Capex Watch: How and where Brazilian telcos are investing

Oi

Rio de Janeiro-based Oi invested 6.1bn reais (US$1.53bn) in 2018, an increase of 7.5% over 2017.

Oi accelerated its capex particularly in the fourth quarter last year. The company invested nearly 40% of its revenues in the period, with capex  totaling 2bn reais in Q4, up 13.6% year-over-year and 37% from the quarter before.

The increase in capex reflected the continued acceleration of investments foreseen in the company's bankruptcy reorganization plan, focusing on expansion of FTTH, high-speed broadband and 4G and 4.5G mobile coverage, Oi said.

As result  of the higher capex, Oi ended December with a cash position of 4.62bn reais, down 33.9% from December 2017.

For 2019, the telco expects to invest 7bn reais, up 15.2% from 2018, focusing on access fiber,  refarming  of the 1.8GHz and 2.1GHz frequencies.

Oi previously said it aimed to invest 21bn reais over the next three years in Brazil. That compares to planned capex of 26.5bn reais from 2018-20.

The company reached 1.2mn homes with fiber by the end of 2018 and aims to end 2019 with 3,600 homes.

Furthermore, Oi  said it analyzed the financial feasibility of 70mn homes in Brazil and found that around 50% of homes had a positive NPV for FTTH. Of these, 9.4mn homes have infrastructure ready for FTTH (except for the last portion of the fiber,  which passes in the customer's home).

TELEFÓNICA

Vivo's capex amounted to 8.2bn reais last year, up 2.5% from 2017.

In the fourth quarter, investments by the Brazilian Telefónica subsidiary dropped 20.4%, to 2.12bn reais, accounting for 19% of its net operating revenues.

The company attributed the lower disbursements to higher investment levels recorded in previous quarters and to "optimized project execution."

The carrier aims to invest 8.9bn reais this year in Brazil, an increase of 8.5% from 2018.

Despite the increase, CEO Christian Mauad Gebara has said that the company is focusing more rational use of capex, doing "more with less"  whenever possible .

Telefônica Brasil outlined plans to invest 26.5bn reais in the 2018-20 period, compared to 24bn reais in 2017-19.

Like Oi,  the company focuses its investments mainly on FTTH rollout, footprint expansion and increased 4G and 4.5G technology coverage and capacity.

TIM

TIM Brasil, controlled by Telecom Italia, had one of the lowest capex levels among the "big four" carriers: it disbursed 1.4bn reais in Q4 and some 4bn reais in the full year, down 1.52% and 4.1% y- o -y, respectively.

Projects under the network scope are the expansion of the fiber network (backbone, backhaul and FTTH), site densification, and frequency  refarming  and carrier aggregation of two or three frequencies, depending on the locality.

In its 2019-21 strategic plan, announced this month, which foresees 12.5bn reais in capex, TIM said it aims a capex-on-revenues level below 20%.

Capex will be directed  to grow fiber and improve mobile capacity.

The company aims to take fiber transport infrastructure to 1,500 cities by 2021, up from currently  601, and FTTH to 4mn homes, compared to 1.1mn at the end of 2018.

Also, TIM expects its fiber national backbone to reach 115,000km, up from 90,000km.

TIM's 2018-20 plan had investments estimated at 12bn reais.

AMÉRICA MÓVIL

Mexican América Móvil  does not report  country-by-country capex figures.

In 2018, consolidated investments reached US$8bn for all of its global operations, up about 10% from 2017. The telco has an earmarked capex of US$8.5bn for 2019. 

In a conference call with investors on Q4 results, CEO Daniel Hajj said, "we do not see a disruptive capex in 2020 with  the introduction of  5G, I think capex  is going to  be more or less the same."

Most of the capex will go to increase wireless capacity and coverage, as well as 4.5G and fiber.

"We are putting fiber all around Latin America. We are at Fiber to the Home and rings with fiber, and fiber is important for us. And mainly, [capex]  is going to  be for increasing our data capacity. We are also investing a lot  in  IT," Hajj added.

In Brazil, the company saw a 0.5% increase in revenue, to 35.6bn reais, as wireless service revenues jumped 9.5% to 12.1bn reais. Post-paid customers increased by 15.6% to 23.5mn as prepaid fell 14.9% to 32.9mn. Average revenue per user ( Arpu ) jumped 10.3% to 17 reais at the end of the year.