Telefónica Mexico extends network-sharing deal with AT&T

April 30, 2024 | by magnews24.com

Telefónica Mexico extends network-sharing deal with AT&T

Telefónica inked a three‑year extension to 2030 of a previous, eight‑year deal with rival AT&T to use its access network infrastructure in Mexico.

The original agreement was signed in 2019 as part of a network‑sharing deal that also saw Telefónica Mexico (Movistar) hand back all its spectrum licences to the government during 2022, when it completed the migration of its traffic to AT&T’s network (Telefónicawatch, #164 and passim).

The operating business (OB) now has access to AT&T’s 3G, 4G, and 5G networks while continuing to serve as an independent operator by maintaining control over elements of its own network infrastructure and platforms.

When the original deal was signed, Movistar said it would keep control of its transport network and all platforms across its operations, with exclusive control over its customer base, operational, and business support functions, including billing and pricing, and financial management, with AT&T having “no visibility or influence”.

The migration of the OB’s traffic suggests that AT&T Mexico’s network now supports more than 45.6 million customers, including Movistar’s around 24 million and AT&T’s own 22.5 million mobile connections, of which over 16.7 million are prepaid users.

During this year’s Mobile World Congress, Telefónica also said the AT&T agreement “has allowed 227 markets to be covered with LTE, which represents 83% of the national population”.

Telefónica Mexico’s Chief Executive Camilo Aya previously said the agreement, which appeared to be an unprecedented operating model in the country, was not exclusive. In 2021, the OB, along with AT&T Mexico and América Móvil‑owned Telcel, signed a “social roaming” arrangement with Altán Redes in order to expand Movistar’s reach in rural areas, leveraging Altán Redes’ access to Mexico’s 4.5G shared network, Red Compartida (Telefónicawatch, #160 and passim).

Movistar previously said it would retain its mobile virtual network operator relationships with operators including Simplii and Virgin Mobile (Telefónicawatch, #82, #107, #109, and passim). However, Simplii ceased operations in January 2021.

Transformative effect

Telefónica Mexico has already seen an improvement in its bottom line in part owing to the “transformation of the operating model”. In the 2023 financial year (FY23), the Group reported operating income for Mexico of €3m compared to an operating loss of €176m in FY22. Revenue in reported terms grew by 12.5% year‑on‑year to €1.32bn.

In FY23, Telefónica estimated its share of the Mexican mobile market at around 18.2%. The 2023 market report from regulator Instituto Federal de Telecomunicaciones said Movistar’s share of the mobile services market was 16.40% as of the end of FY22, compared to Telcel’s 60.27% share and AT&T’s 15.58%.

Mexico falls under Group division Telefónica Hispanoamérica, which has undertaken several other infrastructure tie-ups and transactions as a means to streamline operations and reduce financial exposure in Latin America.

Recently, for example, Telefónica Mexico formed a partnership with Nova Labs in Mexico that will see the OB harness the ‘decentralised’ network startup’s “open‑source” Helium Network, which is based on Telecom Infra Project’s OpenWiFi standard and uses mobile hotspots owned by end‑users (Telefónicawatch, #180).

At MWC Barcelona 2024, Telefónica Hispam reaffirmed its commitment to continue implementing mobile shared networks, “since they represent a new engine to promote the digital development of the region”.

Telefónica’s alliance models in Latin America
 Source: Telefónica.

Argentina

Telefónica Argentina has formed network-sharing alliances with American Tower, Metrotel, and SION. Together, the companies have delivered fibre to more than three million homes.

Chile

ON*NET Fibra Chile is a JV between Telefónica and KKR that is building open, neutral fibre-to-the-premises networks, passing four million households as of September 2023.

Colombia

Telefónica Colombia has signed a mobile network-sharing deal with Millicom International Cellular-owned Tigo. It also has a fibre-building JV with KKR, called ON*NET Fibra Colombia, which has passed 3.3 million households as of September 2023.

Mexico

Telefónica’s network-sharing deal with AT&T sees the former use the latter’s 3G, 4G, and 5G access infrastructure to provide services, as part of a major cost-saving drive.

Peru

Internet para Todos is the wholesale, RAN-sharing JV between Telefónica, Meta, and regional banks CAF and IDB Invest. It has connected 3.1 million people with 4G internet access.

The operating business is also creating ON*NET Fibra Peru, a fibre-building JV with KKR. As of September 2023, it had reached 2.8 million premises, and aims to build to 5.2 million by the end of 2026.

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