Telefónica’s Latin American fixed business is reducing its capital expenditures into fiber deployments in Brazil, Chile, Colombia, and Argentina by leveraging co-investment deals with American Tower, Andean Telecom Partners (ATP), a portfolio company of Colony Capital (with funding shared between Digital Colony Partners I and Digital Bridge), and Phoenix Tower International’s subsidiary Phoenix Fiber.

Overall, these agreements are similar in nature to Telefónica’s more broadly announced and recent fiber-to-the-home (FTTH) partnerships. Firstly, Telefónica and KKR are expanding fiber coverage in Chile through a deal announced in February 2021. Secondly, in March 2021, Telefónica and CDPQ formed FiBrasil, a joint venture that will fund future fiber deployments in Brazil.

Below we highlight select details on Telefónica’s approach to fiber in Latin America. In particular, Telefônica Brasil (Vivo) is used as a case study to outline the company’s strategy in the region.

Fiber Deployment – Telefónica’s Business Models

Telefónica is structuring its fiber deployments into three different categories. Using Brazil as an example, these categories include:

  • 1st Tier: cities where Telefónica deploys fiber entirely with its own capital expenditures
  • 2nd Tier: cities where Telefónica forms joint development agreements with companies like American Tower, Andean Telecom Partners (ATP), and Phoenix Tower
  • 3rd Tier: smaller cities (<60k population) where Telefónica uses a franchise model, through its Terra brand, powered by Vivo Fibra

Telefónica’s three-tier fiber deployment structure allows the company to expand its fiber network faster and with more capital expenditure efficiency. This is because Telefónica’s partners invest, from their own balance sheets, all or part of any incremental fiber-to-the-home (FTTH) passings. Subsequently, Telefónica is responsible for connecting the customers with its fiber broadband services.

Joint Development Agreements – American Tower, ATP, Phoenix

To-date the company has launched 25+ cities with joint development agreements. In this business model, fiber capital expenditures are split between the partner (e.g., American Tower) and Telefônica Brasil (Vivo).

American Tower

Telefónica has a joint development agreement with American Tower to extend its fiber-to-the-home (FTTH) network to 40 new cities in the state of Minas Gerais. Specifically, this agreement spans a 3-year time horizon and targets 800k homes passed.

American Tower is deploying the fiber and will operate the infrastructure for the homes passed. Whereas Telefônica Brasil (Vivo) will invest in the customer premises equipment (CPE) and enable customer connectivity using its Vivo Fibra brand. Additionally, there is a variable cost associated with the connection of each customer which Telefônica Brasil (Vivo) reimburses to American Tower.

Globally, American Tower notes that its return on invested capital (ROIC) for its fiber investments ranges between 5.0% to 5.5%.

Andean Telecom Partners (ATP)

Andean Telecom Partners (ATP) is building fiber-to-the-home (FTTH) in a number of countries across Latin America, including Chile, Colombia, and Peru. Specifically, Colony Capital states that Andean Telecom Partners (ATP) enters into 15- to 25-year lease contracts with investment-grade customers (e.g., Telefónica) in exchange for building wholesale fiber networks for them.

Phoenix Fiber (Phoenix Tower International)

Telefónica also has a joint development agreement with Phoenix Fiber in the Brazilian states of Minas Gerais, Espirito Santo, and Goias.


Telefónica is rolling-out fiber-to-the-home (FTTH) in new cities and additional neighborhoods of cities where it already operates, by selling franchises to third-parties. Overall, the company to-date has launched in 7 cities in Brazil through franchise agreements.

In this business model, the franchisee builds and operates the entire fiber network within these local markets. Therefore, Telefônica Brasil (Vivo) does not deploy any capital expenditures for these fiber expansions.

The franchisee is responsible for the customer relationship and pays Telefónica a royalty fee based on gross revenues. In return, Telefónica provides the franchisee its local expertise, backbone network, call center, and supplier relationships.

Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables. Jonathan has over 8 years of experience in research and writing for Fiber.


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