CANTO Weekly Newsletter – BNamericas

Study: 4G faster than WiFi in many LatAm countries – Regional

Telefónica offers Cuba submarine cable investment – Cuba

Why Entel is not pursuing Telefónica’s assets – Regional

Multi-cloud services from the land of crisis – Regional

4G networks are already darting past WiFi land-based connectivity in terms of download speeds in many Latin American countries, and mobile broadband will become even faster with the deployment of 5G over the next few years, according to a study by connectivity consultancy Open Signal.

The study found that in the region, Bolivia, Colombia, Costa Rica, the Dominican Republic, Guatemala and Mexico currently experience faster speeds both on download and upload links using mobile networks rather than WiFi.

In Argentina, Chile, Paraguay and Peru uploads were faster via mobile, while in Ecuador downloads were faster. Only Brazil had WiFi as the faster connection for both upload and download.

“In 33 countries, or 41% of those analyzed by Open Signal, mobile delivers a faster download experience than Wifi,” the report said.

4G networks, specifically, were up to 16Mbps faster than WiFi in Ecuador, 12.6Mbps faster in Bolivia and 10.3Mbps faster in Guatemala, the report added. In larger countries with more infrastructure development, the speed gap was less noticeable but reached 9.3Mbps in Colombia, 8Mbps in Mexico and 4.5Mbps in Brazil.

The report cited the difficulty in obtaining infrastructure building permits – a common problem in Latin America – as well as design decisions by smartphone manufactures, among the reasons for the gap.

“It’s easier and usually cheaper to roll out new cellular standards fast and improve cell site backhaul than it is to run fiber to every premise to enable faster WiFi internet access. Laying new fiber often requires special planning permission, and requires a significant amount of labor to lay in existing ducts or poles, and often requires new digging.”

Regarding phone design, the study added that manufacturers have de-prioritized WiFi antenna development in more modern devices, and that many phones do not work on the faster and usually less cluttered 5GHz WiFi spectrum, thus resorting to the 2.4GHz band that WiFfi shares with everything from old cordless home phones to garage remotes.

And with several countries across the region looking at the first deployments of 5G technology in the next couple of years, the trend toward faster mobile will intensify. Both operators and device manufacturers will have to rethink indoor mobile coverage and automatic WiFi selection, a holdout from an era when WiFi was assumed faster.

“The pace of innovation is faster in the mobile industry than in almost any other industry. This will continue with 5G rollouts which help mobile to leapfrog the experience of Wifi in countries where operators are slow to roll out full fiber to the premise connections because of capital cost concerns or logistical issues such as planning approvals,” it said.

Telefónica offers Cuba submarine cable investment – Cuba

Spain’s Telefónica is offering to connect Cuba to its international cable network to improve connectivity in the nation.

The announcement was made during an official visit by Spanish president Pedro Sánchez, accompanied by a business delegation that is exploring investment opportunities, as reported by international press.

The news comes amid reports that Telefónica is considering selling its Mexico and Central American assets.

In 2014, US tech giant Google was reported to be considering a submarine cable linking the island – which was again reported this month.

However, in June, Cuba’s then deputy communications minister (now minister), Jorge Luis Perdomo Di-Lella, told BNamericas that talks between Google and the Cuban government were designed to improve the positioning of Cuban content on the internet using the Google Global Cache (GGC) and were not related to building communications infrastructure in the country.

Cuba’s main international connectivity comes from the Alba-1 submarine cable, which runs from Venezuela to Cuba and Jamaica. It was built by Venezuela-Cuba joint venture Telecomunicaciones Gran Caribe (TGC) and activated by Telefónica in 2013.

In February this year, satellite company SES announced it would provide service to the island giving Cuba much-needed communications redundancy.

According to a report by Infobae, Spain is the third largest trading partner with Cuba after China and Venezuela with annual trade of US$1.3bn in 2017.

“We are the island’s principal European trading partner,” Sánchez was reported as saying.

With Venezuela’s economy faltering, Cuba also saw a lucrative contract with Brazil canceled last week, pulling out 8,300 doctors from working in remote regions of Brazil after president-elect Jair Bolsonaro demanded contract changes to the program created in 2013. The program reportedly brought US$400mn to Cuba per year.

Why Entel is not pursuing Telefónica’s assets – Regional

Chilean telco Entel has denied that it is interested in acquiring Telefónica’s assets in Mexico and parts of South and Central America.

The statement came in response to a Spanish media report citing Entel among potential bidders for the Spanish telco’s assets. Other supposedly interested parties mentioned were Millicom, Liberty Latin America and AT&T.

The sale of the Mexico unit could reportedly fetch up to 2bn euros while the sale of 60% of its operations in Costa Rica, Panama, Guatemala, Nicaragua, El Salvador could reach 700-800mn euros.

