The latest balance of AT&T once again brought the difficulties that DirecTV Latin America brings to the telecommunications group on the table.Vrio Corp., a subsidiary that controls the satellite TV operator in Argentina and 10 other markets in the region, reported 13 million subscribers in the fourth quarter of 2019, 25,000 more than those registered in the third, but 3.7% less than in the same period of 2018.Operating income registered a decline: almost 10% less year-on-year due mainly to exchange rate complications.It is vox populi that AT&T wants to part with this business to improve its financial situation, but still does not define how it will do so. In September, the operator agreed with the Management Elliott fund (which owns 1% of the company's shares) a three-year action plan to improve profitability.Thus, AT&T undertakes not to seek new acquisitions, reconfigure its Board of Directors and transfer non-strategic assets to generate between US $ 5,000 million and US $ 10,000 million.The latter contemplates the possibility of selling the business of the telecommunications firm in Mexico and DirecTV in Latin America, although they are still only versions. That is, the American giant must get rid of everything that is not profitable or adds value to the main focus of the company (mobile business and 5G.And it has already started with its subsidiaries in Puerto Rico and the Virgin Islands, for which it received $ 1,950 million from Liberty Latin America in October. The sale includes total assets, networks and spectrum, less DirecTV subscribers and some corporate clients. The process will be completed this year.
According to data from the National Communications Agency (ENACOM), as of the third quarter of 2019 there were 9.6 million accesses of Pay TV, of which 2.4 million correspond to satellite television subscribers. The number reflects almost 76,000 fewer customers than in the same period of 2018.AudiTV data from the same quarter, included in the Pay Bureau and OTT TV Market Map of Business Bureau (BB), accounts for the following market distribution:- Cablevision: 39%- DirecTV: 31%- Telecentre: 6%- Superchannel: 5%- Movistar: 1%- Others: 18%.DirecTV has a good portion of the cake and is a very powerful option in those localities, far from the big cities, where it is not possible to arrive with fixed networks and the operators cannot offer triple play packages. However, the offer seems limited in view of future competition and the loss of customers suffered by the segment."In Argentina there is a slowdown in the hiring of direct pay TV, although not as strong as in other countries in the region," explains BB's Christian Peralta, Chief Customer Officer of BB."In the case of the operators that offer a single benefit it is even more complicated, because there is a tendency to contract package services with the same company, since, administratively and at the cost level, it is more convenient," he adds.How, then, is the satellite operator configured according to this trend and in a context in which on demand content occupies a central place and operators move forward with convergent service proposals on their own networks?"They will continue to have clients, but at some point it will cease to be profitable. It is a business model based on a technology that has an expiration date and it will be difficult to keep up," Enrique Carrier, a Telecommunications market analyst, tells iProUP."To compete with an offer of convergent services, DirecTV lacks the ground leg," adds Juan Gnius, director of Telracom, to iProUP, who adds: "To carry triple or quadruple play services you have to have wired or wireless networks. sense, the rest of the operators are better positioned. "Attentive to this difficulty, the satellite TV operator began in 2016 to shyly enter the connectivity business with WiMAX wireless options and residential fiber optic connections.In this way, he arrived with an Internet TV Pay offer to Godoy Cruz (Mendoza province) and some towns in Córdoba and Greater Buenos Aires. However, it is clearly little to compete with Telecom or Telefónica, for example.According to specialists, it will not be easy for the company to advance in the development of its own network, because it is a very expensive project in a market that already has players with consolidated networks. In addition, uncertainty is added about what AT&T plans are for DirecTV in the region.
"What is happening with this convergence is that although the contracting of Pay TV is contracting, operators have begun to include proposals such as Amazon or Netflix within their linear TV service, or have developed their own platform for streaming. These include plans to retain subscribers, "Peralta explains.Since June last year, satellite operator subscribers from Argentina, Ecuador, Peru and Uruguay can access DirecTV Go. In these countries, the OTT (acronym for Over the Top, as services are known as Netflix that require the third-party network) works as a free value-added offer for the subscriber. In Colombia and Chile, on the other hand, it is sold independently and the subscription mechanism is through a credit card."What they started to do in other countries and then in Argentina was to become an OTT. They have the contents and in addition to distributing them by satellite system, they can now also do it through the Internet. It is a way of continuing in the business of the contents but technologically packaged differently, adapted to how it is consumed today, "says Carrier.According to his analysis, in this way "they can initiate this transition, knowing that the satellites have the years counted because they propose a model of passive television consumption that has no viability in the future."The DirecTV streaming platform, which also offers live content; This adds to the offer of Claro Video, Movistar Play, Flow (Telecom-Cablevisión), Telecentro Play and Mío (Supercanal)."It is a different business, with other costs and of a different scale. It is not the same to have several satellites in the space and equipment in the house of the clients, that to happen to a model directly OTT", clarifies Carrier.According to the consultant, the company has an "advantage when it comes to consolidating content that no other operators have: it is the ability to negotiate the rights for the transmission of a European football league throughout Latin America and get them at a price that at that an operator would not access. ""There is an opportunity but the profitability of the business is also played. I think the firm has to capitalize on its know-how and contacts within the world of content to make them available in a technologically different way," Carrier completes.According to BB, households that have contracted only the pay-TV service decreased from 42% to 26% (second quarter of 2015 and same period 2019).On the other hand, those who are only subscribed to some OTT grew from 6% to 9%, while the figure for those who are paid TV subscribers and some streaming platform went from 29% to 39%."This means that the pay-TV market is maintained but leveraged by the OTT. This demonstrates the importance of operators including these platforms in their offer, because people want to access both benefits," Peralta emphasizes.Another way to arrive with its contents (without having its own networks) would be through new commercial agreements in which a company provides content, another connectivity and both benefit. In September, iPlan announced that in 2020 it will bring TV services to its fiber customers through a commercial alliance with DirecTV.In this way, iPlan Liv users can subscribe to DirecTV Go without being customers of the TV operator and access the contents of their OTT. The intention of the Internet provider is to seal alliances with other companies to offer different content streaming alternatives."The problem is that fixed networks are in urban centers or cooperatives in the interior of the country, and they work on their own content offer. However, it is a commercial strategy that can be adapted," says Gnius. .Strategic and commercial decisions will finally define what business the company will want to develop in the future: it will continue to be a satellite television operator until it starts the business or it will transform until it becomes an audiovisual service provider. The clock, meanwhile, keeps running.