Telefonica losing Pay TV share in key Latin American markets

Monday, December 9th, 2013 
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BUENOS AIRES, Argentina — Spanish group Telefónica, which has leveraged its Latin American operations in recent years to help compensate for poor performance in its economically-troubled domestic market, is struggling to keep up with the growth rates of rival operators in the region, according to new research from Dataxis.

Telefónica has gradually been losing market share in both high-speed internet access and pay television – two of its key communications services in South America, where it also operates fixed and mobile telephony networks. Between December 2009 and March 2013, the group’s residential broadband operations have seen market share fall by 9 percentage points in Brazil, 5.2 points in Peru, 5 points in Chile, 2.6 points in Argentina and 1.9 points in Colombia, according to Dataxis.

In the pay-TV business, which Telefonica addresses through multiple satellite (DTH), cable, IPTV and OTT systems, the company has seen its market share diminish from 5% of total Latin American subscriptions in 2007 to 4.4% by June 2013. 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 Telefonica’s long-term ambitions in Latin America,” said 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, Telefonica 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 America Movil (both in pay TV and broadband). Even new entrants such as Millicom are starting to eat into Telefonica’s pay-TV and broadband market shares,” Conti added.

A key reason behind Telefonica’s modest growth rate in Latin America is its strategic decision to deploy broadband and pay-TV services only in the geographic areas of 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 (the Movistar DTH pay-TV service in Venezuela), Telefonica has enjoyed the fastest growth rate for any of its multiple telecommunications services deployed anywhere around the world.