Merger with Tigo Offers Fundamental Strategic Shift for UNE, finds Pyramid Research Global market research and consulting firm presents findings to support key merger to Concejo de Medellin in Colombia
BOSTON, April 24, 2013 /PRNewswire/ -- The potential merger of UNE and Tigo (Millicom) offers the most opportunity for UNE's parent company, Empresas Públicas de Medellín (EPM), to secure its long-term viability in the Colombian telecommunications market, according to Pyramid Research's assessment presented on April 6 at the Concejo de Medellin in Colombia.
After a comprehensive examination of the pertinent market trends, Pyramid's assessment was built on its key findings to identify the best strategic route for EPM-UNE telecom business. First, the telecommunications industry in Colombia is growing and projected to expand by an average of around 7 percent over the next five years, primarily carried by strong growth in the mobile segments, fixed Internet and pay-TV. Second, market consolidation has strengthened the position of the Industry giants Claro and Movistar by complementing their service portfolio for multiplay packages. Third, the mobile market is the sector's largest, accounting for around 65 percent of Colombia's telecom services revenues in 2012, while fixed voice growth has been an average of negative 12 percent over the past three years. Fourth, UNE needs scale to be able to compete in the local Colombian market.
"Due to these factors, Pyramid believes that UNE needs to diversify and expand its revenue base to reduce its dependence on their fixed voice business, build its presence in the growing mobile market and conquer new markets outside of the Antioquia region in order to remain competitive," says Daniel Ramos, Senior Consultant at Pyramid Research.
"Pyramid believes that it is imperative that the company looks at a global partner with presence in Colombia that will allow them to gain a substantial number of mobile subscribers in order to accelerate the process to complement its service portfolio to offer multiplay services and compete in all regions; this will also enable the company to obtain economies of scale and minimize the investments required to gain space in the mobile segment," Ramos explains. "Of all the options we examined, we find the most attractive to remain a combination of UNE with Tigo, primarily because it addresses a fundamental, strategic shift that is needed in a manner that closes the gap with the competition within a short-medium term timeline in order to guarantee the viability of the company in Colombia."
"We are extremely pleased with the strategic recommendation of Pyramid. Our business development group has arrived to similar conclusions. We think that an integration of EPM´s and Millicom´s telecom businesses in Colombia will maximize our investment creating a powerful player in the Colombian market that will be able to deliver superior offerings to clients across all geographic regions and market segments," Juan Esteban Calle, CEO of EPM explained.
The discussions are expected to conclude at the end of April this year.
For more information on the April 6 presentation given to Concejo de Medellin in Colombia, click here:
About Pyramid Research:
Pyramid Research (pyramidresearch.com) offers practical solutions to the complex demands our clients face in the global communications industry. Its analysis is uniquely positioned at the intersection of emerging markets, emerging technologies and emerging business models, powered by the bottom-up methodology of our market forecasts for more than 100 countries – a distinction that has remained unmatched for more than 25 years. As a division of UBM Tech (tech.ubm.com), Pyramid Research contributes to the only integrated business information platform serving the global communications industry.
EPM is the holding company of a group of 41 companies employing around 13,000 people and participating in generation, distribution and commercialization of electricity, gas distribution, water distribution, sanitation and telecommunications in Colombia and Central America. Founded in 1955, EPM is the second largest company in Colombia by assets. In 2011 EPM generated consolidated revenue of US$ 6.01 billion and operating profit (EBITDA) of US$ 1.87 billion. Its affiliate UNE EPM telecommunications S.A., which operates under the name of UNE, controls six other companies in various cities around Colombia. It provides local telephone, internet and HDTV and Mobil 4G services. EPM is fully owned by the municipality of Medellin and it applies the highest international quality standards to the services it provides. The company has been recognized in Colombia as a leader in social responsibility and transparency. For more information please visit: www.epm.com.co
SOURCE Pyramid Research