Whether Telefónica plans to sell those assets remains to be seen. Despite the lack of confirmation, the company has been seeking ways to reduce its debt burden and has been frustrated by its inability to grow its market share in Latin America’s second-largest economy, Mexico.

The Spanish giant has also experienced difficulties repatriating profits from Venezuela, a crisis-stricken market that is becoming a liability.

A different media report last week said that US investment fund Cerberus Capital Management could be a potential candidate to acquire 40% of Telefónica’s underperforming Mexican assets as well as part of Telefónica’s Hispam Norte division, which includes Central America, Colombia, Venezuela and Ecuador.

In response to the most recent speculation, Entel said: “The company’s strategy is focused on maintaining its industry leadership, which is based on consolidating itself as a relevant player in Peru and Chile and in growing its residential services both wireless over 4G and 5G and wired over fiber optics as well as corporate IT services over fiber.”

WHY ENTEL IS AN UNLIKELY CANDIDATE

The speculation that Entel might be a potential candidate for Telefónica’s operation appears to be based purely on the assumption that Entel’s expansion in 2014 into Peru means the Chilean telco is seeking other expansion opportunities. The reality is that that expansion was more of an opportunistic move when the failing operations of Nextel came up for grabs.

That’s not to say Entel hasn’t been successful. The company has grown quickly in four years to an 18% market share and 7.4mn clients in the third quarter.

But a close look at Entel’s balance sheet shows how the enormous investment needed to build out Peru has negatively impacted the company’s earnings. That has combined with heavy subscriber losses in Chile from heightened competition.

The company posted a 5.3bn peso (US$7.82mn) loss in Q3, while revenues were flat. Meanwhile capex was up 12% in the first nine months of the year to 236bn pesos.

The company has announced investments of US$480mn for Peru by 2020. While the subscriber trend has been positive in that market, the company saw a net subscriber loss in number portability in October, suggesting the fast growth may be waning. And that is combined with falling prices due to competition in both Chile and Peru.

In other words, don’t expect Entel to expand further afield in the short term.

OTHER CANDIDATES

Millicom and Liberty Latin America are much likelier candidates. Both are regional players with an established presence in Central and South America and, in Liberty’s case, throughout the Caribbean.

The two telcos have been strengthening their presence in recent months – Millicom through the acquisition of Cable Onda in Panama and Liberty with Cabletica in Costa Rica – and expressed their intention to continue an inorganic strategy.

Most importantly, both have their debt under control and are growing.

With regards to other potential candidates, América Móvil is already present in all the markets that Telefónica could potentially be selling, and would therefore come up against regulatory obstacles.

AT&T has established a strong presence in Mexico and could be looking at other Latin American markets.

Digicel, an established player in the Caribbean and parts of Central America, is facing its own debt crisis.

Multi-cloud services from the land of crisis – Regional

Cloud services provider Cibersys is looking to break the resistance of small and medium enterprises to relinquish direct systems ownership. It does so via a mixture of affordable, tailored solutions and a focus on customer service across its Latin American and Caribbean footprint, CEO Víctor Márquez told BNamericas.

The company also takes cues from its 2010 origins as an ISP provider in crisis-hit Venezuela to think outside the box in financial and customer support matters, the executive, added, as it looks to offer its flexible “Global Datacenter” solutions to the sector.

“We have become a virtual telecommunications operator,” Márquez said. “Thanks to our commercial interconnection agreements with other operators, we can offer competitive internet services without having to build infrastructure.” But as prices in the internet access market are approaching zero, the company has diversified into new markets, keeping close to the concept of virtual services.

As opposed to large datacenter operations such as Kio Networks, he said, his company can sort through several datacenter options both in-country and abroad, and different levels of service and security, to arrive at the package most suited to individual clients. With this approach Cibersys is taking after disruptive business models such as Uber or AirBnB, for which infrastructure ownership takes a backseat.

SE HABLA ESPAÑOL

Another advantage of hailing from a crisis-ravaged country is that the company has learned how to cope with financial crisis, exchange rate fluctuations wreaking havoc on cost structures and even the fact that after spending much money on training and certifying key personnel, many companies see those employees snatched by better-paying players in more developed countries.

The company also takes pride in offering its virtual customer support solutions in Spanish, bypassing the need for clients to have bilingual staff to deal with IT problems.

“Our natural market, and where we are offering our services is in the small and medium (SME) sector. A SME is a bit on limbo between doing nothing and having to invest a ton of money to reach the level it needs for its operations,” Márquez said.

Adoption of cloud architectures is sometimes a matter of survival, he explained, as proved by Mexico’s devastating 2017 earthquake, which in the case of one client led to bankruptcy as the company had invested heavily in a datacenter that ended up buried under a building’s rubble.

Cibersys, he added, is also partnering in Mexico with telecoms operator AT&T, one of the leading developers of IoT solutions, “that will allow us to offer services connectivity with a SIM card on a very small piece of equipment not just in Mexico but across Latin America.”

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