2011 Chile - Telecoms, Mobile, Broadband and Forecasts

Strong domestic demand and rising GDP in Chile drive telecom market growth

Chile’s telecom sector is one of the most developed in Latin America, with a state-of-the-art infrastructure and regulatory system. Competition, investment, and innovation have been key factors in the development of the country’s telecommunications. Chile is deemed the most transparent country in Latin America, with the lowest level of corruption. Its market-oriented economy and its openness to international investment have made it a popular target with foreign investors.

GDP per capita in Chile is one of the highest in the region, only surpassed by Uruguay and a few Caribbean islands. With solid economic growth and strong domestic demand predicted for 2011, telecom revenues are expected to continue posting double-digit growth rates. The fastest growing services will be fixed and mobile broadband. Smartphones sales are likely to escalate, driven by lower prices and intensive use of social networks.

Chile’s fixed-line market has been stagnating for more than a decade. Teledensity is about 14% higher than average for Latin America, but lags behind Costa Rica, Uruguay, Argentina, Venezuela, Brazil, and a number of Caribbean small island nations.

Telefónica Chile, trading as Movistar, is the incumbent local telephony operator and the largest telecom company in Chile. It is the market leader in local and long-distance telephony, broadband, and satellite TV. Its sister company Telefónica Móviles Chile – also trading as Movistar – leads Chile’s mobile market.

Movistar’s main fixed-line competitors are pay TV/triple play operator VTR Globalcom, incumbent long-distance provider Entel Chile, the GDT group (including GTD Manquehue, GTD Telesat, Telsur, and Telcoy), and América Móvil’s Claro Chile.

In a bid to unify services under a single trademark, the fixed-line business previously conducted by Telmex Chile has been taken over by mobile operator Claro Chile, both companies being controlled by Mexican tycoon Carlos Slim.

Chile’s mobile penetration is one of the highest in Latin America, but lags behind Panama, Uruguay, and Argentina. Three major mobile companies serve the Chilean market: Telefónica’s Movistar, Almendral’s Entel, and América Móvil’s Claro. Two new market entrants, Nextel Chile and VTR, have won licences for 3G services. Both companies are expected to launch UMTS networks in the second half of 2011.

Mobile phone tariffs in Chile are among the cheapest in Latin America, with a basic plan costing about 1.3% of an average wage. Chile is also the Latin American country with the cheapest smart phones compared with per capita income.

Mobile broadband has taken off in Chile; by 2012, about one in ten Chileans will own a 3G USB modem or portable computer with built-in 3G receiver. The mobile broadband market has already passed one million subscribers, and accounts for about 36% of all broadband subscribers including fixed and mobile.

Chile’s fixed broadband market is one of the most developed in Latin America. In terms of speed, Chile is the regional leader, with a mean download speed of 6.45Mb/s (as of June 2011) – which, albeit the highest in Latin America, is still low compared with the rest of the world.

For many years – in fact, from the early days of broadband until 2009 – Chile retained the regional leadership in terms of fixed broadband penetration. Slow growth in 2010, however, has relegated it to third place, after Uruguay and Argentina. The slowdown was partly due to the effects of the devastating earthquake at the start of the year, partly to the mobile broadband boom, and partly to the fact that saturation has been reached in the urban middle- and upper-income segments.

Market highlights:

• In July 2010, Chile became the first country in the world to pass a Network Neutrality Law aimed at ensuring free and equal access to the internet.
• Fixed and mobile number portability was approved in August 2010, with implementation expected in late 2011 or early 2012 – mobile number portability first, then fixed number portability.
• The government is considering the establishment of a wholesale telecom infrastructure provider.
• Operators are consolidating their fixed-line, mobile, broadband, and pay TV operations under a single brand name: Movistar for Telefónica, Claro for América Móvil, and Entel.
• Chile’s telecom regulator Subtel plans to auction 2.6GHz spectrum for LTE/4G services towards the end of 2011.
• Telsur offers TVoIP services and GTD Manquehue provides IPTV over Chile’s first FttH network.
• The GTD group and Movistar have been holding talks aimed at reaching an MVNO agreement, which would allow GTD to offer mobile services over Movistar’s network.

Chile fixed-line, broadband, and mobile statistics – 2009 - 2011

(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 together with industry outlook and forecasts.
• Company performances and ARPU.
• Analyses of Chile’s broadband and mobile sectors.
• How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the ten years to 2020.

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