Mayor of Bogota receives ETB amid customer and market share losses

May 13, 2024

ETB reported losses in 2023 in its financial statements. The continued theft of the communications network and the lack of strategic direction are Mayor Galán’s main challenges to reverse the loss of customers and market share.

etb, installations, internet, Más Colombia

Recently, many Bogotanos have been surprised to receive a letter from Empresa de Telecomunicaciones de Bogotá (ETB) stating that “due to technical unavailability” the company will no longer provide service in certain areas.

However, the letter clarifies that “there are multiple operators available” that will be able to offer the necessary telecommunications services. According to the citizen Alejandra Wilches, (Third Permanent Commission of Finance and Public Credit of April 8, 2024) “they failed to put the number of a service advisor of another company to call and ask for the services that ETB supposedly cannot provide”.

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It is noteworthy that this situation occurs in a context in which the Company has experienced a considerable loss of customers in recent years. According to reported data, ETB has faced difficulties in retaining its users, particularly due to competition from other operators offering similar services.

ETB has lost customers and market share

According to the Q4 2023 Integrated Report, ETB lost more than 10,000 customers in the fixed services segment between Q2 2022 and Q2 2023. In addition, it went from a market share of 30% to 27.6% in the same period.

Revenues from copper-based services continue to show a decreasing trend in relation to total revenues, decreasing from 23% in 2021 to 14% in 2023. On the other hand, revenues from fiber services have grown to 38% of total television service revenues.

Data services, dedicated internet and special businesses have increased their share to 44%, mainly due to the Special Businesses Resale product and the Digital Centers project. Finally, the share of mobility revenues remained at 4%.

According to the company’s report, vandalism and cable theft have experienced a notable increase, especially affecting copper and fiber networks, which has also resulted in the loss of customers in all technologies.

As this is an issue that in 2023 generated impacts on the company’s financial statements due to budgetary additions and loss of income from compensation, adjustments, in addition to the loss of customers, it was included as a business risk and is monitored by senior management in the last financial report.

For Miguel Angel Rodriguez, Cedetrabajo’s research coordinator and specialist in international financial management, the current administration sees as normal the loss of 10,000 annual clients and strategic clients such as TERPEL, Ministry of Labor, Ministry of Housing, Totto, Legal Medicine, OXXO and Conmagro. The most worrying aspect is that the contracts with the Bogota Aqueduct, ITAU and the Social Security Secretariat are at risk.

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More than $37,000 million in losses put ETB in trouble

According to the financial statements, in 2023 ETB recorded losses of more than $37,206 million. A worrisome result considering that in 2021 and 2022 it recorded profits of $138,704 million and $49,093 million respectively.

In addition to the decrease in current assets and liabilities in 2023, the company faces a financial risk due to its growing indebtedness and lack of investment in innovation and development.

In the last decade, ETB has invested in modern infrastructure, such as fiber optics, digital television and satellite services, which has contributed to its technological positioning.

However, these investments have generated high production costs and have affected the company’s financial profitability, since the drop in copper customers is much greater than the growth of new fiber customers, so there is no migration but a loss.

What are Galán’s plans for ETB?

The role of the mayor’s office is vital, especially on the security front, since in the last three years theft and vandalism of the network have not been reduced and are generating a massive loss of customers.

On March 5, the recently inaugurated mayor of Bogotá, Carlos Fernando Galán, told journalist Manolito Salazar, on the program ¿cuál es el maní, in relation to ETB, that he is analyzing how to take advantage of the investment made in the company in recent years, especially in fiber optics, to strengthen its role in the future of Bogotá.

Although Galán ruled out the sale of ETB, he was clear in his intention to seek partners to optimize the investment made by the city in recent years in the replacement of traditional copper communication networks with fiber optic networks.

The objective of the strategy, according to the Mayor, is to look for formulas that guarantee that the city can make the most of the investment it has made as a city.

Something worrying, taking into account what the city has experienced. Under the discourse of getting a strategic partner to strengthen the provision of public services, strategic companies such as Telecom, Empresa de Energía de Bogotá and, more recently, UNE were privatized.

According to Diego Otero, President of the Colombian Association of Critical Economy-ACECRI, “It is the best way to privatize; private persons are appointed as members of the boards of directors, government representatives do not appear, except as secondary figures, and private persons are appointed as presidents of the boards of directors. This privatization is very easy because private individuals manage state companies without contributing a single peso, and they administer them according to their personal criteria and the interests they represent”.

Although the Mayor of Bogotá, Carlos Fernando Galán, has expressed his interest in strengthening Empresa de Telecomunicaciones de Bogotá (ETB) as a tool to close the digital divide in the city, his latest actions sow a blanket of uncertainty about the future of the company, as ETB is mentioned only once in the draft Development Plan of the District Government.