Pay TV America
MADRID – Telefonica, Europe’s second biggest telecom, will expand pay TV services across Latin America in 2016 as it continues to invest in content to drive higher-value customer base upgrades, Telefonica suggested Friday at a full-year 2015 results presentation in Madrid.
Featured in a bullet-point presentation, the plans were not explained in detail at an analysts’ conference call. The confirmation comes, however, a week after Paris-based media giant Vivendi announced it was in advanced discussions with Telefonica to launch a mobile first video services across Latin America this fall.
“Telefonica’s content presence remains limited still so its needs a partner to complement what they need and Vivendi looks like a logical fit, ” one analyst said.
Underscoring continued recovery in sales, Europe’s second biggest telco saw total consolidated 2015 revenues hit €47.2 billion ($52.2 billion), up 4% on 2014.
Full-year Telefonica core profits were €11.4 billion ($12.6 billion), an increase of 3.6% on 2014 but dragged down by depreciation of local currencies in Latin America. Net profits fell to €2.7 billion ($3.0 billion), hit by one-off costs.
The Latin American pay TV rollout is consistent with Telefonica’s content drive in Spain, one of its three key markets, along with Germany and Brazil, and a centerpiece to its digital age strategy.
In December, Telefonica paid $830 million for a weekly Spanish Liga soccer game featuring either Real Madrid or Barcelona soccer club, to slot into its El Partidazo primetime slot. It has coughed up €2.4 billion ($2.65 billion) to pay Spanish conglom Mediapro rights to European Champions League soccer matches and Spanish Liga games from September for the next three soccer seasons.
Asked if its content drive diluted margins, Telefonica CSFO Angel Vilá answered that the company’s convergence process in Spain dates backed to 2011, when it drove into fibre optic network deployment to create speed and capacity. “The second wave of data monetization, when you have in place this robust fibre structure, is about value-added services, and the main value added service is video. It’s the crucial component to drive up data consumption in this new world.”
Content costs would be offset, also, by regulation-required wholesale sales of much content to rivals, and cost-containment at Telefonica in Spain via a voluntary early retirement scheme, Vila added.
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