CANTO Weekly Newsletter – BNamericas: 07/4/14

CANTO Weekly Newsletter – BNamericas: 07/4/14

 

Mexico is only major LatAm country to hit global average connection speed – study – Regional
Cuba to welcome more foreign investors as new law comes into effect – Cuba
Digicel considers banning unlicensed VoIP services in more countries – Regional
European Commission approves Telefónica E-Plus acquisition – Regional
Telco to be dissolved, questions over Telefónica-Telecom Italia future remain – Brazil, Regional

The information presented and opinions expressed herein are those of 
the author and do not necessarily represent the views of CANTO 
and/or its members
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Mexico is only major LatAm country to hit global average connection speed – study – Regional

Mexico was the only major Latin American country to meet the global average internet connection speed in the first quarter of this year, as measured by internet content delivery network specialist Akamai.
According to Akamai’s Q1 State of the Internet report, the global average connection speed increased 1.8% quarter-over-quarter and 245 year-over-year, reaching 3.9Mbps at end-Q1. The study is based on fixed connections made to Akamai’s Intelligent Platform during the quarter.
Mexico, with a recorded 3.9Mbps average connection speed in the period, was the only one of the main Latin American economies to hit the global threshold according to an interactive map created by Akamai.
Apart from Mexico, only small Caribbean islands met or surpassed the global average, including Bahamas (6.3Mbps), Grenada (4.9Mbps), Jamaica (4.9Mbps), Trinidad and Tobago (4.5Mbps) and Barbados (3.9Mbps).
Puerto Rico was listed in Akamai’s study as part of the US and therefore had a 11Mbps average connection speed. Canada’s average connection in Q1, in turn, was 9.7Mbps.
The 10 highest Latin American average connection speeds, aside from Mexico and the Caribbean nations, were the following: Uruguay (3.8Mbps), Ecuador (3.3Mbps), St. Lucia (3.2Mbps), Chile (3.3Mbps), Argentina (3.2Mbps), Colombia (3Mbps), Haiti (2.8Mbps) Peru (2.7Mbps), Brazil (2.6Mbps) and Panama (2.6Mbps).
At the bottom end of the regional ranking, with less than 1Mbps, were Bolivia (945Kbps) and Cuba (672kbps). The global ranking is topped by South Korea (23.6Mbps) and Japan (14.6Mbps).
Akamai considers “high broadband” connections to be those greater than 10Mbps and “broadband” connections as those of 4Mbps or more. The company predicts the global average will surpass the 4Mbps broadband threshold by next quarter.
URUGUAY
Of the entire Americas region, Uruguay presented the highest average connection growth, of 37% q-o-q and 151% y-o-y. The country also led the American continent, and ranked 9th globally, for the fastest average connection peak in Q1 of 45.4Mbps, for 24% q-o-q and 206% y-o-y expansions.
Uruguay is also the Latin American country with the highest percentage of its connections considered “high broadband” at 4.5%. It is followed by Mexico (2.2%), Argentina (2%), Chile (1.1%) and Brazil (1%).
Cuba to welcome more foreign investors as new law comes into effect – Cuba

A new law for foreign investment has come into effect in Cuba, with the aim of attracting more investment from abroad to inject life into the country’s slow-growing economy.
The law was approved by the national assembly in March and marks the socialist nation’s biggest effort to date to open up the economy to foreign direct investment (FDI).
Under the law, foreign firms are now allowed to invest in all areas of the Cuban economy except for the health, education and military sectors. It also offers international investors tax breaks and stronger legal protection than in the past, the country’s state news agency ACN reported.
It is hoped that the new law, which updates the 1995 legislation that first opened Cuba up to foreign investment, will lead to faster economic growth, job creation, a greater diversification of the Cuban economy and the transfer of more advanced technology to the island.
Foreign trade minister Rodrigo Malmierca said when presenting the bill to the national assembly that Cuba needed over US$2bn a year in FDI for the country to attain its GDP growth target of 7% a year.
As part of its efforts to attract more FDI, the Cuban government recently invited a large number of foreign business executives and investors to take part in its first international industrial convention, called Cubaindustria 2014.
Some 400 businesspeople from 29 countries reportedly attended the event last week, at which debates were held on the transfer of technology, innovation and technological management, among other topics.
On Friday, Cuba and Spain also signed an association agreement for international cooperation for development.
This took place during a visit to Spain by a Cuban delegation promoting the new foreign investment law among Spanish companies and investors.
Digicel considers banning unlicensed VoIP services in more countries – Regional

