People around the world have been reminded of how communication is becoming swift between individuals and businesses, even during the coronavirus pandemic, knocking a large portion of challenges, which would have otherwise not happened until after the world has resumed normalcy. This rapid advancement is owing to the development and expansion of telecommunications over the past few decades.
For Latin America, there has been an influx of investments in digital and other high technology businesses, making it a ripe market for telecom and subsea cables. It is observed that there has been a technology boom in the region with increasing data centres, telecom, fintech and ecommerce companies attracting high investments, especially in Brazil, Chile, Colombia and Mexico. Even governments across those nations have adopted new ways to increase investments. But the last one year has been truly challenging for the telecom industry despite the market growth. This has in fact stoked curiosity on how telcos are performing and what are the factors underpinning their performance during the pandemic.
Latin America and the Caribbean telecom and multichannel companies are taking measures to ease the pulsating effects of the pandemic, while continuing to offer stable facilities for customers. Chilean companies, for example, are making a headway in the region, by following a series of government-backed measures that seek to avoid service interruptions for those affected by the economic downturn.
Last year, S&P published a research which shows that the pandemic could have a lasting impact on operator revenues between 2.6 percent and 14.2 percent drop. But this was largely dependent on the intensity and duration of lockdown measures. Chile, being one of the hardest hit economies in Latin America, as well as the most connected with multichannel penetration, has developed a solidarity plan to keep 40 percent of the nation’s households well-connected.
Again, the region’s most populous market Brazil has developed a series of measures to keep the telecom industry operating during the pandemic. One of the measures includes an agreement with the largest telecom companies to address various challenges faced by customers who were unable to pay their overdue bills in installments. Along with those measures, some state governments have established partnerships with mobile carriers to use anonymous location data collected from mobile devices to monitor crowds. In fact, the Ministry for Science, Technology, Information and Communications had devised a plan to develop the project nationwide, but it was not carried out fully owing to privacy concerns.
Subsea cables are of utmost importance to Latin America’s economic growth and are expected to require over $1 billion in new investment over the next five years. In fact, the transition to 5G wireless cables will require a dramatic increase in new subsea cable construction in the region. By numbers, 90 percent of subsea cables have been developed and financed by consortia, where each owner brings their own financing. On the global front, the subsea cable market is estimated to be worth $22 billion by 2025, which has more than doubled from 2019, and might reach an estimated $30.4 billion by 2027. These subsea cables have also been financed by large commercial banks, multilateral development banks and export credit agencies that are linked to key equipment supplies and private equity funds among others.
Last June, numerous subsea cable projects were underway in Latin America. The development is not only stemming from 5G, but also the current technology boom and steady growth in the use of bandwidth, data, internet connections and telecom subscriptions. By practice, telecom subsea cables are constructed between locations with significant communications traffic. For example, Chile and Brazil already house prominent data centres and investments from major technology companies are forming major hubs in Latin America.
There was an obvious forecast that Latin America’s telecom service revenue in 2020 would significantly decline due to the pandemic, and stabilise between 2021 and 2025. With that, the key focus of this interview is to explore and understand the telecom industry in Latin America—which also points to the dynamics of the industry before and during the coronavirus pandemic.
GoldConnect was established as a wholesale telecom provider in Latin America and the Carribean. The intriguing part of this establishment was that it took place just at the right time when connectivity challenges in the region had increased and several companies were unable to meet their consumer needs. The company is anticipated to meet customers demands through wholesale connectivity. GoldConnect has already evolved as a leading telecom provider in Latin America and the Carribean, demonstrating a defined presence in 17 countries. Justo Valladares, CEO of GoldConnect, in an interview with International Finance, provides insights into the company’s growing regional presence and its continued work in uplifting the telecom industry.
GoldConnect is found to have a strong presence in the Latam telecom market. What is the length of its growing influence on the market as a disruptive connectivity provider?
GoldConnect started in 2011 with our legal name Gold Telecom Inc., to support global carriers in five countries where we have our network infrastructure. Today, we call it a hybrid network because we not only focus on our assets, but also on every other country in Latin America and the Caribbean through our extended reach with over 100 partners, 172 PoPs and capacity in more than 12 subsea cable systems.
What is the value proposition of GoldConnect and how does it add to Latin America’s comprehensive telecom service portfolio?
We are embracing technology as much as we can, from quoting to the service experience. Our internal SLA is to support our clients from a couple of hours to 48 hours tops. We are a customer-centric organization. Our DNA is always to be fast, transparent, customer-centric and innovative. If we follow this, we will make a significant impact on the market.
How is GoldConnect forging its industry experience into one of the most advanced and innovative wholesale connectivity businesses?
