Spain’s Telefónica and Mexican telecoms giant América Móvil, controlled by billionaire Carlos Slim, have for a decade been slugging it out in the Latin American markets for fixed broadband, pay-TV and mobile services.
Now Telefónica is set to exit many Latin American markets, except Brazil, so the competitive landscape will change in the coming 1-2 years. And there has been other competition emerging in some countries – AT&T has recently been a force in Mexico, while Gruppo TIM (formerly Telecom Italia) has been mounting the biggest challenge in Brazil, at least in mobile. Then former incumbent Telecom Argentina is the major third force in that country.
Now América Móvil has moved to up the ante against rivals across the whole region in the mobile arena by setting aside $8bn to boost network infrastructure and acquire additional spectrum, just after Telefónica announced it was reining back in Mexico as the first step in the regional refocus it announced in 2019.
Telefónica ’s Latin American retreat has been on the cards for some years, as the group struggled to match América Móvil’s expansion on all fronts across the whole of the region. Instead, the Spanish company has decided to concentrate on four core markets – Spain, Germany, the UK and Brazil – although retaining what presence it could in other Latin American countries where it does not offload its subsidiaries.
In Mexico this meant switching to being an MVNO operating over AT&T’s network, in an eight-year agreement reached in November 2019. Telefónica then announced the return of its spectrum in the country, with the second of four steps in this process concluded in December 2020. At this point it became a full MVNO and Mexico’s total available spectrum for mobile services shrunk temporarily by around 12% from 557.8 MHz in 2018 to 488.7 MHz, according to telecoms consultancy Telconomia.
Telefónica had struggled for years to match América Móvil in the latter’s home market, with just under 26% of mobile subscribers at 25.8m. América Móvil under the Telcel brand has almost exactly two thirds at 76.6m with AT&T currently on 12.5m in third place, although poised to gain substantially from the Telefónica deal.
Mexico is Latin America’s second biggest market after Brazil, where Telefónica is aiming to shore up its leadership position in mobile with 76.7m subscribers, or almost exactly one-third, with América Móvil, operating under its Claro brand, closing in on 60m, or 26%. The other two major operators in Brazil are TIM on 52m and indigenous operator Oi (formerly Telemar) on 36.6m, so it is a genuine four-way contest.
Telefónica ’s machinations may have prompted América Móvil’s announcement at a recent investor conference call to invest about $8bn over 2021 and in particular acquire additional 5G spectrum in both new and existing markets. Indeed, the company’s CEO Daniel Hajj singled out Brazil as a target for spectrum acquisition, alongside Colombia and the Dominican Republic.
Of these two, Colombia is the more significant market, the region’s third largest just ahead of Argentina. Currently América Móvil has 32m subscribers there, just over half the total, ahead of Telefónica /Movistar on 17.5m.
In Argentina it is a far closer three -way fight, with América Móvil (Claro) just in front on 21.3m subs, Telefónica /Movistar on 20.8m and Telecom Argentina, with its Personal brand, on 18.8m.
As for Mexico, Hajj admitted América Móvil was interested in 5G auctions coming up, most likely in October 2021, but argued that the company was already well placed with the frequencies it holds in the 3.5 GHz band. He pointed to advances on several fronts, with 6.8m wireless subscribers gained in the last quarter of 2020, twice as many as in the quarter before. This included 2.7m mobile postpaid subscribers, of which almost 2m are in Brazil, 223,000 Peru and 201,000 Colombia.
“In recent years we have been investing in our networks. We have the best networks in Latin America and we are prepared to do 5G,” said Hajj. “I think this year we can launch 5G in some countries, and there are three types of 5G – the DSS [dynamic spectrum sharing], the Non-Standalone and the Standalone, and so we are deciding in which frequencies and which 5G we are going to launch and then what the path we’re going to take.”
América Móvil’s expansive activities have not been confined to spectrum but also extend to handsets that combine new features with affordability, to help prize open new markets. The most significant move on this front came in August 2020, when the telco signed an agreement with China’s Oppo Mobile Telecommunications, the world’s fifth largest smartphone maker by shipments, which already has similar agreements with Vodafone along with Japan’s Softbank and KDDI. This is the first major one for Latin America, targeting especially Brazil, Chile, Peru and Mexico.