2012 Chile - Telecoms, Mobile, Broadband and Forecasts

Competition hots up in Chile’s mobile market

Chile stands out in Latin America for its openness to innovation, and this is particularly true in telecommunications. Solid economic growth and a progressive regulatory system have contributed to make Chile’s telecom market one of the most dynamic in the region. The government takes a proactive role in promoting telecom competition and places no restriction on foreign investment. As a result, the country’s telecom sector is a popular target with both national and international investors.

Competition is hotting up in 2012 thanks to the introduction of fixed and mobile number portability as well as the launch of four new mobile market players, with a fifth one expected to begin operations by early 2013. The four are Nextel, VTR, GTD, and Virgin Mobile. Nextel and VTR have launched 3G networks, while GTD and Virgin Mobile are offering Mobile Virtual Network Operator (MVNO) services. The fifth, local retail giant Falabella, is also preparing to enter the MVNO market. Hitherto, the MVNO model has been largely unsuccessful in Latin America, but 2011 marked a turning point, with several operations launched in a number of countries. In Chile, the government is actively supporting MVNOs through licence clauses and regulatory requirements.

Teledensity in Chile is only slightly higher than average for Latin America. This compares poorly with the country’s other economic indicators such as GDP per capita, which is the highest in South and Central America. Chile’s mobile penetration, on the other hand, is one of the region’s highest, though still lagging behind Panama, Uruguay, and Argentina.

In terms of broadband penetration, Chile ranks second in the region after Uruguay, but the latter’s download speeds are considerably slower. In fact, in terms of broadband speed, Chile is the regional leader, well ahead of any other Latin American country.

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

In the fixed-line market, the leading operator is the incumbent Telefónica Chile, which trades as Movistar. Its main competitors are VTR Globalcom (VTR), the GTD group, Almendral’s Entel, and América Móvil’s 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 and Telsur. Entel offers fixed-line services primarily to the wholesale and corporate segments.

In the mobile market, Chile’s major operators are Entel, Movistar, and Claro. Entel and Movistar are in the lead, followed by Claro. Chile’s telecom regulator, Subtel, has completed a public auction for frequencies in the 2.5GHz band, to be used for 4G LTE services. Having each won a block of spectrum, Entel, Movistar, and Claro are required to launch an LTE network by mid-2013.

Several operators provide broadband access; Movistar is the leader, closely followed by VTR. Claro, in third place, has a small but fast-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).

Strong demand for telecom products is expected to continue in Chile. The country has a technology-hungry consumer base; to keep up with consumer expectations, operators must improve and invest or lose out to competition. We can expect substantial investments in 2012 and 2013 as Entel, Movistar, and Claro roll out their LTE networks.

Chile’s fixed-line, broadband, and mobile statistics – 2010 - 2012

(Source: BuddeComm based on industry data)

For those needing an objective and high-level strategic analysis on Chile, this report is essential reading and gives further information on:

• The development of Chile’s fixed-line, mobile, broadband, and pay TV sectors.
• Company performance, ARPU, and spectrum awards.
• An analysis of Chile’s broadband sector.
• An analysis of Chile’s fledgling MVNO market.
• The development and expansion of mobile broadband and 3G/4G services in Colombia.
• How different scenarios may affect the fixed, mobile, and broadband markets in the years to 2020.

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