Venezuelan telcoms infra creaks under strain of economic crisis

Bnamericas Published: Tuesday, November 06, 2018

Crisis hit Venezuela's telecoms infrastructure is creaking under the strain of a combination of factors including lack of maintenance, infrastructure theft and vandalism, local daily El Nacional reported.

Telefónica's Movistar brand has reported voice and data service blackouts around the country, according to the paper.

Patricia Valladares, president of telecoms services association Casetel was quoted as saying that the sector was facing a "perfect storm" in terms of deficient and damaged infrastructure, which operators were struggling to upgrade, due to economic restrictions and a devaluing currency, as well as electricity blackouts.

Valladares said that telcos spend 70% of income on network maintenance and repairs due to theft and vandalism, adding that rampant inflation has meant that the cost of fixing a base station has increased 200,000% over the past year.

The average monthly expenditure of a Venezuelan on telecommunications services is US$1 compared to the regional average of US$8.

Valladares said that the prices telcos are able to charge for services do not cover their costs.

Telefónica's third quarter report showed an 86.2% decline in revenues in euro terms to 3mn euros compared to 23mn euros a year earlier. Capex in Venezuela was reported as 0 in Q3 compared to 4mn euros in 3Q17.

According to Juan Véliz, president of the telecoms workers union, state-controlled telco Cantv and its mobile unit Movilnet have also suffered from a gross lack of investment. Batteries and network equipment like DSLAMs are deteriorating from inadequate refrigeration from air conditioning, while engineers have been leaving due to poor salaries.

Inflation has also impacted the pay-TV market as decoders, remote controls and other equipment is beyond the affordability of users.

Véliz explained that its costs US$600 to import equipment to provide a signal to 30 customers in a building, yet users are currently paying the equivalent of only US$0.80 per month, while the regional average for a basic pay-TV package of 30 channels is US$15.

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