to estimates from local handset distributors cited by Venezuelan paper El Mundo. The report added that estimated demand in the Venezuelan market requires around ‘eight million to ten million’ handsets annually, but total new devices sold last year fell significantly short at approximately six million (around half of 2007’s total of roughly twelve million new devices). The distributor report also provided an estimated breakdown claiming that despite smartphones accounting for ‘around 30%’ of mobile phones currently used in Venezuela, only approximately 10% of imported models in 2013 were smartphones, with ‘low-cost’ or basic phones representing the majority (‘estimated 60%’) of imports, with about 30% reckoned to be feature phones. The report added that in 2013 around 50% of total new handsets (imported and domestically manufactured) were on the Movilnet network, around 35% Movistar and roughly 15% Digitel. TeleGeography notes that state-owned CANTV/Movilnet has to some extent offset the restrictions on foreign exchange/importing by manufacturing its own mobile devices, initially focusing on the basic low-cost market but also moving into the smartphone segment, whilst the company is also engaged in partnerships with Chinese technology companies to manufacture network equipment in Venezuela.

Venezuela, CANTV, Digitel, Movilnet, Movistar Venezuela