These have not been easy times for Colombia’s telecoms industry. Accustomed to growth averaging an annual rate of 7% over the past 15 years, the sector registered a 2% decrease in 2015.

Competition and a more robust regulatory framework have helped reduce prices for voice and data, as well as improve service quality. Though some aspects of regulation need revision, the sector continues to show promise, especially as patterns of data consumption become more established. Regulatory moves – such as number portability, the elimination of permanence clauses and greater choice for consumers – have put the burden of gaining market share squarely on operators’ shoulders.


The telecoms market was estimated to be worth $9.5bn in 2016 in a report by consultancy Frost & Sullivan. The study also showed that the market could be worth $11.5bn by 2021.

Continued improvements on key policy goals are making a difference for Colombian livelihoods. Internet penetration doubled from 13.9% at the start of 2012 to 31.4% in the fourth quarter of 2016, according to figures from the Ministry of IT and Communication (Ministerio de Tecnologías de la Información y las Comunicaciones, MINTIC).

The increase in mobile connections, rising broadband internet access and higher data usage are also having a positive impact on the sector. The devaluation of the Colombian peso, however, represented a big blow for operations, mainly due to the amount of inputs that are paid in US dollars, from physical infrastructure to access to television programming in paid-television services.

Alberto Samuel Yohai, president of the Colombian Chamber of IT and Telecoms, told OBG, “We must adapt quicker to the digital economy as the speed at which things change is very fast. It would be beneficial for that to happen that we do not consider IT as a normal sector of the economy, but rather as a cross-cutting area that has the potential to be beneficial for all. Tax burdens in the sector could widen the digital divide and promote inequality, as they would hit low-income Colombians harder.”

On a broader scale, fiscal reform implemented in early 2017 raised the country’s value-added tax (VAT) rate from 16% to 19%, which could tighten consumption patterns. As telecoms services are already subject to an additional 4% consumption tax, the sector has been particularly affected. The increase in VAT effectively raised taxes on voice consumption from 20% to 24%.

After discussions with operators about the measure’s impact, however, the government announced that mobile data would only be liable for an extra 4% consumption tax after the first COP45,000 ($13.50), a measure that will reduce the impact of the tax increase on users with lower consumption levels. Higher taxes for data, however, may work against the government goal of increasing the number of broadband connections to 27m by 2018. On the other hand, the authorities have exempted smartphones worth $220 or more from VAT.

Sector oversight is divided between three entities. The Commission for the Regulation of Communications (Comisión de Regulación de Comunicaciones, CRC) is charged with regulating telecoms services, and is part of MINTIC. Spectrum allocation and management falls to the National Spectrum Agency (Agencia Nacional del Espectro, ANE), while paid television services are regulated by the National Television Authority. This assortment of regulating bodies has long been a source of contention for operators, due to the complexity it can lead to.

Market Majors

The sector remains centred around the three main traditional operators and six smaller operators. However, a steady influx of mobile virtual network operators (MVNOs) in recent years has allowed smaller players to capture niche segments and diversify the market’s offer. The biggest telecoms operator remains América Móvil’s Claro Colombia, which accounted for 49.3% of mobile customers at the end of 2016, according to MINTIC’s fourth quarter 2016 report. The second-largest market player is Movistar, which is owned by Spain’s Telefónica and the Colombian government, and had a market share of 23.4%. The third provider, Tigo, is owned by Luxembourg-based Millicom and accounted for 17.5% of mobile users.

Although the mobile segment remains tightly held by the three largest players, their combined market share was reduced from 92.1% in the fourth quarter of 2015 to 90.3% by the end of December 2016, according to MINTIC. This reduction was matched by a decrease in the market share of leader Claro relative to its competitors, which went from 50.5% to 49.3% over the same period, as well as by legislation implemented by the CRC with the stated goal of reducing Claro’s market share. The CRC implemented asymmetric interconnection fees in 2015 as it sought to reduce costs for users.