After blocking several “unauthorized” VoIP applications in Haiti, Caribbean and Central American telecom provider Digicel is considering expanding the ban to other countries, including Jamaica.
“This is currently the case only for Haiti, but we’re actively considering our options in other countries,” Antonia Graham, head of communications for the Digicel Group, told Jamaican daily The Gleaner.
Digicel blocked apps such as Viber, Tango and Nimbuzz due to the intense bandwidth pressure put on its network stemming from their popularity, as well as the fact that they were not paying to route their traffic over the provider’s networks.
Graham said the bandwidth pressure negatively affects customer data usage experience.
If the apps agree to pay through formal business arrangements, Digicel said it may lift the ban in Haiti, though it would end the services’ free calling and texting features.
European Commission approves Telefónica E-Plus acquisition – Regional

The European Commission has approved Telefónica’s 5.0bn-euro (US$6.83bn) acquisition of Dutch telco KPN’s German unit E-Plus, but imposed a range of conditions on the Spanish operator in order to allow the deal to go ahead.
The commission had concerns that the deal, which will take the number of mobile players in Germany from four to three, would remove competitive forces from the telecoms market and further weaken the position of MVNOs to the detriment of consumers.
The German telecoms market is characterized by high entry barriers for new competitors, and the merger in its original form would have led to reduced competition and higher prices for consumers, the commission said in a release.
In order to address these concerns, Telefónica agreed to sell up to 30% of the merged company’s network capacity to between one and three MVNOs before the acquisition is completed.
The Spanish operator also committed to divest spectrum either to a new market entrant or subsequently to the MVNOs which will have taken up the network capacity.
Finally, Telefónica will extend existing wholesale agreements with Telefónica’s and E-Plus’ partners, and offer wholesale 4G services to all interested players in the future.
The European Commission overruled German regulators to carry out the merger review process itself, arguing that it was better placed to deal with the case because of its experience in assessing mobile mergers.
There is also a need for constant application of merger control rules throughout the EU, according to the regulator.
With consolidation currently on the cards in Europe’s telecoms market, the regulatory ruling may serve to set a precedent for other deals.
Telefónica has sold off non-core assets in a range of countries in recent months in order to reduce its net debt, while at the same time strengthening its position in key markets.
The company’s net financial debt reached 41.9bn euros as of the end of Q1, below its self set target of 43.0bn euros as of the end of this year.
The Q1 net debt figures do not include the E-Plus acquisition. However, ratings agency Fitch has praised Telefónica’s ‘leverage neutral’ approach to funding the deal.
Telco to be dissolved, questions over Telefónica-Telecom Italia future remain – Brazil, Regional

Telecom Italia’s largest shareholder, holding company Telco, is set to be dissolved as questions remain over the future relationship between the Italian company and Spanish operator Telefónica, Telco’s key backer.
Telco’s board approved a “partial demerger” which will result in the holding’s 22.4% stake in Telecom Italia being split between four shareholders.
Telefónica will retain a 14.8% stake in the Italian operator, while the Generali Group will have a 4.32% stake and Sanpaolo and Mediobanca will each gain a 1.64% share, Telco said in a release.
As Telefónica already held a 66% stake in Telco, the demerger does not appear to involve any significant changes to the Spanish operator’s total share in Telecom Italia.
Telco also announced that it was writing down its share in Telecom Italia by 831mn euros (US$1.13bn) after the latter’s share price has plummeted in recent years. Telco’s 22.4% stake in Telecom Italia is now worth around US$5.41bn, based on Telecom Italia’s current market cap.
Last year, Telefónica increased its share in Telco from 46.2% to 66%. However, fears that the company could eventually acquire full control of Telecom Italia – whose Brazilian subsidiary TIM competes directly with Telefónica’s Vivo in the country – led Brazil’s antitrust watchdog Cade to force Telefónica either to reduce its share in Telco or find a new partner to share control of Vivo.
Telefónica’s strategy to accommodate the regulator’s demands is still unclear, but the company recently sold US$103mn euros of bonds in Telecom Italia, sparking rumors that Telefónica may be planning to reduce its share in the Italian company.