Alfonso Gomez Palacio, CEO of Telefónica Hisbam: “The economy is starting to recover, but Argentina still faces many challenges”

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Alfonso Gomez Palacio, CEO of Telefónica Hisbam: “The economy is starting to recover, but Argentina still faces many challenges”
Alfonso Gómez Palacio, CEO of Telefónica Hisbam

From Santiago de Chile – “The economy, the macroeconomics, is starting to recover, and that’s exciting, but the country still faces many challenges. There’s a sense that doing will pay off. There’s hope in what’s happening in Argentina,” he said in the conversation. Infobay Alfonso Gomez PalacioCEO of Telefónica Hispam.

The fourth edition is headed by a Colombian executive who commands the operation of the Spanish telecommunications company in eight Latin American countries: Argentina, Chile, Uruguay, Colombia, Peru, Ecuador, Venezuela and Mexico. Hisbam Digital ForumThe regional event is currently taking place in the nerve center of the city, at the Telefónica Tower in the Plaza Bagudano in Providencia, now renamed the Movistar District.

This year, Telefonica turns 100 years old. It is one of the largest telecommunications companies in Argentina, along with Telecom and Claro, and the protagonist of an industry in the middle of a government-promoted “deregulation” process. Javier Miley. For example, a few days ago, Decree 690, which he signed, was revoked Alberto Fernandez It declared telephone, landline and mobile, internet and cable television services public by the end of 2020, and established that all price increases must receive government approval. The move, which was highly questioned by companies in the field and had almost no tangible effect amid the preemptive measures brought to justice, was finally repealed. Now, this increase is borne by the private sector.

Five years ago, at the end of 2019, Telefonica announced a strong restructuring of its business and proposed to “gradually reduce exposure to Hisbam”. There was even talk of selling operations (except for Brazil, which they put as a priority market), which they then ruled out.

At the local level they have a total of 17 million customers, and as part of this regional transformation they have moved forward with new business models such as partnerships with other companies, like the AT&T Mobile Network in Mexico; and deployments of fixed fiber optic networks in Colombia and Chile, with US fund KKR as a financial partner.

The Hisbam Digital Forum takes place in Chile on Tuesday and Wednesday

Telefonica emphasizes the idea that “everything is done with communications” these days. And it’s trying to get other giants to “use” it and start pushing its services into their networks. This is “the” central debate occupying telecommunications companies worldwide.

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Thus, three generals say that Gómez Palacio outlined in this Hisbam Digital Forum They called for the creation of a new structure with more regulations, the elimination of outdated regulations and modernization “which would allow us to reduce the burden faced by the industry by eliminating asymmetries with competitors”; Create shared infrastructure models to save costs and efforts; And, as noted: “The contribution of all actors in maintaining networks.” At this point, the review OTT (services more, or run on telecommunications networks), but three in particular generate 85% of traffic in the region: Meta (Facebook, WhatsApp and Instagram), 58%; According to a recent survey by the GSMA (a continental body made up of major telecommunications companies), Google, 17% and TikTok, 10%.

“Use networks wisely. We all have to contribute to making this industry sustainable,” summed up the regional CEO.

– You talked about the challenges facing the country, specifically what would they be?

– The equation for the telecom industry is to deploy infrastructure in the long run, which should be profitable in the long run. At the start of this deployment, Argentina already has challenges with imports. We want to do things fast. Transfer issues also affect the dynamics of the sector. In Argentina we have one indicator that we are proud of: it is our most digitized operation.

— Still having trouble importing?

– It is being normalized and we see that there is an intention to continue on that path, but the dynamic brings a gap and the previous load remains.

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— Has Argentina’s economic environment changed to examine new investments with some of the strategies being carried out in other countries in the region?

We never stopped investing in Argentina. Over the years we have made capital expenditures to get more homes with fiber optics access. Fiber optics has about 1.3 million customers, the same in Colombia and Chile. Argentina maintained the rhythm and we did it with lungs. We do not follow the models of Chile, Peru and Colombia, but partner with other companies to deploy more, better and faster on fixed and mobile networks. If the conditions are met, we can evaluate other investment strategies.

The Colombian executive spoke with Infopay at the Telefonica Tower in Santiago

— The present government presents itself as deregulation and one of its first steps is to revoke Decree 690. What other changes are you looking forward to?

The regulatory framework that existed in this industry 15 years ago has changed. Technology is powerful, but so is society’s behavior, which makes rules obsolete. The current regulatory framework is for a market consisting of copper cables and ADSL, technologies that have nothing to do with existing ones. We need fewer rules, more customer-centric with a focus on security, long-term and less transactional. Argentina is reviewing regulations; From our side, we need legal certainty and stability.

— Is there room for new mobile operators in Argentina?

— There is no recipe that works for all countries, but having multiple operators does not always create a stable and sustainable environment in the long run. This is one found in Chile. Competition in Argentina is very high, and customer turnover is incredible. The regulator must balance the levels of competition and coverage. The Latin American board showed some alarm, such as Brazil, which went from four operators to three. There are also alarms in Colombia, Chile and Panama. Things are happening that didn’t happen before and the industry needs conditions of financial stability.

“Argentina is reviewing the regulations. From our side, we need legal certainty and stability”

There has been a sharp drop in consumption and Argentina’s wages are deteriorating, how is that affecting business?

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— We have a portfolio of products and services that allows each customer to adapt to their situation. We strive to provide you with the best equation. At different times the trend is more to go for prepaid or more limited plans. It’s also true that we’re integral to our customers’ lives, and we’re embedded in society. We live these cycles with clients. It happened in the pandemic too.

— Beyond context, like in Chile, do you want the business in the country to have a financial partner?

-If that happens, we manage an industry that wants to share because there is a regulatory framework that allows us to attract capital. Of course I want to have a financial vehicle that supports and accelerates fiber deployment.

“Competition is very high in Argentina, customer turnover is incredible”

– Now there is an incentive for large investments, which are not telecommunications, but rather technical problems.

– It might have been so. We invest, but we can put energy into that investment. Everything should be put in its place and follow the macro.

– Are you making any specific proposals for regulatory changes to the government?

— We have a multi-pronged institutional and regulatory agenda such as connecting unconnected and rural internet issues. We are talking with Enacom, we have a fluid dialogue and we are very active, but we are not leading a comprehensive change of structure as the country is reviewing.

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