The recession enveloping Colombia is having strong effects on the wireless industry. Cellular carriers, in particular, saw first-half 1999 losses and declining user numbers. And the future will include competition from new PCS licensees.
Colombia, which is experiencing its worst recession in at least 50 years, likely will see a negative gross domestic product figure for 1999, said several sources. A declining peso and high unemployment have added to the country’s problems.
To that end, Colombians are stopping their cellular service, not paying their bills, making fewer calls and talking less.
“Demand has decreased,” said Peter Burrowes, president of cellular operator Comcel. “This is the issue that cellular operators are having to deal with that has affected their revenues.”
In fact, Comcel reported a first-half loss of 166 billion pesos (US$96 million), largely due to a foreign-exchange loss of 155 billion pesos. Celumovil, Comcel’s competitor, posted a first-half 1999 loss of 192 billion pesos (US$110 million), which Celumovil also blamed on the exchange-rate change.
The recession is forcing a shift to prepaid services.
Bogota-based Julio Perez, an adviser to telecom companies including Celumovil, said two years ago most users were required to have monthly postpaid accounts. “Now we buy a card for US$25 or US$10 and spend it in a month,” he said. “We avoid [having] a monthly account. That’s the tendency.”
Some paging operators are enjoying an increase in user numbers for the first time since cellular operators began service five years ago.
“Now a lot of people are churning from cellular, but trying to communicate at lower costs,” said Carolina Pulido Rincon, general manager of paging operators Mensatel and Comsabana. “The paging industry is reactivating. Households cannot afford cellular anymore … Paging subscriber numbers are increasing.”
With the end of the cellular carriers’ five-year exclusivity period on 1 September, competition from PCS operators looms on the horizon. However, the process to license PCS carriers is just beginning.
Burrowes said the government plans to license one PCS carrier in each of the country’s three operating regions. The two incumbent cellular carriers in each of those regions are not allowed to operate PCS systems for at least two years after the first licenses are granted.
