Spotlight: Costa Rica’s telecom market

Costa Rican telecom regulator Sutel has released its telecom statistics report, shining a light on the status of the sector before the pandemic hit. 

In the document released on Tuesday, the watchdog highlights minor changes to the industry’s revenues, subscriptions, and overall connections, but also significant moves in market share. 

Sutel said commercial offers boomed during 2019, leading to price drops of 12% for mobile services and of 35.4% for fixed internet. The regulator also said that updates to the competition law last year gave it more tools so it could identify 20 monopoly practices and four concentrations. 

BNamericas takes a look at the report’s biggest findings. 

REVENUES

The Costa Rican market ended 2019 with combined revenues of 760bn colones (US$1.2bn), an increase of 0.32% year-over-year. The results show a small contraction of the market due to, among others, economic readjustments in the country over the past two years, according to the regulator. 

Generally, the link between revenues and services shows that more users are transitioning from mobile services to fixed-line services, a trend Sutel started noticing in 2018. But even though fixed-line services are becoming more popular, mobile telephony and internet access remain the biggest revenue generators with up to 65% of the total in 2019. 

The second biggest service revenue generator was fixed and mobile internet (21%), followed by fixed telephony (8%) and leased lines (6%).  

While telecom investments were flat before 2019, they increased slightly last year, representing 0.5-0.6% of GDP, according to the regulator.

MOBILE TELEPHONY

Revenues for mobile telephony totaled almost 226bn colones, a decline of 12.2%. 

The mobile sub-sector registered 8.5mn subscribers, 6.1mn of these representing prepaid lines (71.7%) and 2.4mn postpaid lines (28.3%). Overall, the results suggest the industry added 54,558 lines, an increase of 0.6%.

State-owned electric and telecom company ICE remained the main player, with 51.2% of total subscribers, followed by Spain’s Telefónica’s Movistar (29.9%), América Móvil’s Claro (18.9%) and mobile virtual network operators (MVNOs), which reached about 0.1% of the market in 2019. 

Telefónica took subscriptions away from both ICE and Claro, increasing its market share by 3.3% by year-end. ICE and Claro, on the other hand, lost 2.4% and 0.3%, respectively. 

The Spanish telco, which announced plans to exit parts of the Latin American market last year, said earlier this year it would sell its Costa Rican market share to Millicom’s Tigo, but the deal did not materialize. In July, however, Liberty Latin America closed a definitive deal with Telefónica to buy its local operations. 

FIXED & MOBILE INTERNET

Revenues for both mobile and fixed internet services, which Sutel grouped together, totaled 425bn colones in 2019, a growth of 10.6%. Of that, mobile internet represents 62% and fixed internet represents 38%. 

For last year, the regulator counted more than 4mn mobile internet subscriptions and 904,734 fixed internet ones. 

In mobile, postpaid represents the biggest part with 2.28mn subscriptions, followed by prepaid with 2.25mn subscriptions and data cards with 132,700 subscriptions.

ICE dominated the market in data cards (78.3%), postpaid subscriptions (57.7%) and prepaid subscriptions (45.6%). The other two operators shared the remaining parts, with Movistar only taking the advantage over Claro in the prepaid segment. 

In the fixed segment, however, there were 592,000 connections via cable modem, 192,000 through XDSL, 117,000 through fiber optics and the remaining 4,458 through other mediums. 

ICE is again the main player, with 33.5% of the fixed internet market, followed by Cabletica (21.8%), Millicom (19%), Telecable Económico (19.2%), and others (5.8%). 

FIXED TELEPHONY 

Fixed telephony services have been declining since 2015, when the reported number of subscribers was 850,377. By the end of 2019, the service had 636,504 connections, a decline of 16.6% compared to the end of 2018. Last year a record number of fixed telephony connections were lost, according to the regulator. 

The subsector which is made up of traditional fixed telephony and voice over internet protocol (VoIP) telephony, reported total revenues of 58.8bn colones, a drop of 9.1% from 2018-19. 

While Sutel did not provide data on how traditional fixed telephony is distributed among operators, it broke down the market share per VoIP service, which represents only 10.2% of the overall segment. 

According to the report, Cabletica had 40.2% of the VoIP telephony market, followed by Tigo (26.5%), Telecable (12.7%), R&H (5.5%), Multicom (4.8%) and others (10.2%). 

Costa Rica’s telecom sector also includes leased line services, which have grown and declined, but remain important. In 2019, the service grew 17% and generated 49.4bn colones.