|Liberty Global in talks to acquire CWC – Caribbean, Central America
Liberty Global has confirmed it is in talks with Caribbean and Central American telco Cable & Wireless Communications (CWC) to acquire 100% of the company.
Liberty, which in Latin America controls cable operators VTR (Chile) and Liberty Cablevisión (Puerto Rico), clarified that the announcement did not confirm a “firm intention to make an offer.”
“There can be no certainty that any offer will be made or on the terms on which any offer might be made. A further announcement will be made as appropriate,” the company said in a statement.
The news comes weeks after Vodafone and Liberty Global officially ended talks about an official asset swap. Liberty did agree to acquire Belgium’s third-largest operator Base for 1.33bn euros earlier this year.
Liberty Global’s chairman and largest shareholder, John Malone, owns about 22% of CWC after CWC completed its 1.85bn-euro acquisition of Columbus International in March.
The Financial Times reported undisclosed sources saying that Liberty and CWC have been in discussions regarding a possible cash-and-shares US$5.5bn transaction, with Liberty also assuming CWC’s net debt of around US$2.6bn.
According to Liberty’s statement, the company now has until 19 November to submit an offer.
CWC was formed in March 2010 following the split of former UK business Cable & Wireless’ international division into Cable & Wireless Communications – consisting mainly of the Caribbean, Central America and some Asian assets – and Cable & Wireless Worldwide – with operations in Asia Pacific, Europe, India, the Middle East & Africa and North America – which was acquired by Vodafone in 2012.
Liberty had around 1.6mn customers in Puerto Rico and Chile at the end of Q2. In 2014 it considered spinning off its units in Latin America and the Caribbean into a separate company as it concentrated on Europe. Instead, it launched a tracking stock for its operations in the region (the LiLAC Group), which started trading in July this year.
CWC provides residential fixed, mobile and corporate communications in 16 markets in the Caribbean and Panama to 5.6mn clients.
Columbus International provides residential cable TV, broadband and landline telephony in Trinidad, Jamaica, Barbados, Grenada, St Vincent & the Grenadines, St Lucia and Curacao and Antigua. The joint residential offerings go under Columbus’s original Flow brand.
The merger is expected to help CWC recover market share lost particularly in the mobile market against Irish-owned Digicel.
Both companies also offer corporate ICT services including datacenter hosting, managed data network and IP services, with Columbus having an extended footprint in the Andean region.
CWC is currently engaged in a US$1.05bn investment strategy called Project Marlin designed to invest in new networks and services to boost performance and reduce long-term costs.
Level 3 decouples Venezuela from earnings statement – Regional, Venezuela
Currency volatility in Latin America continued to negatively impact IP enterprise communications provider Level 3 in Q3, particularly in Venezuela, which will be reported separately from the company’s consolidated results starting in Q4.
Level 3 posted a 9% decline in revenue in Latin America on an as-reported basis and a 9.1% rise in constant currency terms.
Growth for the company was attributable to increases in co-location and datacenter, as well as IP and data revenue.
Globally Level 3 posted a 1.16% rise in revenue to US$2.062bn. Total core network services revenue, which accounted for 89% of income, rose 6% to US$1.946bn, while wholesale voice services and other revenue fell 19%.
CFO Sunit Patel said during a conference call with investors that the three largest currencies for Level 3 outside the US dollar – the British pound, the euro and the Brazilian real – declined an average of 17% against the dollar, negatively affecting core network revenue by 2.8%.
The Brazilian real weakened 13% against the dollar in Q3 compared to average rates in Q2, Patel explained.
But the big currency-related news for Level 3 was its decision to deconsolidate the Venezuelan subsidiary from its financial statements effective September 30. Starting in Q4 it will begin accounting for Venezuelan operations using the cost method of accounting and not report the revenue, Ebitda or cash flow.
Level 3 has been monitoring the situation in Venezuela for multiple quarters due to President Nicolás Maduro’s alternative exchange rate called Sicad 1, which is weaker than Venezuela’s official rate, used by Level 3 for most transactions.
For Venezuela in Q3, Level 3 reported revenue of US$25mn and US$16mn in Ebitda at the Sicad 1 exchange rate, which was devalued from 12.8 to 13.5 bolívares to the dollar effective September 1, Patel said.
“The macro environment in Venezuela continues to worsen, and we believe significant uncertainty exists regarding the exchange mechanisms,” Patel said.
“These evolving conditions have resulted in a lack of exchangeability between the Venezuelan bolívar and US dollar, and the inability to repatriate earnings from Venezuela back to the U.S.”
However, Patel clarified that the company remains committed to Venezuela and “will continue to provide communication services there.”
The executive said that deconsolidation resulted in a one-time charge of US$171mn.
Level 3’s VP of sales for the Southern Cone Luis Piccolo told BNamericas in September that while depreciation of local currencies is hurting the top line, the economic slowdown in Latin America is not having a major impact on business, given that its projects are long term.
THE BRIGHT SIDE
Despite the currency impact, Level 3 said it continues to grow thanks to its 15 datacenters in the region.
CEO Jeff Storey explained during an investor conference call that the LatAm datacenter offering is an “integral part” of the way customers buy other Level 3 services, which is not the case in North America.
