Kagan's second annual installment of its Latin America market overview now includes coverage of the mobile segment. The report explores the region's top telecommunications groups' operational and financial trends.
Report authors: Georgia Jordan, Tomas Sarmiento, Rob Parungo and Kwame Campos
Over the past seven years, broadband has become an increasingly relevant revenue generator for Latin America's 11 largest telecommunications groups. In 2018, fixed broadband overtook multichannel and now holds the largest share of top groups' fixed service revenues, at almost 40%. This is mainly due to the decline of multichannel and fixed telephony revenues as consumers increasingly cut the cord, as well as broadband's consistently higher average revenues per user, driven by the product's increasing value perception among Latin American consumers.
Broadband revenues for the 11 groups considered in this report grew an average of 3.0% annually from 2011 to 2018. This study considers broadband revenues and subscribers as reported by operators, which includes residential and commercial broadband services. Of the four services analyzed in the report — multichannel, broadband, fixed telephony and mobile — broadband is the only service offered by all 11 companies: América Móvil, Telefónica, AT&T, Liberty Latin America, Millicom, Grupo Televisa, Megacable, Telecom Argentina, Oi, Entel Chile and Telecom Italia.
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From 2011 to 2018, fixed telephony's share of revenue-generating units, or RGUs, among Latin America's top 11 groups fell, while broadband grew and multichannel stagnated. At almost 60 million subscribers in 2018, these 11 companies represent approximately 80% of total fixed broadband households in Latin America and the Caribbean, with América Móvil's Claro and Telmex and Telefónica's Vivo and Movistar brands dominating the segment.
The two companies have maintained a steady market share of about 50% of total Latin American broadband households throughout the eight-year period. Mexico's América Móvil operates fixed broadband services in a total of 14 markets, including the region's two largest ISPs: Brazilian cable operator Claro Brasil, formerly NET, and Mexico incumbent telco Telmex. Meanwhile, Spain's Telefónica provides internet services in seven countries and ranks as the largest telco in Brazil and Peru.
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Despite their dominance of the Latin American fixed broadband market, these companies' position as telco and cable incumbents in many countries means their leadership is disproportionately reliant on legacy technologies. While DSL dropped below 40% of total broadband households in the region, among the 11 top groups, the platform still represents more than 40% of broadband subscribers. Meanwhile, fiber represents a mere 9.2% of the top companies' broadband subscribers, compared to the regional total of 16.2%, highlighting the prominent role of small ISPs in leading fiber growth in Latin America.
The top 11 groups also control more than 90% of Latin America's total cable broadband subscribers, as parent companies of the region's largest MSOs, such as América Móvil's Claro Brasil, formerly NET, and Claro Colombia; Telecom Argentina's Cablevisión Fibertel; Televisa's Cablevisión México and competitor Megacable; Millicom's UNE EPM Telecomunicaciones; Liberty Latin America's VTR; and Telefónica's Telefónica Perú.
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Fiber deployments among the top 11 groups have focused mainly on upgrading existing DSL footprints, with Telmex, Telefônica Brasil, Telefónica Chile and Telefónica Argentina representing 78.6% of fiber net adds among the top 11 groups in 2018 due to their aggressive migration of DSL subscribers to fiber broadband services.
Recent new entrants are expected to boost fiber subscriptions among the largest operators going forward. Telecom Italia's TIM Brasil launched fiber-to-the-home, or FTTH, offers in 2017 after many years' success with its fiber-to-the-curb solution. Entel Chile is expanding its residential products and launched its fiber bundles in 2017, and Oi resumed its fiber network expansion after reaching a deal with creditors in 2017. Telecom Argentina began deploying FTTH following its merger with cable operator Cablevisión Argentina in 2018.
