Alliances to connect Latin America: the future lies in cooperation

Telefonica’s commitment to the take-off of digitalization in Latin America is progressing steadily under a new model of strategic alliances. This spirit of cooperation is essential to face the challenges of the digital divide and the deployment of new networks.

Man in a wheat field
  • Mario Coronado

    Public Affairs Director Telefónica Hispam

  • Miguel Calderón

    Director Strategy & Public Policy Positioning Telefónica Hispam

6 min

The current COVID-19 pandemic has boosted global digitalization like never before. It has also made it possible to highlight the various connectivity challenges the regions face. In the case of Latin America, the greatest future needs are: fibre deployment and rural coverage. However, the challenges of uncertainty and the difficulties of the industry in the region require alliances that allow working together for the development of Latin America.

Digitalization is at the core of countries’ economies and development, so the lack of internet connectivity reduces opportunities for social and economic progress. In Latin America and the Caribbean, at least 32% of the population living in rural areas, around 77 million people, still do not have internet access. This gap reveals that it is essential to work together to close the digital divide and foster equal opportunities in the region.

In this regard, as demand for services increases, many countries (companies and regulators) are contemplating the need to incorporate more flexibility in their management frameworks for infrastructure deployment and spectrum use. This is in order to connect the unconnected and contribute to bridging the digital divide.

While sharing is not a new concept and has been used historically, new sharing frameworks are emerging that allow for more dynamic and coordinated shared access over scarce resources such as fibre and radio spectrum. Since access to such resources is often allocated through individual licenses that provide exclusive access, recent sharing models are making full use of these resources by allowing additional users to access them. Telefónica strongly believes in this approach and is making it a reality in Latin America.

A system based on partnerships between different agents offers a new innovative business model that can address this situation, redirecting capital flows for the creation of new network sites and fibre deployment in Latin America

In this way, Telefónica presents itself as a digital ally to connect Latin America through solutions adapted to the region.

Our journey in the partnership system

Perú

In 2019, Telefónica took its first steps in the partnership system with the Internet for All (IPT) initiative promoted by Telefónica, Facebook (now Meta), IDB Invest and the Development Bank of Latin America (CAF). Through the use of technological innovation, IPT proposes a model of open technology and shared infrastructure that makes it possible to accelerate the expansion of the mobile operators’ network to the most remote and rural areas of Peru. In this way, this initiative has a multiplier effect that will reduce the digital, social and economic divide.

Mexico

In 2020, Telefónica signed an agreement with AT&T Comunicaciones Digitales to use its infrastructure for at least eight years. AT&T Mexico will also provide wholesale access services to the operator, allowing it to provide the same services to its costumers while innovating and improving quality.

In addition, this alliance contributes to the sustainability goals of Telefónica and the telecommunications sector in Mexico through improved energy efficiency.

Chile

In 2021, Telefónica and KKR promotes the creation of the independent company InfraCo with the objective of operating Chile’s first open access fibre optic network (FTTH). This agreement will contribute to a substantial expansion of access to its fibre optic services and, given its open and neutral business model, will increase market efficiencies that will benefit end users in the country.

Colombia

In Colombia, Telefónica has formed a new alliance with Kohlberg Kravis Roberts (KKR) to introduce ON*NET Fibra to the market. The new partnership between the operator ant the investment fund will bring the benefits of ultra-high-speed internet access to more homes and businesses in Colombia.

KKR is a US-based multinational investment fund and venture capital firm with extensive experience in wholesale fibre optic business platforms, providing Telefónica with its extensive expertise in fibre deployment and the multinational’s digital infrastructure. For its part, the operator will provide its networks so that high-speed internet services can be offered to customers.

ON*NET Fibre bills itself as the nation’s largest independent national open access fibre-to-the-home network. The company plans to expand the existing fibre coverage of homes by the ed of 2024 with more than half of them comprised of underserved areas outside of high-income urban areas. The rollout of this network is characterized by the use of computing-edge technology to offer its users greater coverage, faster connections and improved quality.

Telefónica's proposal to connect the unconnected

Latin America faces great challenges, one of which is the need to reduce the social divides in the region through a digital transformation with opportunities for all. Our goal is to ensure that the Latin American population can enjoy the opportunities and advantages of digitalization, regardless of where they live. To this end, connectivity is key.

Networks are the central nervous system of the digital economy, which is why we need new business models to drive their deployment. The system of alliances promoted by Telefónica presents a sustainable and innovative model for bridging the digital divide. The winners will be the people and the digitalisation process in the region.


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