“[North American] Customers want to buy datacenters separately…they don’t care if it’s connected to transport or long haul or any of those other services,” Storey said.
Patel said that the verticals driving growth for Level 3 globally are media software, manufacturing, automotive, healthcare and financial services.
“We see a lot of opportunity over the next years in areas like energy where we have a low market share, where energy companies are looking to save a lot of money as they transition their infrastructure,” Patel said.
LatAm netted nearly US$200bn from digital economy – Regional
The digital ecosystem – telecoms and internet-based services – generated US$195bn in revenues in Latin America from 2005 to 2013, or 4.3% of the region’s accumulated GDP growth in the period.
Those are the main findings of a study carried out by Eclac and released Wednesday at the Futurecom conference in São Paulo.
The study says operators generate around two out of three jobs and pay three times more with taxes in percentage terms than others in the ecosystem – such as the over-the-top (OTT) players.
The research was headed by Argentine researcher Raúl Katz, professor at the Columbia University, and funded, among others, by Telefónica.
According to Katz, a decline in the price of services and equipment seen in the eight-year period led the number of internet users to double in Latin America, to 47% of its population now.
Nonetheless, of the 100 most-visited websites in the region, only 26 are local. As a result, 63% of the traffic flow is international, going mainly toward the US.
The survey also presents recommendations based on workshops held in Argentina, Brazil, Chile, Colombia, Mexico and Peru with 180 experts from academia, the public sector, entrepreneurs, carriers and OTT companies.
Among those recommendations, the study mentions the development of an industrial policy for the digital sector, and carried out jointly by the private and public sectors, that would enable greater efficiency in the allocation of public resources.
According to Katz, this requires a strategic national agenda, with long-term goals focused on eliminating the digital gap in the region.
The paper also defends the giving additional spectrum to operators in order to meet the growth of data traffic expected from the development of the internet of things (IoT). The same recommendation was made at Futurecom by Óscar Leóz, head of the Inter-American telecommunications commission (Citel) linked to the OAS.
On a broader sense, the study advocates for the creation of a sort of unified Latin American digital market.
DirecTV drives up revenue for AT&T – Mexico, Regional
AT&T reported a 19% year-on-year revenue uptick to US$39.1bn in Q3 driven by the acquisition of DirecTV.
“Our early integration efforts with DirecTV are going very well and we’ve just begun to scratch the surface on the video, wireless and broadband cross-selling opportunities,” said CEO Randall Stephenson.
Net income declined to US$3bn from US$3.1bn in 3Q14 due to increasing operating expenses, which rose to US$33.2bn from US$27.4bn.
Foreign exchange rate impacted results, particularly in Latin America’s DirecTV operation. Total AT&T revenue in the region reached US$945mn, including US$581mn in Mexico.
AT&T recently deployed 4G LTE in six Mexican cities, and plans to expand its 4G LTE network to 40mn users by year-end, targeting 75mn by end-2016 and 100mn by 2018.
AT&T announced a US$3bn investment for the next three years in Mexico to build infrastructure, which the company has said is its priority.
TIM tests 3-carrier LTE aggregation – Regional
Brazilian telecom operator TIM is using technology from Qualcomm and Ericsson to offer 4G LTE via carrier aggregation technologies. The announcement was made at the Futurecom conference.
TIM is the first operator in Latin America to aggregate three different frequencies. In September, Chilean telco Entel made a trial of LTE-Advanced (LTE-A) Carrier Aggregation by combining two bands.
Carrier aggregation bundles distinct bands to enhance speed and capacity, enabling operators to bring down the cost of delivered gigabyte.
TIM is testing the combination of the 700MHz, the 1.8GHz and the 2.5GHz bands. Ericsson provides the infra while Qualcomm offers terminals powered with Snapdragon chipsets able to operate simultaneously in the three frequencies.
With that, TIM became the first Brazilian operator to effectively make use of the 700MHz bands, awarded last year for mobile broadband but still occupied by analog TV broadcasters.
TIM received a special green light from telecom regulator Anatel to test the technology in areas in São Paulo where the frequency is unoccupied, CTO Leonardo Capdeville said at a press conference.
But a massive three-band adoption will have to wait at least until 2017, when the 700MHz spectrum will start to be released across various cities.
According to Capdeville, TIM is focusing now on refarming of the 1.8GHz bands from 2G for 4G use in order to offer dual-carrier aggregation (1.8GHz and 2.5GHz) transmission in 2016. The focus is the Rio 2016 Olympic Games.
“The availability of 1.8GHz for 4G LTE will be critical to allow roaming for international tourists,” he said. Capdevile said the 1.8GHz band is the most-used band for LTE worldwide: there are 150 networks running it, compared to 86 in 2.5GHz.
In terms of reception, Capdeville said there are commercially available devices enabled for dual-band, but few for three-carrier. He said these terminals should be available in Brazil by 2017.
According to Arun Bansal, global head of Ericsson radio unit, carrier aggregation is a top priority for Latin American operators at the moment because of the need for greater speeds and more efficient use of an expensive resource such as the spectrum.
Cristiano Amon, VP at US chipmaker Qualcomm, said during a keynote at Futurecom that the three-carrier aggregation will be one of the main focuses for the company.