Telefónica Hispam planning to plow ahead with fruitful cooperation strategy

Telefónica Hispanoamérica's infrastructure-sharing schemes, partnerships and operating models have made the deployment and operation of its networks much more efficient in recent years and have produced a series of positive results, leading the company to prepare to extend the strategy to help close the digital divide in the region.

To enable operators to expand connectivity and accelerate the digital transformation and inclusion, regulation and public policies have to be designed in such a way that their objective is to expand telecommunications and attract private investment, José Juan Haro, director of regulation and wholesale business at Telefónica Hispanoamérica, tells BNamericas in this interview.

He also explains how the company is working on replicating its internet for all wholesale mobile network model in Colombia and planning to create new fiber optic companies in Peru and Argentina as part of its strategy going forward.

BNamericas: Telefónica has been posting good results in Hispam from its new way of operating. What is your strategy going forward? 

Haro: I think we've focused on two levers. The first had to do with financial discipline – we've been very disciplined in making investment decisions and about the expenses that we could afford in the environments that we faced. We have to remember that after [the announcement of the new strategy in 2019], we've had to deal with the pandemic and the difficulties that it entailed.

Perhaps the most complex decisions have been related to spectrum, since we decided to return spectrum in Mexico, we decided not to continue bidding in Colombia, we announced our intention not to acquire the remaining 4G spectrum and we decided not to participate in the tender in Peru. We have been quite judicious in our decisions and not only in terms of spectrum, but also in the network.

This financial discipline has made it possible to return to cash generation and return to growth.

The second thing, and it is a differential case in Telefónica, is that we've concentrated on becoming allies, on making our company learn to cooperate with others. We've done it in the mobile business, in rural coverage, in television and, of course, in fiber.

This combination has brought us to where we are. And what comes in the future? I believe that involves deepening the commitment to partnerships, to cooperation.

BNamericas: Several Latin American countries in which you operate are planning spectrum tenders for 5G. What does Telefónica expect to do in those processes?

Haro: Regarding the 5G spectrum tenders, we participated in Chile and we've been one of the operators that have deployed the technology the fastest. We also have the network operating in Mexico thanks to the agreement with AT&T. We're focused on continuing development in the rest of the territories and we're interacting with the authorities in Uruguay, Colombia ... who are advancing in public consultations, and it's also happening in the case of Argentina.

The vision that we're transmitting is that it must be as transparent and clear as possible. The future of mobile technologies is 5G, but a set of requirements must first be met, such as the completion of 4G deployment. It's key that there should be good deployment of fiber optics that allows the base stations to be served and, of course, for the spectrum to be offered with reasonable prices and conditions.

If the latter doesn't happen, we'll tell the governments with all respect and clarity. Only by ensuring sustainable business, which means paying what's right for the spectrum and being able to deliver profitability to the market, can we offer a long-term perspective.

BNamericas: Could Telefónica decided not to take part if it believes that the price is too high?

Haro: I wouldn't speculate on future contests, the conditions of which we don't know. What I can say is that we're a responsible operator that has returned spectrum when it has considered it expensive, that it has withdrawn from tenders in which it was participating when it has considered that prices had risen beyond our means, and it has transmitted to governments with absolute clarity when we didn't see a strong business case. That's our track record.

BNamericas: Going back to sharing, in fiber optics you have forged agreements with KKR for joint ventures in Chile and Colombia. What's the progress in other markets?

Haro: These are processes that take a long time. In the last results statement, our global head of finance explicitly stated that we're making progress in Peru and we're making progress in Argentina and still exploring the possibility of developing cooperation models similar to those we have in Chile and Colombia.

The exact formula hasn't been defined, the partners aren't defined, but the vision and the way forward in that direction are there.

BNamericas: Are you planning the same expansion for models such as internet for all in Peru?

Haro: Yes, of course. We already have the business case set up in Colombia, we have investor interest in Colombia, we've spoken with the government to discuss our vision on the matter. We're ready.

BNamericas: What terms are you dealing with?

Haro: The spectrum issues are becoming clearer. We are in the midst of talks about the way in which the obligations, the coverage obligations associated with the bidding processes are carried out. I believe that the conditions are being aligned for this to become possible. I'd expect that we will make noticeable progress in Colombia this year.

As you know, it takes two to tango, but in this case it's three or four.

BNamericas: How is the progress in other countries for this type of model?

Haro: Colombia is the one that's coming in the short term. We're piloting in other countries, but I would say that Colombia is the only one in the short term for now.

BNamericas: Telefónica participated in the Open Gateway announcement. What impact will that have and when can we expect its arrival in Latin America?

Haro: The global initiative was launched with the GSMA. We have to enable a set of issues in infrastructure, which is what we're making progress on. I can't confirm dates, but it's certainly something that the Telefónica group is interested in doing globally.