(Adds comments from CEO interview, background on 5G issues)
MADRID/STOCKHOLM, Oct 29 (Reuters) - Spanish telecoms group Telefonica expects a return to revenue growth in 2022 after making a loss in the third quarter and is working on new fibre optic ventures, including projects in Latin America.
The company, which decided late last year to focus on its main markets of Spain, Britain, Germany and Brazil, is teaming up with German insurer Allianz in a venture worth 5 billion euros to build fibre optic networks in under-served areas of Germany.
Chief Operating Officer Angel Vila said more such projects were in the works.
A planned fibre business in Brazil has entered a second round of offers from potential partners and is “progressing nicely”, Vila said, while in Chile the company is in the process of potentially bringing investors into a fibre project.
Telefonica and its European rivals are also gearing up for the next round of investment into so-called fifth-generation (5G networks), after having ploughed billions into ultra-fast broadband internet,
Telefonica has decided to gradually phase out kit made by China’s Huawei from the sensitive core of its network in Germany and Spain because it wants to use several different vendors that are compatible with each other.
The company, a supporter of a technology called Open Radio Access Network (RAN), is also looking to use the new system for building parts of the upcoming 5G network and bring down costs. “It broadens the range of suppliers, increasing the versatility of the network from a technological standpoint,” CEO Jose Maria Alvarez Pallete told Reuters.
Telefonica has signed a pact with Japan’s Rakuten to use Open RAN that uses software to run network functions on the cloud, requiring less physical equipment and removing dependency on a few suppliers.
Telefonica’s revenue rose 1.2% in the third quarter from the second, despite a roughly 591 million euro ($698.50 million) hit from COVID-19.
A 785 million euro impairment charge in Argentina led to a net loss of 160 million euros.
Telefonica forecast free cash flow of more than 4 billion euros at the end of this year.
The company’s shares were down 6.3%, making them the worst performers on Spain’s benchmark IBEX-35 index. ($1 = 0.8461 euros) (Reporting by Isla Binnie in Madrid and Supantha Mukherjee in Stockholm, Editing by Inti Landauro and Jane Merriman)
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