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LatAm_latam 09/07/2014 17:31 Page 10 MARKET FOCUS igital TV is finally taking off in Latin America – from only 18.1% penetration of TV households at end-2010 to just over the halfway mark by end-2014 and onto 94.5% by 2020, according to a new report from Digital TV Research. To put it another way, 132 million digital TV households (in the 19 countries covered in the Digital TV D Digital TV is tipped for significant growth in the LatAm region. Here is Advanced Television’s overview of the sector and its prospects. Latin America report) will be added between 2010 and 2020 to take the total to 157m. DTT will provide half of the additional digital TV homes to be added between 2010 and 2020. DTT drives digital TV in Latin America According to Simon Murray, principal analyst at Digital TV Research, much of this growth is being driven by satellite TV, especially lower-cost and prepaid packages, “although these subscribers are forcing down average ARPU figures,” he advises. Nearly 14.4m pay satellite TV households will be added between 2013 and 2020, with 3.1m more in 2014 alone. Pay satellite TV penetration will grow from 9.6% in 2010 to 21.1% by end-2014 and onto 25.8% in 2020 – indicating that much of the fast growth has already taken place. Pay satellite TV is the leading digital platform, but primary FTA DTT will (cont. page 16) Latin America profiles TV households (000) 2010 2013 Argentina 10450 10927 Brazil 60341 61549 Chile 4970 5166 Colombia 11850 12391 Mexico 26103 27301 Peru 4140 4380 Venezuela 6446 6745 Source: Digital TV Research Telefónica losing broadband and payTV share 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 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 14 LATAM Briefing 2020 12128 69736 5655 13752 30300 4997 7486 Digital (000) 2010 2645 9419 1653 1399 6382 458 1493 TV households 2013 5190 31469 2413 3076 13776 929 3366 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 Telefónica 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 2020 11824 68551 5486 12542 28330 4073 7224 Pay TV households (000) 2010 2013 2020 7193 8196 9181 9769 18175 29777 1929 2557 3433 3509 4662 6010 10072 14732 21089 1015 1279 2199 2551 4223 5854 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 Telefónica’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, Telefónica might at first sight appear to be benefiting 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 Pay TV (000) 2010 1606 3252 725 738 2900 198 762 revenues $m 2013 2091 7173 872 1123 4750 301 1208 2020 2334 9544 1071 1458 5694 445 1470 new entrants such as Millicom are starting to eat into Telefónica’s pay-TV and broadband market shares,” Conti added. According to Dataxis, a key reason behind Telefónica’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), Telefónica has enjoyed the fastest growth rate for any of its multiple telecommunications services deployed anywhere around the world.