Telefónica tanking in LATAM pay-TV arena

Joseph O'Halloran | 10-12-2013

Research from Dataxis into one of the pay-TV world’s key growth areas has revealed that leading Spanish telco Telefónica is struggling to keep pace in Latin America.

The news is a blow for the Spanish communications group which has eyed the region as offering business opportunities that could mitigate poor performance in its economically troubled domestic market.

Even more worryingly for Telefónica, not only has it seen pay-TV market commerce eroding, it has experienced falls in its high-speed Internet business as well as fixed and mobile telephony services.

Dataxis calculates that between December 2009 and March 2013, the group’s residential broadband operations have seen market share fall by nine percentage points in Brazil, 5.2 points in Peru, five points in Chile, 2.6 points in Argentina and 1.9 points in Colombia.

In the pay-TV business, which Telefónica addresses through multiple satellite (DTH), cable, IPTV and over-the-top (OTT) systems, market share has dipped from 5% of total Latin American subscriptions in 2007 to 4.4% by June 2013. By contrast, during the same period, the region’s largest pay-TV operator (DirecTV Latin America) increased its market share by 11.2 percentage points (from 17.2% to 28.5% of regional accounts), while Luxembourg-based Millicom International has grown its pay-TV customers from zero to 1.2% of the market in less than five years.

“The first five reports from our Operator Profile Series have revealed a worrisome picture for Telefónica’s long-term ambitions in Latin America,” explained Juan Pablo Conti, senior analyst at Dataxis, and author of four of the reports. “At a time when the demand for both residential broadband and pay-TV services keeps growing solidly in the region, Telefónica might at first sight appear to be benefitting because its customer base is expanding. However, it is not expanding as fast as rival established operators such as DirecTV (in pay-TV) and América Móvil (in both pay-TV and broadband). Even new entrants such as Millicom are starting to eat into Telefónica’s pay-TV and broadband market shares.

Conti suggested that a key reason behind Telefónica’s modest growth rate in Latin America was its strategic decision to deploy broadband and pay-TV services only on geographic areas within each country where the Spanish telco operates as the incumbent telephony operator. Indeed, in the only service for the only country where this general rule was not observed was Venezuela where Telefónica’s Movistar DTH pay-TV service has enjoyed the fastest growth rate for any of its multiple telecommunications services deployed anywhere around the world.

Dataxis is planning profiles on América Móvil (both for broadband and pay-TV), Grupo Televisa and Grupo Clarín throughout 2014.