Although fiber is expected to drive ARPU growth, as the service is usually offered at higher speeds — and prices — than DSL and cable, this is likely to be counterbalanced by increased broadband adoption by lower-income households. In general, new market entrants and competitors to incumbent telco and cable operators registered lower broadband ARPUs. Mexican MSOs Megacable and Izzi offer aggressive prices and discounts for bundled services to compete with incumbent Telmex, which controlled 48.9% of the country's market in 2018. Similarly, AT&T and TIM Brasil offer services at competitive prices to gain subscribers from América Móvil, Telefónica and Telecom Argentina's incumbent operations.
The exception to the higher ARPU expectation is Oi, due to its position as telco incumbent for most of Brazil, which means the company has a high penetration of low-income residential users, reducing its ARPU. Entel, on the other hand, enjoys a higher ARPU because it only recently turned its focus to residential fixed services, having traditionally operated mainly as a business service provider in Chile and Peru. Entel's ARPU is declining as the company expands its residential footprint.
Fixed broadband consistently remained the service with the highest ARPU for the top 11 groups throughout the eight-year period analyzed. However, it has experienced a downward trend since 2011, declining by an average of 6.3% a year.
Click here for an overview of residential broadband revenues for Latin America's four largest broadband markets: Brazil, Mexico, Argentina and Colombia.
Report table of contents:
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Sector Overview - Regional Summary
Multichannel video
Multichannel Overview (Cable, DTH & IPTV)
TV Everywhere
Retrans
Fixed broadband
Broadband overview
Broadband revenues
Broadband speeds
Mobile
Mobile overview
Mobile spectrum: 4G penetration and 5G perspectives
Mobile data pricing
Mobile tower congestion
Top operators
Operational review
Financial review
Profitability
Capex
Cash flow
M&A
Operator Profiles
América Móvil: Claro summary, 2011-2018
Telefónica Latin America: Movistar/Vivo summary, 2011-2018
AT&T (includes DIRECTV Latin America and AT&T Mexico) summary, 2011-2018
Liberty Latin America summary, 2011-2018
Millicom summary, 2011-2018
Televisa summary, 2011-2018
Megacable summary, 2011-2018
Telecom Argentina (merged with Cablevisión Argentina in 2018) summary, 2011-2018
Oi summary, 2011-2018
Entel Chile summary, 2011-2018
Telecom Italia (2016 and 2017 include Telecom Argentina) summary, 2011-2018
Report's table of contents (Excel edition):
Regional Totals
Subscriber Counts and Penetrations
Multichannel subscriber data 2011-2018
Basic cable subscriber data 2011-2018
Digital cable subscriber data 2011-2018
Broadband subscriber data 2011-2018
Telephony subscriber data 2011-2018
Mobile subscriber data 2011-2018
Financial Metrics
Group revenue by service, 2011-2018
Group multichannel video revenue by technology, 2011-2018
Group monthly average revenues per user by service, 2011-2018
EBITDA by group, 2011-2018
CapEx by group, 2011-2018
Cash flow by group, 2011-2018
Debt by group, 2011-2018
YOY Growth Trends
Basic multichannel and mobile data 2011-2018
Group Profiles
Latin America top 11 groups
América Móvil (Claro)
Telefónica
AT&T (includes DIRECTV Latin America and AT&T Mexico)
Liberty Latin America
Millicom
Televisa
Megacable
Telecom Argentina (Cablevisión Argentina)
Oi
Entel Chile
Telecom Italia
Methodology details available with full report.
This article is based on Kagan's Latin America Multichannel & Broadband Market Overview report, which explores operational and financial trends affecting the telecommunications industry in the region. It also contains profiles, including footprint maps, for the top 11 telecommunications groups offering multichannel products in Latin America: América Móvil SAB de CV, AT&T Inc., Telecom Argentina, Liberty Latin America Ltd., Megacable Holdings S. A. B. de C. V., Millicom International Cellular SA, Telefónica SA, Grupo Televisa SAB, Oi SA, Entel Chile and Telecom Italia SpA. Clients may access the full report here.
Global Multichannel is a service of Kagan, a media research group within S&P Global Market Intelligence's TMT offering.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global