Is Telefónica closer to becoming a Brazilian 'fintelco'?
With a considerable proportion of the Brazilian population still on prepaid or hybrid mobile plans and having no bank account with scant access to financial services, a telecom operator leveraging its customer base to improve bankarization seems a natural move.
Estimates are that 45mn Brazilians don’t yet have a bank account and have no access to credit. According to Brazilian banking association Febraban, there were 155mn current accounts and 168mn savings accounts active last year in the country.
With that in mind, Spanish telecom group Telefónica is carrying out pilot tests of Vivo Money, a service that offers personal loans of 1,000-30,000 reais (US$250-US$7,500) provided by Banco Digio and offered in partnership with Ibi Digital.
“We're planning to do something more concrete next year. We want to leverage on the footprint that we have as a company whose channels reach many places where other companies don’t. And we have a very strong brand that gives a lot of credibility to customers who want to borrow money,” Telefônica Brasil CEO Christian Gebara said in a call with analysts.
Such a move has already been mentioned publicly by various Telefónica executives in recent months and follows similar initiatives in other markets where the group operates.
In Germany, Telefónica’s O2 has partnered with various financial institutions to offer a range of financial products such as investments and credit.
Meanwhile in Brazil, Vivo expects to leverage on its base of 73.8mn clients, of which 31.5mn are prepaid users. However, Vivo Money will not be the only fintelco bet the company makes.
“We see other opportunities in the fintech arena. Vivo Money is just one of the initiatives and we also plan others for other verticals,” said Gebara, hinting at new launches in education, healthcare or entertainment.
CAPEX
Telefônica Brasil invested 2.4bn reais (US$601bn) in Q3, up 1.6% year-on-year and in line with full-year guidance. Investments were primarily focused on FTTH implementation and expanding the firm's footprint.
Fiber investments grew by 25% in the first nine months of the year and 4G/4.5G capex was up 45% in the same period.
The company’s fiber-to-the-home customer base grew 34% year-on-year in Q3 and FTTH revenues rose 44.5%, as fixed broadband customers continue to migrate to fiber connections.
For the first time FTTH, FTTC, IPTV, Data & IT revenues surpassed those of legacy networks (voice, xDsl cable and DTH) and represented 51% of the company’s fixed revenues in the quarter.
According to Telefônica, FTTH ARPU is 27% higher than FTTC and 36% higher than xDSL.
FTTH was launched in 33 new cities as of September, already surpassing the total of 30 cities launched in 2018, the company reported.
Meanwhile, data consumption continues to rise and 4G data already accounts for 71% of total traffic, improving the firm's ARPU.
The company’s growth of 2.6% in total net revenues was the highest seen for three years.
AMERICAN TOWER’S FIBER BUILDING AND FRANCHISING
To accelerate its fiber expansion with reduced capex and time-to-market, Telefônica announced a partnership with American Tower Corporation (ATC), which will be responsible for building and operating homes-passed (HP) with fiber for the telco.
In turn, Vivo will be responsible for connecting customers' premises under the Vivo Fibra brand and paying certain costs associated with that back to American Tower, explained Gebara, who declined to disclose additional details of the business model at this time.
The goal with the outsourcing approach is to reach 40 new cities in Minas Gerais state alone, where works will be focused, with an estimated 800,000 homes passed in three years.
In parallel with this partnership with ATC, Telefônica Brasil also announced a franchising model for fiber rollouts.
In this format, the franchisee builds and operates the network and manages the customer relationship, selling through Telefónica’s Terra brand.
Vivo will provide the knowhow, brand, backbone, call center and scale with suppliers, among other things. The franchisee is responsible for the capex for homes passed, with the financial model based on a royalty fee on gross revenues.
According to the executives, the first franchises have already been sold, with initial delivery expected in 2019. The objective is to target neighborhoods and cities where Vivo currently does not provide ultra broadband services.
As for an infrastructure-sharing deal with rival TIM, Gebara said the group is postponing its MoU with the company for 60 days to reassess the potential synergies, particularly regarding the connection of small cities.
“We will make more and more partnerships on different fronts,” he said on the call.
DIGITIZATION IN BACK-OFFICE FOR COST SAVINGS
The company also continues seeing room for cost reductions through simplification and digitization.
As an example of that, Vivo is now making automation more proactive, using robots not only to respond to customer queries via chatbots, but also to contact customers.
The robots are being used to contact customers whose bills are overdue and is thought to be generating positive results already in terms of assertiveness and responses.
Bots are also contacting customers through WhatsApp (AURA) to schedule and confirm technical visits, reducing back office and call center expenses
Meanwhile, the company reached 65% e-billing penetration (+24% YoY) and 51% of payments are made through online platforms.
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News
Chile invites private sector to boost lithium production
After months of uncertainty, the government said it will invite private sector players to help develop Chile's lithium sector.
Peru's La Libertad region promoting US$900mn in private sector infra investments
There are currently 47 projects involving investments of US$911mn to be developed in collaboration with the private sector in La Libertad, accordin...
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Wastewater treatment plant in Trujillo (PTAR Trujillo)
- Current stage:
- Updated:
1 day ago
- Project: Caldeira
- Current stage:
- Updated:
10 hours ago
- Project: Burica hydro
- Current stage:
- Updated:
1 day ago
- Project: Energía Sierra Juárez wind complex
- Current stage:
- Updated:
2 days ago
- Project: New Trauma Hospital in Tegucigalpa
- Current stage:
- Updated:
2 days ago
- Project: La Navidad
- Current stage:
- Updated:
16 hours ago
- Project: Salinas
- Current stage:
- Updated:
15 hours ago
- Project: Cosigüina volcano geothermal project
- Current stage:
- Updated:
16 hours ago
- Project: Incorporation of the Energy Storage System in the Sol del Desierto Photovoltaic Park
- Current stage:
- Updated:
2 days ago
- Project: Cimarrón wind farm (Energía Sierra Juárez wind complex)
- Current stage:
- Updated:
2 days ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Etermar Sucursal Perú  (Etermar Perú)
-
Etermar Peru is the local branch of the Portuguese maritime engineering and construction company Etermar. The company began operations in Peru in 2017. Etermar provides services...
- Company: Pluspetrol Bolivia Corporatión
- Company: Energía 2000 S.A.  (Energía 2000)
-
Energía 2000 S.R.L is a company based in Dominican Republic and engaged in generation and sale of electric power. The firm is in charge of Manzanillo Power Energía 2000 thermoel...
- Company: Summit Nanotech Corporation  (Summit Nanotech)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: Grupo CRCC Chile
- Company: Andes Solar SpA  (Andes Solar)
-
The description included in this profile was taken directly from an AI source and has not been edited or modified by BNamericas researchers. However, it may have been automatica...