2013 Chile - Telecoms, Mobile, Broadband and Forecasts

Fixed-mobile substitution is particularly marked in Chile

BuddeComm’s yearly update of Chile - Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Chile, including the regulator’s statistics, company data, and other industry indicators to March 2013, as well as estimates for end-2013 and expected market developments in the coming years.

Economic climate

Chile is experiencing a period of uncertainty tied to a decline in the price of copper, which is Chile’s main export, and an economic slowdown in China, which is one of Chile’s main export destinations. Nevertheless, Chile enjoys the highest GDP per capita in South and Central America, and the country’s economy is expected to continue growing by at least 4% per annum.

Regulatory developments

A Digital Agenda for 2013-2020 – dubbed Agenda Digital Imagina Chile 2013-2020 – sets out a roadmap for the long-term development of Chile’s ICT sector, including five strategic axes and 30 specific initiatives or goals to facilitate telecom access for all Chilean citizens.

Telecom market outlook

Fixed-mobile substitution is particularly marked in Chile, with fixed-line teledensity slipping while mobile penetration continues to climb. Many Chileans are turning to mobile solutions also for their broadband access. Mobile broadband using USB modems is shrinking, as tethering has made the separate purchase of dongles unnecessary, but the tablet and smartphone market has been escalating. Major drivers in the smartphones boom include lower handset prices and the intensive use of social networks.

Investment potential

Chile’s telecom sector is one of the most open and mature in Latin America, with full competition allowed in all areas and a state-of-the-art infrastructure and regulatory system. The country’s market-oriented economy and its openness to international investment have made it a popular target with both national and international investors.

Fixed-line market

Chile’s fixed-line teledensity is about 6% below the South American average. This is surprisingly low, considering that the country’s GDP per capita is the highest in this subregion. In fact, since peaking in 2001, teledensity has dropped by four percentage points, and the market continues to shrink.

Fixed-line operators

The leading fixed-line operator is the incumbent Telefónica Chile, which trades as Movistar. Its main competitors are VTR Globalcom (VTR), the GTD group, Entel, and Claro. VTR is the leading provider of cable TV and cable modem broadband, and the second largest provider of local telephony. The GTD Group operates through seven subsidiaries, including GTD Manquehue, GTD Telesat, and Telsur, which provide voice, data, and video services for residential and business customers. Entel offers fixed-line services primarily to the wholesale and corporate segments.

Broadband market

The high level of broadband penetration in Chile compared with other Latin American countries can be attributed to the country’s relatively high GDP and its receptivity towards new technologies. Broadband plans on offer in Chile are among the fastest and least expensive in Latin America. In terms of both broadband penetration and broadband speed, Chile ranks second in South and Central America after Uruguay.

Broadband players

Several operators provide broadband access; Movistar is in the lead, followed by VTR Globalcom. Claro, in third place, has a growing market share. Competition in the broadband market is livelier in Chile than in most other Latin American markets; nevertheless, it remains weak by international standards, and is largely limited to competition across technologies (ie ADSL versus cable modem).

Broadcasting market

Chile’s pay television market is one of the most mature in the region, with penetration ranking third in South America after Argentina and Uruguay. More than four Chilean household out of ten subscribes to pay TV services.

Mobile market

Chile’s mobile penetration is one of the highest in South America but lagging slightly behind Uruguay and Argentina. Mobile growth, however, has slowed down considerably – it even turned negative in the first quarter of 2013, which may indicate that the market has reached saturation.

Mobile players

Telefónica’s Movistar and locally owned Entel compete neck-and-neck with a 37% share each, while América Móvil’s Claro accounts for 25%, and a few new entrants and MVNOs share the remaining 1%. Four new entrants have joined the mobile market, with a fifth one expected to begin operations in the second half of 2013. The four are Nextel Chile, VTR, GTD, and Virgin Mobile. Nextel and VTR have launched 3G networks, while GTD and Virgin Mobile are offering Mobile Virtual Network Operators (MVNO) services. The fifth, local retail giant Falabella, is preparing to enter the MVNO market.

Chile’s fixed-line, broadband, and mobile statistics – 2011 - 2013

(Source: BuddeComm based on industry data)

Market Highlights

• A bill is in the pipeline to create a Superintendency of Telecommunications.
• Mobile Number Portability has helped to increase competition and reduce prices.
• To encourage customer mobility, the regulator, Subtel, has banned the sale of carrier-locked handsets, and ordered operators to unlock devices free of charge.
• Chile is eliminating domestic long distance charges and establishing a single nationwide calling area.
• Smartphone sales are soaring in Chile, driven by the popularity of social media and improved 3G coverage – as well as diminishing prices and a wider range of devices.
• Chile’s Facebook penetration rate is the highest in Latin America and one of the highest in the world.
• In Chile, more fixed-line customers subscribe to telephony bundled with another service than to telephony on its own.
• Claro has launched Chile’s first 4G/LTE network. Under the terms of their licence, Movistar and Entel have until early 2014 to launch 4G services.

Data in this report is the latest available at the time of preparation and may not be for the current year