However, the majority of gains from Claro’s loss of market share seem to have passed by the second and third operators in the market. Movistar did see its share of the mobile market increase marginally, from 22.5% to 23.4%, according to MINTIC. All but one of the larger mobile operators were able to increase their market share. Tigo’s share fell from 19% to 17.5% over the same period. Virgin Mobile has operated a MVNO in the Colombian market since 2014 and had a 4.2% share of the mobile segment as of the fourth quarter of 2016.

In The Game

An array of smaller competitors share the rest of the market in various forms. Trunking service operator Avantel won a 4G licence in 2014 and has been focusing on providing mobile phone services to the corporate segment, securing a 2.1% market share in the fourth quarter of 2016, up from 1.2% a year before, according to MINTIC. Retailer Grupo Éxito launched an MVNO, Éxito Móvil, in 2013, focusing on capturing the firm’s retail customers.

Uff! Móvil, which had a 0.2% market share in the fourth quarter of 2016, was launched in 2010 using Tigo’s network, and is owned by Bancolombia, which acquired 70% of the firm’s shares in 2012. As of early 2017 Uff! Móvil had 114,000 users, according to local press reports. However, financial problems delayed payments to Tigo for use of its network and threatened the suspension of Uff!’s service. By February 2017 a capitalisation process was under way, allowing the firm to continue operating.

Empresa de Telecomunicaciones de Bogotá, which offers fixed telephony and internet services, expanded into mobile provision in 2014 after being awarded 4G space by partnering with Tigo in the 2013 auction, and had 1.18% of the mobile market as of the fourth quarter of 2016. Another MVNO, EPM, had a market share of 0.16%.

AT&T entered the Colombian market through its acquisition of satellite television provider Direct TV in 2014. This gave the US-based communications firm access to around 1m high-end customers in Colombia. The move created much interest due to the impact that a competitor like AT&T could have on an already crowded market, yet plans to move into other segments remain unknown.

Increased Connections

Mobile communications reached a penetration level of 120.4% in the fourth quarter 2016, a 1.5% increase from the same period in the previous year according to MINTIC.

A total of 58.7m mobile lines were operational across the country, up from 42m at the start of 2010. The segment remains dominated by prepaid customers, who account for 80% of the market, according to a December 2016 MINTIC report. However, the weight of post-paid customers has progressed over the years, increasing from 16% of the market in 2010 to 20% by the second quarter of 2016.

The switch to data is challenging traditional revenue streams for operators, as the Colombian market has seen continued average price reductions for the voice segment. “The volume of voice consumption did not reduce considerably, but telecoms companies’ earnings from voice services have gone down. You started to see several unlimited voice offers in the market, and aggressively priced offers,” Santiago Pardo Fajardo, vice-president of corporate issues and regulation at Claro, told OBG. Undergoing a transition phase, the mobile segment has still not been able to secure sufficient revenues from data to make up for the reduction in voice revenues.

Total internet connections increased from 3.3m at the start of 2010 to 15.9m in the fourth quarter of 2016, according to MINTIC. Mobile internet subscriptions have been a major driver of this growth, rising from 964,671 at the start of 2010 to 9.9m by the fourth quarter of 2016. Claro accounted for 5.3m mobile internet users, followed by Movistar with 2.9m, Tigo at 1.2m and Virgin Mobile with 0.55m using internet access on demand.

Fixed internet connections have had steady but slow progress, increasing from 5.55m to 5.94m between the fourth quarter of 2015 and the same period in 2016. Of the 15.85m internet connections by the end of 2016, 15.31m were broadband links.

4G: Mobile internet and higher data consumption underline the need to expand 4G coverage and capacity. This has been the main requirement by the regulator for operators since the first allocation of 4G licences. Expanding coverage has been hampered by municipal restrictions that make infrastructure deployment difficult, but in early 2017, 639 cities and urban centres in Colombia had 4G access, according to MINTIC. The number of mobile internet users on 4G networks rose from 1.13m in the fourth quarter of 2014 to 4.89m by the same period of 2016.

Further growth of 4G will depend on the long-delayed spectrum auction. Space on the 700-MHz, 900-MHz, 1900-MHz and 2500-MHz frequencies is set to be offered to the market soon, though the process has seen delays. In February 2017 the ANE and MINTIC announced that the draft resolution for the spectrum auction had been put up for public consultation. “The 700 MHz is the most attractive; there is enough space to accommodate four or five operators,” Pardo Fajardo told OBG.

