06
Economic Management
GRI (201-1)
In 2021, the telecommunications industry demonstrated once again that it is a key driver for the rebirth of the economy. As an industry and as a Company, we are a source of growth for the country’s people and companies.
During 2021, the level of competition in the market was unprecedented. The average speed of broadband fixed services increased dramatically. In the residential segment, the average download speed in the market increased from 34 Mbps in December 2020 to 56 Mbps in June 2021 (Source: Ministry of ICT, ICTMin). Movistar was one of the main drivers of this growth, thanks to the accelerated deployment of fiber optics.
In the fiber optics front, deployment totaled 858,800 households passed, a 3.7 times increase compared to 2020, reaching close to 2.14 million households passed (HHPP, for the Spanish original). Thanks to the agreement signed with KKR, the sustainable development of the Colombian fiber optics market continues. The project will enable bringing the benefits of fiber to approximately 90 Colombian cities within the next three years, with a network that will cover 4.3 million Real Estate Units Passed (UIP, for the Spanish original). It is expected that precisely these 4.3 million UIP will contribute to the substantial improvement of Internet speed in the country and increase the number of connected households.
In 2021, challenges were faced such as the existence of market domination without corrective measures by the government, changing spectrum conditions that discourage investment, and a well-established operator receiving the benefits of an entrant operator. In January, the Communications Regulation Commission confirmed that Claro (COMCEL) has a dominant position in the relevant Mobile Services market. Following almost four years of review, resolution CRC 6146 concluded that the prevailing conditions demonstrate a high level of concentration, and that Claro has the capacity to act independently, and consequently this market does not have effective competition. Unfortunately, neither this regulation, nor resolution 6380 of September, which ratified the decision, take any corrective actions. Such actions remain an urgent challenge for all the entities in the telecommunications sector.
Additionally, there is macroeconomic pressure, which is not on the telecommunications sector alone, but that has a fundamental impact by not being able to pass through to customers the inflationary pressures, and because a large percentage of the Company’s investments are in foreign currency.
Market Shares
According to ICTMin figures, at June 2021 the market share of Movistar was:
Total mobile: 24%
Postpaid mobile: 30%
Prepaid mobile: : 23%
Fixed broadband: 14%
Pay TV: 9%
Fixed voice: 19%
Movistar Colombia continued to strengthen its commercial strategy, leveraging the growth of access in all service lines, mainly for corporate customers with integrated solutions, consumer market customers with offerings of ultra-high speed, deployment of FTTH and adding of mobile terminals (smart phones). These improvements in access values translated into strong growth of service revenues, which posted a year-on-year increase of +10.8% in 2021. Other operating revenues displayed a year-on-year increase of 1.7%.
Operating expenses increased by 13.0% year-on-year, mainly due to greater commercial activity in terms of performance of contracts for integral solutions with corporate customers, and costs of mobile terminal equipment.
EBITDA in 2021 totaled COP 1,742 million, equivalent to year-on-year growth of 5.2% (+COP 86 million), mainly due to the positive growth of operating revenues, driven by integrated solutions, connectivity and digital services and the deployment of FTTH, and the efficient control of non-commercial costs. The EBITDA margin was 29.5% (2020: 30.9%).
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EBITDA in 2021 totaled COP 1,742 million, which is equivalent to year-on-year growth of 5.2% (+COP 86 million)
CapEx during 2021 totaled COP 666 million, up 2.0% year on-year, represented in mobile and fixed infrastructure.
Sources and Uses
Cash inflows totaled COP 7,250 billion associated with operating fees, asset sales and new financing operations. Cash outflows totaled COP 7,960 billion, mainly related to payments of operating and investment activities, taxes and repayment of financial debt. The opening balance of cash was COP 710,150 million.
