The latest data available from operators and the regulator, Subtel, show that Chile still has considerable potential for growth - despite having passed the 150% penetration mark in terms of mobile subscribers. The prospect of LTE/4G technology should help drive the market further, encouraging subscribers to upgrade handsets and opt for more expensive data packages - although we do expect that there will be considerable downward pressure on pricing as the key operators compete for market share. In terms of broadband, mobile broadband subscriber numbers more than double wireline broadband subscribers, and the former posted impressive growth in 2012. Mobile broadband is particularly suited to Chile, as geographical obstacles and a dispersed population make investment in wireline infrastructure an expensive venture for telecoms operators. In many parts of the country, government-funded network expansion, such as Subtel's plans for over 1,000 Wi-Fi spots, are the only means of increasing internet access where private investment does not make good business sense. Over the course of our five-year forecast period, we expect to see double-digit growth in terms of the number of 3G and 4G mobile subscribers; declines in fixed-line services; and low single-digit growth in wireline broadband.
- Since the introduction of mobile number portability (MNP) in January 2012, 1,004,883 subscribers had changed their operator by March 30 2013. This has been extremely successful, lowering tariffs by 25% and benefiting smaller operators as subscribers migrate away from larger providers.
- By the end of Q412, mobile broadband connections had grown to 4.92mn and fixed broadband to 2.19mn subscribers.
- Net additions bounced back in Q412 to 876,000 after a record low 82,000 in Q212. This is due to maturation of the Chile market, at 150.9% penetration in Q412.
- Pay-TV growth has been sluggish - subscriber numbers climbed by just 3.9% y-o-y in December 2012 to stand at 2.16mn. One of factors behind this trend is the popularity of IPTV.
Chile remained in second place in our Q313 Risk/Reward Ratings. Chile offers investors a stable operating environment and is one of the most advanced telecoms markets in Latin America, although its GDP growth forecasts are muted.
Key Trends & Developments
Claro began LTE trials in March 2013, initially in Santiago, but the firm plans to roll it out across the country. Entel, meanwhile, announced it had selected Ericsson for the deployment o its 4G LTE network, but Entel has publicly expressed concerns over the viability of 4G services on the 2.6GHz band. Subtel has warned that Entel could face a fine of up to US$75mn if it does not launch its 4G services within the 12- month period which formed part of the terms of the auction.
Movistar also plans to launch 4G services. In April 2013, it was awarded spectrum in the 2.6GHz bandwidth; the firm has assigned US$200mn to fund the deployment of its 4G network over the next three years.
Chilean regulator Subtel has launched two tenders to facilitate internet access. One is for the deployment of 1,036 Wi-Fi hotspots, which will offer internet access free of charge for five years, and the second will see the development of voice and data networks in the north of the country. Combined, the government is investing just over US$60m in the projects.
Chile's Competition Tribunal emitted a ruling that will prevent telecoms from charging different tariffs for off-net and on-net services. This change to tariff came into effect in March 2013, 60 days after the Tribunal published its ruling.