Spotlight: The ups and downs of Telefónica in LatAm

Telefónica has seen mixed operational and financial results in its main Latin American markets.

In Peru, the Spanish company lost fixed and mobile share, in addition to pay TV.

Overall, data compiled by BNamericas shows that Telefónica’s revenues grew in its Hispanic America (Latin America excluding Brazil) geography from 2020 onwards.

The growth follows five years of decline driven by divestment and other moves to reduce operations in these markets.

In 4Q22, Telefónica reported revenues of 2.11bn euros (US$2.25bn) for Hispanic America, up 2.8% year-on-year on an organic basis.

The Hispam unit’s result was attributed mainly to Q4 double-digit growth in Colombia (13.6%), while Mexico and Chile grew 3.2% and 3.1%, but Peru contracted 2.7%.

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Last year, Telefónica del Perú operated 38.6% of the country’s 1.2mn FTTH accesses, still leading the market. Yet, in the previous year, the company operated over 50%. The decline has come on the back of the growth of rivals, especially smaller players and internet service providers.

Telefónica also lost participation in the mobile segment. Of the 41.6mn mobile lines in service nationally last year, the company operated 12.5mn, down 5.45 percentage points.

Fitch downgraded Telefónica del Perú’s ratings. “The downgrade and negative outlook reflect the near-term materialization of TdP's tax liability, which will result in a material deterioration of its leverage profile, although the exact timing and extent of additional debt financing needed to pay the tax payments remain uncertain,” Fitch wrote in a February report.

“In addition, the company continues to operate in an intense competitive environment amid an uncertain economic backdrop in Peru. While TdP benefits from its scale as the largest operator in Peru, as well as its diversified product portfolio, the company's negative [free cash flow] has weighed on its financial profile,” Fitch added.

BRAZIL

In Brazil, one of Telefónica’s core markets besides Spain, the UK and Germany, results were more positive.

Telefônica Brasil posted 2022 net revenues of 48bn reais (US$9.28bn), up 9.1%. In Q4, revenue reached 12.7bn reais, an increase of 10.1%. Total accesses reached 112mn, an increase of 13.7%, with 98mn being mobile ones.

The company also grew business in the highly competitive fiber broadband segment. By the end of January, Telefônica led the segment with 17.8% of all 31.1mn FTTH accesses, according to regulator Anatel.

Telefônica expanded its FTTH network to 3.7mn new homes (homes passed) in 82 new localities, with 874,000 new clients. The company’s FTTH service is now available in 409 localities.

Relying on its co-investor CDPQ in neutral fiber network FiBrasil, Telefônica plans to reach 29mn homes passed with fiber by 2024. 

COLOMBIA

In Colombia, performance has also been solid in the fixed segment. The telco reported a 71% increase in FTTH accesses in 2022, also supported by its fiber wholesale JV On Net Fibra Colombia.

According to latest figures by regulator CRC and the information and communications technology ministry, Movistar Colombia operated 1.27mn (nearly 15%) of fixed internet accesses by September 2022, up from 1.17mn in September 2021.

That segment is led by Claro Colombia (36.7% of market share by September) and Tigo Une (20.6%). Only Une managed to grow its base year-to-September.

CHILE

Meanwhile, in Chile, Telefónica expects its fiber footprint to expand to 4.5mn premises, equivalent to 70% of the country's homes, by the end of the year, also supported by its local JV On Net Fibra Chile.

Around 94% of Movistar Chile's fixed broadband customers can now access its fiber network, according to the local subsidiary.

Data from regulator Subtel shows Telefónica Chile with 1.29mn of 2.83mn fiber broadband customers by September. Telefónica also led the fixed broadband market with a 30.3% share, followed by VTR, with 26.2%.

Movistar Chile reached over 800,000 5G users and eyes 1mn by July. 

Public affairs director Fernando Saiz said at the Mobile World Congress in Barcelona that 1,300 of the 2,000 antennas installed in the country in 2022 were 5G compatible.

He also said that the company planned to switch off 2G by the end of 2023 and the fixed copper network in 2024.