Space on 700 MHz will be critical for future expansion as demand for data and fast mobile internet connections grows. However, with several countries in Latin America sustaining devaluation of their currencies triggered by reduced commodities prices, it is possible that not all of the international telecoms operators will be willing to commit the necessary financial muscle to the market at present. What seems certain is that data services will be a key avenue for growth. “Mobile data has penetration of 40-45% in Colombia, so there is a lot of room to expand this segment,” Pardo Fajardo told OBG.

Service Bundling

An increase in multi-product offers is also expected. In early 2017 Claro launched the market’s first multiplayer offer, combining mobile communications, mobile data, fixed telephony, and internet connection and television services under a single contract. The offer allows customers to adapt their packages to specific needs by, for example, combining more than one mobile phone link as a means to incorporate mobile services for an entire household. The move will likely change the competitive environment. In mid-2016 the CRC published regulation on bundled offers, specifying certain obligations for telecoms companies.

All of the services provided in a bundled offer must be made available individually. Operators must also specify the price that the customer is paying for each service within the bundled offer’s billing, and provide an online price comparison with similar offers from competing providers. According to 2016 figures from the CRC, half of Colombian telecoms users are subscribed to a bundled offer. “One element we have tried to secure with the regulation regarding bundled offers is that operators cannot provide one of the services at an expensive price in order to subsidise another service,” Germán Darío Arias Pimienta, commissioner at the CRC, told OBG.

Fixed Line

Bundled offers are set to become a strong point of competition between operators, and they may be one of the few ways to grow fixed telephony. The number of fixed lines has remained fairly stagnant in recent years, falling slightly from 7.35m in the first quarter of 2010 to 7.12m by the fourth quarter of 2016, according to MINTIC.

One element that could agitate the market is a potential law for fixed telephony portability, which would likely motivate consumers to try to unify their home internet and fixed lines under one single provider. Although the possibility of implementing fixed-line portability was considered by the CRC in 2015, no conclusion regarding regulatory changes has been announced since then.


A tight competitive environment and CRC decisions have shaped the market. Price reductions have continued, with the average price per minute for voice calls reaching COP54 ($0.016) in the second quarter of 2016, down from COP72 ($0.022) at the end of 2014, according to the CRC.

Albeit not at the same speed, average tariffs for data have also shown a descending trend. The average price per gigabyte for mobile data dropped from COP36,065 ($10.82) in 2012 to COP25,273 ($7.58) by the second quarter of 2016. The CRC stated in its third evaluation report on the consequences of eliminating permanence clauses, published in December 2016, that these reductions have translated into real benefits for consumers in terms of the lower cost of telecoms services.

Permanence Clauses

Mobile users also felt the impact of a July 2014 CRC measure banning all permanence clauses in the Colombian market. The initiative was questioned by some, given that previous regulation – which made it mandatory for operators to make all of their offered phone models available to consumers with or without the need for a permanence contract – provided mobile users with sufficient options. The measure had several effects on the market, although its reach was undercut by macroeconomic conditions that started to affect Colombia in the same year that it went into effect.

One clear result was growth in retail mobile phone sales. The CRC’s report, which also evaluated the impact of the measure on the sector, found that smartphones sold as a percentage of mobile phone sales in Colombia rose from 52.5% in the first quarter of 2014 to 87.6% in the same period of 2016, as the variety of available mobile phone models improved and a larger assortment of more affordable smartphones took a bigger share of the market.

According to the CRC the fastest-growing segment is now mobile phones priced between COP400,000 ($120) and COP800,000 ($240), which saw their market share increase from 17.9% to 33.1% between the first quarter of 2014 and the same period in 2016. By comparison the share of mobile phones costing more than COP800,000 ($240) grew by 3% to 12% of the market by the first quarter of 2016. Between 11m and 12m mobile phones are sold in Colombia annually. Another positive impact of the measure, the CRC report found, has been the increased freedom of mobile users to switch operators.

