BMI View: The announcement that 700MHz frequencies will be awarded to the three mobile operators Claro, Movistar and Entel in the first half of 2015 is an important step for the market. Movistar and Entel have already contracted equipment vendors to roll out LTE services in the 700MHz band, this should help to speed up the new spectrum release to the public. Uptake of 3G services in Chile has been among the strongest in the Latin America region, driven by a healthy competition between Claro, Movistar and Entel, with support from Subtel and the government. 4G services are also available from all three operators, with VTR soon to be the fourth operator to launch LTE. The allocation of 700MHz spectrum will relieve network congestion problems, as well as expand internet access to rural areas of the population at a low cost, benefitting operators and consumers from low prices. Nextel's divestment of its Chilean subsidiary to UK-based Novator Partners could bring a change into the market share distribution.
Mobile telephony penetration reached 149.2% at the end of 2014, with 26.5mn subscribers, representing a decline of 1.3% from December 2013.
4G connections rose 87.3% quarter-on-quarter in Q314 to reach 345,000.
Chile ended Q314 with 7.9mn mobile internet subscribers.
Internet penetration in Chile increased 22.4% year-on-year (y-o-y) to 60.2%, for a total of 10.7mn accesses, in 9M14, ended September 2014
Fixed lines increased 5.6% at the end of September 2014 from December 2013, driven partially by the gradual elimination of national long distance calling rates in 2014.
Pay-TV penetration grew 6.6% y-o-y to 48.6%, for 2.8mn subscribers, in 9M14.
Key Trends & Developments
Chile's transport and telecoms ministry is expected to grant 700MHz spectrum licences to the winners of the auction held in 2014 in the next four to six months, according to Minister Andres Gomez-Lobo in January 2015. The government will draw up and publish the necessary documents within six months after Entel, Claro and Movistar pay the initial fees to the treasury. Under the licence terms, the operators are required to launch services via the 700MHz band within 18 months and the frequencies are expected to be in use by 2017.
Both Movistar and Entel have already reached an agreement with equipment vendors. Movistar has contracted Chinese telecoms equipment vendor Huawei to roll out LTE technology in the 700MHz band on its network. The technology is expected to provide speeds of up to 300Mbps. The deployment will complement Movistar's existing LTE network in the 2GHz band. The deployment of 4.5G network would begin in 2016 and the network will be commercially launched by the end of 2016. Meanwhile, Entel has signed an agreement with Swedish telecoms equipment vendor Ericsson to roll out its 4G infrastructure in the 700MHz band. The two firms completed Latin America's first live test of the APT700 spectrum in December 2014. The test used 10 sites with equipment using APT700 band on Entel's live 4G LTE network in Rancagua city, Chile.
Following reports of financial woes, Nextel finally divested its Chilean unit. UK-based Novator Partners has acquired Chile's smallest mobile network operator, Nextel Chile, for an undisclosed sum. The deal comes just five months after bankrupt NII Holdings sold the business to an international consortium for USD29.1mn. The latest change in ownership at Nextel Chile will have no significant impact on our long-term outlook for Chile's mobile communications market. New owner Novator has better investment-positive credentials than its predecessors, affording us a more positive view of Nextel Chile's ability to continue trading. Yet Novator's track record in Europe suggests it does not plan to be in Chile for the long haul.