We have developed multiple platforms to disrupt the purchasing process in the wholesale business. Our platform has more than 20 million on-net and near-net buildings that we can search in a matter of minutes for our clients. We have access to KMZ files right at our fingertips and multiple diversity options. It has taken years of development to compile the details across the region.
Why is the partnership with Mosaic NetworX considered to be a historic deal and how will it impact the bottom line of the agent/partner community?
We looked for a strategic partner to be an expert in the US Agent community and with a similar mission. Mosaic’s incredible reputation supporting the partner ecosystem is impressive. Combining our knowledge and automation to Latin America makes it a unique partnership to provide real options for agents in the US.
What are the implications of the Mosaic NetworX-GoldConnect partnership for opening an entirely new set of capacity sales opportunities that were previously not available in the Caribbean and Latam?
Now, we are empowering agents to succeed in the challenging and underserved Latin American market by enabling them to support Latin America and the Caribbean bids with confidence, full support and information to cover every aspect of their project. Now, agents have full access to wholesale capabilities, which is relatively new for the agent community.
How has the Latin America telecom market progressed over the years and how conducive is the environment for existing and new players?
Latin America and the Caribbean remain one of the most challenging markets with very different regulations and economies to consider. Prices vary significantly between countries and reliable technology options are limited. GoldConnect filters and overcomes all those challenges for customers. We have all the data in our platform to provide reliable and complete information.
What are the persistent gaps in the telecom industry that GoldConnect has identified and seeks to address in the future?
As stated earlier, Latin America and the Caribbean are very challenging markets. The fact that you can provide complete information with competitive pricing about any project in a matter of hours is a testament to embracing automation to provide an exceptional customer experience. We understand the importance of balancing automation and personalised support. This is why we remain fully engaged with our clients through every process while we pay attention to details so our clients can concentrate on their business while we focus on the rest.
What are GoldConnect’s plans for the future in its key markets: Latin America and the Caribbean?
Latin America and the Caribbean are our markets by nature. We plan to add new solutions and services in the region and continue enabling new customer modules on our platforms. Our objective is to complement our customer’s business strategy in everything they may need. This is one of the reasons that some of our biggest customers are Latin American carriers.
On a close note, the company is recognised to be a disruptive connectivity provider and it relies on its fully owned, network infrastructure. It has built extensive partnerships to provide network solutions, cloud connection, data center services and network security in more than 40 countries in the region.
With that, it is clear that Latin America is prime for telecom developments. Brazil, especially, is expected to flourish in the telecom industry, with its recent developments. Last February, the country revised its telecom legislation to facilitate market fluidity. It has one of the largest mobile markets in Latin America, and several changes to its market dynamics were expected to take place last year. Chile, on the other hand, is also known for its advancements in telecom, with a modern infrastructure supporting a host of services in fixed-line and mobile sectors. In 2019, it was reported that one-third of Chile’s telecom investments have been put in the wireless market.
However, a lot is to be seen with the disruptions caused by the pandemic. Experts from around the region believe there are huge opportunities on the horizon using technology in the post-pandemic setting. In August, an IDC survey found that 41 percent of telco participants said they would invest in technology to close the digital gap; 23 percent said they would invest in technology to mitigate recession; 17 percent said they would invest in technology to expand their market share. Only 1 percent of the respondents said they would avoid acquiring new technology in the remaining part of 2020. However, 31 percent of respondents provided startled responses that they would accept the risks of adopting a new technology to increase their competitiveness.
For years, telcos in the region have been working with technology providers. For example, it is found that big data and analytics gives telcos the power to access customer interaction data from CRM platforms and call centres. This in turn helps them to understand customer pain points and develop remedial measures to build positive experience. However, policy makers and service providers will need to develop a new paradigm to optimise integration and growth in the region. This move will allow the business enterprises to expand into areas outside urban centres in Latin America, such as Buenos Aires, Santiago and São Paulo. Additionally, the paradigm shift will also bring new opportunities to the industry—integrating policies into a single regional framework.
Reinstating the fact that subsea cables have become important to the region also reflects the industry’s growth trajectory over the years. For the Americas, development of subsea cables have been quite prominent and steady, with four cable systems that went into service in 2017, and five cable systems were put into service in 2019. But that’s not all. Eight more cable systems were expected to move into service in 2020, and the new cable systems even included connections in Latin America. Interestingly, a new trans-Atlantic cable service has been built each year over the past five years. Chile, for example, is collaborating with Japan to build a trans-Pacific cable designating Australia and New Zealand as endpoints. It is reported that at least one new trans-Pacific cable was built each year between 2016 through 2019, while eight new projects are planned through 2022. In short, the future of Latin America’s telecom industry is poised for growth—and it could have a direct impact on the economy.