LatAm fiber strategy helps improve Telefónica results

In Latin America, Telefónica is betting on alternative fiber optics deployment models that include the separation of its fiber business into new vehicles and infrastructure sharing agreements – and the models are yielding results.

"This deployment allows us to capture the growing demand for fiber and, at the same time, reduce our exposure in the region," CFO and head of Telefónica Hispam, Laura Abasolo, told the company's Q3 earnings call.

Abasolo highlighted that “there are a lot more conversations around sharing than we've had in the past. With 5G, we definitely have to continue on this path.”

According to Abasolo, fiber connections to the home represent 81% of accesses, 10 percentage points higher than the previous year.

The company reported 12mn homes passed with fiber globally and expects to reach 25mn by 2026.

In Latin America, Telefónica has 15.8mn homes passed with fiber and cable. Accesses with the possibility of connecting to fiber optics increased by 3.4mn, or 27.8%, in Q3, compared to the same period last year.

KKR and Telefónica's Chilean neutral fiber optics company, OnNet Fibra, registered 3.5mn homes passed and reinforced its market share with the acquisition of Entel's fiber optics network covering 1.2mn of homes.

The company did not detail progress of OnNet Colombia. The JV’s head, Ximena Mora Méndez, told BNamericas in April that the company expected to reach 2.3mn homes passed with fiber by the end of this year, compared to 1.2mn when it started operations in January.

In addition to the neutral networks in Chile, Colombia and Brazil, Telefónica has advanced fiber sharing agreements in Argentina with companies such as American Tower, Sion and Metrotel.

Telefónica is expected to follow a similar strategy in its other markets.

At end-September, Telefónica Hispanoamérica had over 4.8mn real estate units connected with fiber optics and cable, up 18.3% year-on-year.

The good results of Telefónica Hispanoamérica boosted the company's global performance.

“Our strategy has not changed. Hispam is not a core market, but that does not mean it is for sale,” said Abasolo. She said solid foundations are being built and efficiencies are being generated by changes in the operating model to avoid being capital intensive.

Oibda grew 1.2% and revenues 3.8% due to services growth and sales of terminals.

Sales of Chilean datacenters generated 30mn euros (US$30mn), also positively impacting the results.