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, Kwame Campos and Rob Parungo
In 2018, Mexican group América Móvil SAB de CV dominated the Latin American mobile market. Together, both companies control almost 70% of the mobile subscribers held by the 11 largest telecommunications groups in Latin America, which also include Telecom Italia SpA, Oi SA, Millicom International Cellular SA, Telecom Argentina, AT&T Inc., Entel Chile and Liberty Latin America Ltd., as well as Mexican cable operators Grupo Televisa SAB and Megacable, which do not operate wireless services.
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The nine groups generated almost $60 billion in revenues from mobile services in 2018, representing more than half of total service revenues reported by Latin America's top 11 groups. Mobile revenues for the top groups fell by an average 5.1% annually between 2011 and 2018, due to local currency depreciation, as well as regulatory cuts in mobile termination rates and increasing competition, which led to a reduction in prices for mobile voice and data services across the region. Mobile ARPU for the top Latin American groups fell at a CAGR of 7.0% between 2011 and 2018. AT&T saw the largest drop in mobile ARPU, despite subscriber growth in Mexico, the only country where the company operates mobile services in Latin America.
In Colombia, for example, Millicom's TigoUNE, the combined brand of Tigo Colombia and UNE EPM Telecomunicaciones, América Móvil's Claro Colombia, and Telefónica's Telefónica Colombia (branded Movistar) have made unlimited SMS and voice a common add-on for all price points of postpaid plans. Incumbent operators in Chile are competing against WOM SA in offering unlimited data and voice plans, with 720p HD video streaming and high-fidelity audio streaming. In Mexico, Telefónica México S.A. de C.V. will try to grow its 4G subscription base through the introduction of unlimited voice and data plans while AT&T Mexico will look to dent Telcel’s dominance through the acquisition of 80 MHz in the mid-band, as well as offering converged entertainment and data mobile bundles.
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Spectrum outlook
From 2020-2021, regulators in Latin America are supporting the expansion of spectrum inventory in the low and mid-bands with interest leaning on the 700 MHz and the 3.5 GHz bands. In Latin America, total spectrum for the six covered markets of Argentina, Brazil, Chile, Colombia, Mexico and Peru totaled almost 3,000 MHz at the end of 2018.
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Pilots using high band millimeter wave frequencies have also emerged in some markets, such as a test by Telecom Argentina in April 2018, and the launch of commercial 5G FWA services by Uruguay's Antel in May 2019, both over 28 GHz spectrum and deployed in partnership with Nokia. However, the cost associated does not make it appealing for operators in the region, who are still expanding 4G networks.
In Brazil, more than half of mobile subscriptions are 4G LTE. In 2018, TIM Brasil Serviços e Participações S.A. and Nextel Telecomunicações Ltda. funneled portions of their capital expenditures to refarm the mid-band spectrum, specifically the 1.7 GHz and 2.1 GHz bands. In Chile, 96% of 4G subscriptions are smartphones while the remainder combine 4G USB dongles and machine-to-machine connections. Operators were keen to strengthen postpaid plans, offering "unlimited" data and voice plans to capture heavy data users. On the other side of the coin, consumers in Argentina are stifled by a weaker peso. But despite the struggling economy and rising expenses in utility, Argentine operators still aggressively expanded 4G across the country. The newly merged Telecom Personal SA and Nextel Communications Argentina S.R.L. entity increased its 4G LTE footprint in 900 new locations.
Capex
Capital expenditures for the nine mobile operators considered in the report declined in 2018. AT&T and Telefónica showed the largest declines, while América Móvil and Liberty Latin America ramped up their investments. Overall, operators focused their spending in 4G network expansion and fiber networks deployment.
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New opportunities will arise in Brazil as the regulator looks to reduce barriers for machine-to-machine connections. Regulator Anatel will also be addressing the country’s spectrum scarcity via a spectrum auction planned for 2020, with frequencies in the 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz bands up for grabs. The four largest mobile carriers in terms of subscribers ranked as the highest spenders in Brazil in 2018: América Móvil's Claro Brasil, Telefónica's Telefônica Brasil (branded Vivo), Oi and TIM Participações comprised 96% of the country’s total capex spend.
Vivo focused on expanding its 4G network, which covered 88% of total pops by the end of December, as well as its fiber acceleration project, which consumed 500 million reais in capex in 2018 and is expected to double to an annual 1.0 billion reais in 2019 and 2020. TIM financed the deployment of 4G over the 700 MHz band it secured while refarming mid-bands 1.7 GHz and 2.1 GHz, and also the expansion of its fiber broadband networks. Since the approval of a stringent financial debt restructuring plan totaling $20 billion, Oi has been ramping up investments in fiber and 4G LTE in “key clusters and cities” identified as priority areas. To maintain liquidity, the carrier hired Bank of America to assess the feasibility of the sale of noncore assets such as data centers and towers. For Claro, for the full year of 2018, capital expenditures for its mobile business focused on accelerated expansion of its 4G LTE-A and 4.5G LTE-A Pro and enabling the 700MHz band in “key geographic locations.”
For Mexico, about 50,000 more towers are still needed to cover 99% of the population with 4G, despite the aid of its newly lit 700 MHz. Both Telefónica Mexico and AT&T Mexico have separate national roaming agreements with market leader Telcel, so pressure to expand will be dependent on the incumbent and ALTÁN Redes' "Red Compartida," the country’s wholesale 4G network in the 700MHz band.
Full 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.
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