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, Kwame Campos, Rob Parungo and Tomás Sarmiento
Latin American multichannel operators had a year of mixed results in 2018. The segment's subscriber base grew 0.7%, following a 0.4% drop the previous year, but revenues declined 7.1%. Currency depreciation was the main factor behind the revenue decline.
The Latin American multichannel market returned to subscriber growth in 2018, adding an approximately half a million subscribers. Multichannel penetration declined due to subscriber losses in Mexico and Brazil, the region's largest markets. Large multichannel groups outperformed small operators during 2018. Kagan estimates the top 10 multichannel groups in Latin America added more than a million subscribers, while the remaining operators lost 611,713.
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Cable remains the distribution technology with the most subscribers, accounting for almost half of multichannel households. Direct-to-home is a close second, followed by IPTV with less than 5% and fixed wireless with less than 1%. IPTV was the platform that added the most subscribers during 2018, with 710,025 net additions, while DTH lost the most, with 717,198 net disconnections.
That trend toward more connected services was evident during 2018, as fixed broadband became the main contributor to the 11 top regional operators' fixed revenues, growing at almost double the annual growth rate of multichannel in the seven years up to 2018.
Currency depreciation pulled multichannel dollar-denominated revenues down during 2018. Despite showing subscriber growth in 2018, Latin America multichannel revenues declined 7% due to a 9% depreciation of currencies in the region. Currency depreciation was especially sharp for Argentina, where the peso depreciated 41.0% against the dollar.
Based on our local currency average revenue per user index, we estimate ARPUs in local currency increased less than 2% during 2018. The increase was not enough to counter the 8.7% average currency depreciation, which caused the ARPU in U.S. dollars to decline. Argentina and Brazil's depreciation weighed heavily on the region's average currency value during 2018.
Already a client: Access the article here to see our estimate of the impact of currency volatility between 2011-2018.
América Móvil SAB de CV, AT&T Inc. and Grupo Televisa SAB are the largest pay TV providers in Latin America, accounting for more than half of the region's multichannel households. Millicom International Cellular SA led the group in net additions during 2018, mainly due to its acquisitions of Panama's largest cable operator, Cable Onda 90, as well as competitors in Costa Rica and Guatemala.
Meanwhile, América Móvil and Televisa were the only groups with net subscriber losses in 2018, largely due to disconnections in their DTH operations in Brazil (Claro TV Brasil) and Mexico (Sky México).
Even though its revenue declined, AT&T remains the largest pay TV provider by revenues with almost a quarter of the market, followed by América Móvil, Televisa and Telefónica. This is due to DIRECTV's perception as a high-value service in the Latin American market, which has helped the group maintain one of the highest multichannel ARPUs in the region over the past seven years, although forays into prepaid services has pushed the company's ARPU down in recent years.
Liberty Latin America Ltd. had the highest multichannel ARPU in 2018 due to its exposure to high ARPU Caribbean markets. Meanwhile, Megacable registered the lowest ARPU due to its operations being limited to Mexico, which is the market with the lowest multichannel ARPU in Latin America, excluding Venezuela, where foreign exchange controls and an ongoing economic crisis have made it difficult for companies to adjust prices.
Already a client: Access the article here to see pay TV revenue and ARPU per group.
Mexico's telecommunications regulator, Instituto Federal de Telecomunicaciones, or IFT, retracted Televisa's designation as an agent with substantial power in the pay TV market in March 2018. The IFT had designated Televisa as such after Mexico's Supreme Court asked the regulator to review a previous ruling in 2017. However, a final ruling on this issue by Mexico's Supreme Court ordered the IFT to review the designation based on a new set of conditions. As a result of this new analysis, IFT determined Televisa did not have substantial power in the Mexican pay TV market.
Millicom expanded its dominance of the Guatemalan and Costa Rican markets in 2018 with the acquisition of competitors Cable DX, Cable Zarcero and Cable Television Doble R SA (Cable Max). In October 2018, the group set its sights on new markets, acquiring Panama cable market leader Cable Onda. Finally, in February 2019, Millicom acquired Telefónica SA's mobile operations in Panama, Costa Rica and Nicaragua, which also included small DTH subscriber bases in the latter two markets, where the Spanish group had recently launched satellite TV services.
América Móvil snatched up Telefónica's operations in Guatemala and El Salvador, where the company had also recently launched DTH services.
In October 2019, Liberty Latin America reached an agreement to acquire AT&T's fixed and wireless operations in Puerto Rico and the Virgin Islands, improving its ability to provide convergent services in those markets. The deal did not include DIRECTV assets.
Full report table of contents:
Already a client: click on the links below to access specific sections of the report or the Excel supplement.
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.
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