Movistar to use third-party infrastructure to migrate 250,000 Argentine homes

Telefónica’s Movistar and local firm Sion sealed an alliance to share infrastructure with a focus on southern Argentina. 

Under the deal, Movistar will migrate 250,000 homes using copper cable to coaxial cable and fiber optic networks in the hands of local operators over three years, including 100,000 in the first phase of the agreement.

The announcement is part of Telefónica's strategy to redirect investments and seek alternatives for its fiber optic business. It is the first agreement of its kind in the region.

In Chile and Colombia, Movistar closed the sale of part of its infrastructure to the KKR fund in order to finance new fiber optic deployments.

The Argentina agreement includes an investment commitment from Sion of 9.5bn pesos (US$97mn) in three years for the retrofit of current networks and the construction of new access networks.

In response to a BNamericas question, Luis Delamer, Movistar's wholesale Hispam director, told a press conference that the company plans to continue investing in its fiber optic network, but concentrating on the Buenos Aires metropolitan area and other large cities in Argentina.

Investments in networks will depend on the profitability achieved by the company. The alliance will make it possible to redirect investments destined for southern Argentina to other markets in the country.

Movistar has about 2mn homes passed with fiber in the country, the majority in large cities.

Sion, meanwhile, has its business focus in the "interior of the interior" of the country, said its president, Luis Quinelli.

The alliance also foresees improvements in Movistar's transport networks, which will support the new connections.

SION

Sion, one of the first internet service providers in Argentina, has been working in alliances with local operators that the company supports with investments, know-how, scale and technology.

These providers have mainly deployed hybrid networks of coaxial cable and fiber optics (HFC and FTTx).

As part of the process, Sion updates the pay TV networks so that they can be bidirectional and offer internet services with Docsis 3.0 technology. It also seeks to deploy fiber optics and bring the nodes closer to the users.

The goal is to create hybrid networks and gradually migrate to fiber optics, what Sion calls “pre-GPON” networks.

The agreement with Movistar also involves new network lines, which will be made entirely of fiber optics. These deployments will be carried out in locations where there are no agreements with local operators, such as the case of Comodoro Rivadavia in Chubut province.

The companies are also evaluating deployments in other cities in Tierra del Fuego, Santa Cruz and Chubut provinces.

Sion has an agreement with about 15 local suppliers, which will join the alliance. The company hopes to add new operators to the alliance.

MIGRATION

Movistar and Sion have already carried out the integration of the computer systems and are now making progress in the migration of clients.

In a first pilot, 250 clients in Tierra del Fuego were migrated. In September and October, the migration of new customers will begin at a rate of 600 users per month.

Movistar will maintain the commercial and after-sales services. "What we’re doing is outsourcing to the Sion network," Delamer said.

Of the users that Movistar will migrate, 80% currently have connections of 1-6Mbps. The new networks will allow services with speeds of above 20Mbps and up to 300Mbps, depending on the network topology.