Chile has a population of around 17.4m, and had 23.7 million mobile subscriptions at the end of 2013, giving mobile penetration of 136%. 5% subscriber growth is forecast for 2014, tapering off over subsequent years. 70% of subscriptions are Prepaid. There are 3 principal mobile network operators: Entel PCS, Movistar (Telefónica) and Claro (América Móvil), and 6 mobile virtual network operators (MVNOs).
The telecommunication sector in Chile has been one of the most dynamic sectors over the last few years and represented 5.72% of GDP in 2012. The market generated an estimated US$7.4bn in service revenue in 2012, up 9.4% from the previous year.
In order to develop the broadband and mobile telephony market and to increase the competitiveness of the market while maintaining its regional leadership within South America, the Chilean government’s strategy has been to minimise regulations applied to the industry – leading historically to considerable mobile technology diversity. Today, except public entities using CDMA2000, all of the networks in Chile rely on GSM to provide services – arguably as a result of the abundance of spectrum originally given to Entel (60 MHz), which over the last decade has caused non-GSM operators to migrate to GSM.
Chile mobile operators
3G services were launched by the 3 main operators in 2007, and Entel and Movistar also introduced 3.5G in the same year via HSPA and HSDPA technology. There were 9.7m 3G subscriptions in December 2013 (41% of all subscriptions). Between 2009 and 2013, mobile broadband penetration experienced rapid growth due to improved mobile coverage and the explosion of smartphone adoption. Whilst fixed broadband connections increased by 35%, mobile broadband increased by 894% during this period (see figure 2).
Figure 2 : Internet Connections per Access Type
4G Developments
In 2012 telecoms regulator Subtel held an auction for 120MHz of 4G spectrum in the 2.6GHz band, divided into 3 blocks of 40MHz, which attracted more than a dozen operators - although only the three main operators submitted bids. Entel spent around US$8,852,360 while Claro paid US$2,907,781 and Movistar US$503,841.
LTE services began to be commercialized by Claro in June 2013, quickly followed by Movistar and Entel. In April 2014, Subtel announced that Movistar, Entel and Claro had also each won a spectrum block in the 700 MHz band for a total combined of US$22 million. The three operators have 24 months to deploy their networks nationwide, to expand the coverage of 4G mobile services and broadband connections across the country, and national roaming must be offered to other operators including MVNOs and entrants. At present, 4G penetration is still low – there were only 39,000 subscribers at the end of 2013, according to Subtel.
The tower sharing market
In June 2012, the Government adopted the Law on the Regulation of Trans-Receiver Antennae for Telecommunications Services. The “Tower Law” requires that existing towers in sensitive and congested areas be shared with other operators, decommissioned or compensation be paid to local areas. Local areas can either to choose to camouflage towers to reduce the visual impact of the site or accept a tower structure that includes compensation to the community up to 30% of the value of the tower.
The new law on recognises that past deployment of towers impacts on the urban landscape and provides retroactive mitigation measures on existing towers, but exclusively in two cases:
In areas defined as tower-saturated – i.e. where there are more than two antenna support towers within 100 metres; and
In areas defined “sensitive” – i.e. where there are schools, hospitals, nursing homes and other similar areas defined by Subtel, and which have also been formally identified by the municipalities within their respective communities.
This new law restricts network operators’ ability to deploy new sites and towers which is expected to lead to more sharing going forward. However if an operator chooses not to share its infrastructure with other operators, it would be forced to pay the equivalent of 50% of the replacement value of the tower, or 20% if the tower is camouflaged. Major MNOs have negotiated tower sharing agreements or paid compensation in about 80% of sensitive/congested areas designated by the regulator. However passive sharing is not significant outside sensitive/congested areas and there is no active sharing in the market.
In 2010, American Tower launched operations in Chile under the name ATC Sitios de Chile and purchased 287 base station sites from Telefónica Chile. In 2011, ATC acquired another 140 sites from VTR. With the introduction of the Tower Law in 2012, ATC acquired another 558 sites from Movistar for the sum of US$96 million. Today the ATC portfolio in Chile contains 1,116 sites.
In 2012, Peruvian based Torres Unidas also acquired over 400 wireless towers from Telefónica.
With the new tower regulations, the recent investments in LTE rollout and a raging price war led by MVNOs, and with more than 8,000 towers spread over the country, Chile represents an attractive market for tower operators.
Guest columnist Alexandre Dole
Alexandre is a Consultant within Mott MacDonald’s Technology and Communications practice and has a considerable experience in mobile, terrestrial and satellite telecommunications. In the last 4 years, Alexandre has worked on several telecommunications infrastructure developments around the world. Most recently, Alexandre has been part of a Mott MacDonald team commissioned to execute an advisory study for a towerco looking to invest in developing markets.
