Claro has been reinvesting around 70% of its profits into developing the company. Where are you allocating that reinvestment?
Claro has been reinvesting in its 4G network so as to meet the commitments we made at the time of the 4G spectrum auction. These commitments greatly exceeded those of our competitors in terms of the towns and communities that we intended to cover. It is critical that we build a 4G network, allowing us to offload data traffic from the 3G network so as to adequately use that spectrum, given our significant disadvantage compared to our competitors in terms of spectrum allocation. We have to serve close to 30 million subscribers with the same spectrum amount that our competitors serve far fewer subscribers with. Therefore, our reinvestment is critical not only in terms of providing a better and faster service, but also in terms of improving quality for all our users. In addition to our 4G users, our 3G network users are starting to see significant improvements in quality now that we are moving to the 4G network. This is thanks to better coverage, better movement of traffic, and better pipelines through which to serve our customers. A second major area where we have been reinvesting our earnings is in the infrastructure required to shift data traffic, namely our fiber-optic network, to connect up all base stations. The fiber optic project is coupled with the submarine cable project that we began five years ago and will provide worldwide internet connectivity to our users. This submarine cable connects Brazil to Colombia, Colombia to Jamaica, Jamaica to Miami, Miami to Mexico, and then connects back to Colombia. We are also working to increase capacity. Last year we added 600 additional base stations, or towers, and 3G to ensure that capacity was in place, while also extending coverage. As a result, data traffic is increasing YoY at a rate of 70%. On the fixed network, we are investing to connect more homes to provide fixed-service internet, TV, and telephony. The result is that the fixed and mobile networks are now a single network from a transmission perspective, employing 25,000 miles of interconnected fiber optic-cables nationwide. This also means that we have a more robust network of far greater capacity and reliability.
You plan to offer 4G services to your current subscribers at no additional cost. How will you achieve that, and does Claro have the capacity to do so?
We want to offer 4G services to 100% of our consumers. However for this to occur, we need a whole new coverage network. With the necessary infrastructure in place, where 4G is not available, the customer's device will pick 3G, or 2G. Today, our 4G coverage has reached 55% of homes and businesses throughout Colombia within a year, and we aim for 100%. Of course, none of this helps if people are not using devices that are 4G enabled. We used to be able to subsidize these devices, but currently a regulatory restriction forbids this practice. In response, we are implementing an aggressive sales campaign for phones and installment payments. Today you can get a smartphone deal with us for just $1.70 a month. This allows people to access data on their smartphones quicker, which is in both our and the consumer's interest, as they get better access to a data device that can use a 4G network. Therefore, the installment programs that enable consumers to access the 4G network are just as important as having a good 4G network in place. Our role is essentially to make technology accessible and useful to consumers nationwide and across all social strata.
How are you working with the public sector to improve connectivity?
We work with the public sector in a variety of ways, because ultimately our interests converge. Installing the fiber-optic network across the country, implementing the 4G network, increasing data mobility, and introducing faster and more widespread internet access benefits Colombia overall, and these projects are also in line with the government's own plans to develop the IT sector and increase broadband connectivity. This year, we have issued significant subsidies in education, with 300,000 tablets being delivered to students of lower socio-economic status. We have also developed a platform called Educlick, which is the Wikipedia of education in Colombia, enabling teachers to upload five-minute lessons that can be shared nationwide. There is much more to be done and ways to use the network for education in Colombia, and we hope to be at the forefront of new projects like that. Another area where we are active is healthcare. Claro is tapping into some of the developments that Fundación Slim has done in Mexico. There is no such foundation in Colombia, but we are adopting the model to, for example, reduce infant mortality.
How do you assess the level of competition in this sector in Colombia?
There are nine mobile and 20 fixed operators in Colombia, so the competition is stiff. In terms of what differentiates us in telecommunications in Colombia, I would say that Claro has clearly led on the investment side, even through particularly depressed times where investments were scarce, and in some of the toughest parts of the country. But we did that through our 20-year commitment to investing in this country and to driving technological growth and development across Colombia. I think there's no better contribution to competition other than to compete. Our efforts have driven our competition to keep up with us, and to offer the services that we offer. As the government makes spectrum available to everyone, the competition is also increasing, and other multinationals are starting to invest in Colombian telecommunications. Thus, private entities have the task of delivering and creating opportunities, to deliver value to consumers, to invest in delivering that value, and ultimately reap the rewards of those investments.
What targeted services and advantages do you offer SMEs in Colombia?
Claro has made massive investments, and is now in the process of expanding capacity in terms of data centers, where we have made investments to host cloud services not just for SMEs, including renting software like the Microsoft 365, but also for hosting PBX services on the cloud. The country is still in the process of adapting to these new technologies, but investments have been made to ensure a smooth transition with adequate data centers in place.
What do you see as your major objectives and challenges over the coming years?
The objective is to significantly improve the consumers' experience. We have to create as many channels of communication as we can in order to make the interaction process as simple as possible. A new interactive channel that we are delivering, for example, is allowing people to conduct a whole variety of transactions from their handset or smartphone. We see millions of transactions executed every month through that new channel, and are trying to make the system as usable and accessible as possible. We also have over 100,000 subscribers for Claro Video, which provides on-demand TV and movie content. Meanwhile, Claro Música enables the streaming of music. So these all provide easy access that our users can tailor to their personal needs.
© The Business Year - April 2015