Mobile Retail

The regulatory change also transferred the majority of mobile telephone sales from operators to the retail sector. In early 2014 only 2.8% of mobile phone sales bypassed the three biggest operators, but by the second quarter of 2016 as much as 31.8% of phone sales in Colombia took place through retail channels. The two biggest operators, Claro and Movistar, saw their share of mobile sales decrease considerably following the new measures. Claro went from selling 80% of mobile phones in the country to just over 50%, while Movistar sold 5.4% of them in the second quarter of 2016, down from 12.9% in the same period in 2014. Tigo was the only one of the three biggest market players to increase mobile sales, from 5.1% in the first quarter of 2014 to 12.6% by the second quarter of 2016, according to the CRC report. Combined with other measures, the elimination of permanence clauses brought more freedom to Colombian customers. Number portability, which allows users to switch mobile operators but keep their numbers, rose by 133% between the second quarter of 2014 and the second quarter of 2016, according to the CRC.

Currency Pressure

Elimination of the permanence clauses was matched by devaluation of the Colombian peso against the US dollar, which led to price increases for mobile phones.

The CRC found that the volume of mobile sales fell by 16% in 2015, compared to 12m phones in 2014. Global sales value in that period rose by 23%. By the first quarter of 2016 unit sales fell by 26.1% and sales value by 27.9%, reflecting not only the continuing currency devaluation making imports more expensive, but also some overall reduction in consumption in Colombia in 2016, partly caused by macroeconomic conditions. “The ending of permanence clauses was beneficial. The fact that this happened at the same time as the dollar went up was unfortunate, and affected all users and all companies,” Arias Pimienta told OBG.

Although Colombian consumers will likely have access to a wider variety of phone models, the need to import is set to keep their average prices at a relatively high level until the Colombian peso regains its value against the US dollar. Another consequence of the regulatory move was making operators establish instalment payment programmes to help customers buy new mobile phones, adding an unrelated layer of risk and complexity to their operations. This has been problematic in some cases, mainly because operators are unable to block service to any customers that stopped paying their phone instalments. Surprisingly, in March 2016 the CRC announced that it may revise the ban on permanence clauses. If implemented, the move would allow operators to once again subsidise the acquisition of mobile phones through contracts. Bringing back permanence clauses, however, would once again require operators to revise their processes.


Putting the necessary infrastructure in place to improve service quality remains a challenging aspect of the sector’s expansion plans. Local restrictions affect several smaller cities, with local authorities – and the dependence of urban development on local territorial development plans – forcing operators to deal with an array of requirements, depending on area and region.

“The quality problems are sometimes attributed to the operator, but in some cases it is not the operator’s fault,” Carolina Calderón Rojas, economic director at the Association of the Colombian Mobile Industry, a private sector body that represents the three main mobile operators, told OBG.

Additional infrastructure will be critical. According to a December 2016 report by Colombia’s National Department for Planning (Departamento Nacional de Planeación, DNP), the country requires an additional 7000 towers or antenna sites in order to support the expansion of 4G and increased data consumption over coming years. The required investment is expected to amount to as much as COP1trn ($300m), according to DNP figures. The ANE estimated in 2015 that the country already had between 12,000 and 15,000 towers.

The issue has increasingly been on the government’s agenda. The National Development Plan 2014-18 introduced new provisions, including Article 193, which underlines the importance of territorial authorities supporting the deployment of telecoms infrastructure for economic development.


The telecoms sector is adapting to the move from voice to data. Although this is set to affect operators’ financial results in the near term, rapid expansion of smartphones and 4G accessibility is set to enlarge the potential for new offers.

The growth of data consumption will determine sector performance over the coming years, requiring investment in infrastructure by market players. The increasing number of competitors in the Colombian market has raised the number of options for users across all product categories. However, the coming years will showcase whether or not smaller players can continue to advance in the market by focusing on niche segments. Robust regulatory intervention has also shaped the sector.

Furthermore, the merger of different entities into a single regulatory body would simplify the rules for operators, ease procedures and remove the need to interact with a number of different watchdogs.