BMI calculates Colombian consumer electronics spending grew by about 12% in US dollar terms in 2012 to US$4.9bn. Domestic demand for consumer electronics devices remains relatively strong in Colombia and will continue to support consumer electronics spending over the coming quarters. The burgeoning middle class and private sector credit growth will therefore continue to stimulate household consumption. Falling unemployment should help to drive demand for consumer electronics goods, such as tablets and smartphones. We believe Colombia's economy will expand at robust growth rates in the coming years, characterised by improved macroeconomic conditions and an increasingly friendly business environment. The auction of 4G spectrum should boost smartphone sales in 2014, as well as the requirement that companies distribute 500,000 tablets as part of the obligations for the frequencies. Drivers will include rising PC and mobile phone penetration, the launch of digital TV broadcasting and 3G mobile network roll-outs. The development of a modern retail sector will also encourage growth over our five-year forecast period to 2017.
Headline Expenditure Projections
- Computer Hardware Sales: US$1.5bn in 2012 to US$1.6in 2013; +8% in US dollar terms. Forecast in US dollar terms unchanged amid signs that consumer credit growth is bottoming out. Tablets are expected to be a growth area in 2013, amid overall slower growth in Colombian PC market, with strong uptake of the devices reported in 2012.
- AV Sales: US$2.3bn in 2012 to US$2.5bn in 2013; +9% in US dollar terms. Forecast in US dollar terms unchanged, with flat-panel and Smart TV sets the main growth area as consumers upgrade their old models.
- Handset Sales: US$1.0bn in 2012 to US$1.1bn in 2013; +12% in US dollar terms. Forecast in US dollar terms unchanged, with smartphones accounting for a higher proportion of mobile sales.
Colombia's score was unchanged at 44.8 out of 100.0, remaining in sixth place in our latest Latin American CE RRR table for Q114, ahead of Argentina and Venezuela. BMI expects rising penetration of consumer electronics devices such as smartphones and flat-screen TV sets. Over time the market has the potential to rise in our rankings.
Key Trends & Developments
The government's Vive Digital programme offers a long-term boost to the PC market, with a pledge to eliminate import tariffs on connectivity devices and to take measures to enhance credit availability for such devices. Incentives under the Vive Digital plan included a VAT exemption programme for low-income households looking to obtain an internet connection.
The migration to digital TV broadcasting is currently scheduled for completion in 2019, although government sources have suggested this could be brought forward by two years. To maintain revenue growth in the face of price declines, vendors will focus on product innovation, with drivers including improved display quality and wider screens, as well as design and features, such as wireless technology.
With the growing popularity of mobile broadband services, and recent launch of 4G services by Movistar and Claro, smartphone usage should grow rapidly, as average prices fall. There will also be increasing demand for mid-range phones as consumers upgrade from their entry models. Even for low-tier subscribers, the desire for features such as cameras and support for MP3/MP4 are increasingly important requirements.