BARCELONA, Spain — Telecommunications giant Telefónica said it’s confident about the future growth potential of most of its operations throughout Latin America and the Caribbean, coming on the heels of celebrating 25 years of operations in those markets.
Speaking to a group of Latin American journalists during the Mobile World Congress 2015 event, Telefónica Hispanoamerica CEO Eduardo Caride highlighted that the growth of the middle class will continue to boost telecom consumption, though he did not provide any forecasts of Telefónica’s expected growth in the region. Caride did note that the increased consumption of mobile broadband services is a reality and claimed that governments should embrace policies to encourage broadband deployment.
Telefónica based its statements on 2030 projections from international institutes that show the middle class – those living on between $10 and $50 per day – will represent almost 45% of the region’s total population by 2030, jumping from near 25% in 2005. “The region continues to have great opportunities of growth, and telecommunication services grow together,” Caride noted.
Talking about potential investments, Caride disclosed that the company’s operating interest before depreciation and amortization margin in the region has been around 30%, with Telefonica using between 15 and 20% of the total to make investments in the operations. “Since Telefónica has begun in the region, it has invested a total of 125 billion euros.”
When asked about why both network income and OIBDA had decreased in 2014, Caride explained that performance was impacted by currency exchanges, “but countries have grown organically.” Telefónica posted a decrease of 34.7% in its net income for 2014, while OIBDA dropped 18.7% compared to the previous year. Counting Telefónica’s Hispanoamerica markets, OIBDA dropped 26.5% year-over-year, with Telefónica Brasil dropping 10.1%.
Challenges ahead
Telefónica started operations in the region in 1990, with its first launch in Chile, followed by Argentina. Currently, the Spanish company is the No. 2 telecom group in Latin America and the Caribbean, counting 227.2 million connections, double that of its European (Spain, Germany and U.K.) operations where Telefónica counts 113.6 million connections.
The challenge ahead for Telefónica — and it’s not only about LatAm — is to keep the business growing while the telecom market faces drastic changes. This includes a big push into greater use of digital services in order to improve network efficiency and financial performance.
Telefónica set an 18-month program to turn itself into a digital telco. “We have several solutions launched [as a result of this strategy]. In the region, we aimed at increasing digital services by 25% and we surpassed this landmark,” Caride told RCR Wireless News.
Editor’s Note: Celistics paid for travel costs to Barcelona.
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