Chile is one of the most developed telecoms markets in Latin America, making it a high value market for operators, but market maturity does bring its own challenges. A high penetration rate in the mobile market means subscription growth opportunities are diminished, requiring operators to target subscription migration, wireless data services and value-added service. Operator strategies are as a result focused on high capacity service development. Claro launched the first 4G LTE service in June 2013, while Movistar launched in November 2013 and Entel set to follow in March 2014. Operators are generating return on investment, as Chile's mobile internet market grew four times faster than the average of its OECD peers, according to a new report from the international organisation. Chile's impressive performance supports our already positive view of the country's developments and particularly its leadership among Latin American telecoms markets.
- The mobile market recorded the first ever quarterly subscription loss in Q313 due to the discounting of inactive subscriptions by Claro. However, growth was already slowing as a result of market saturation.
- Broadband subscriptions are increasing rapidly in Chile, with mobile broadband growth the strongest segment of the market.
- Pay-TV growth is also robust, boosted by converged service provision, with total subscriptions up 10.6% year-on-year to 2.347mn at the end of June 2013.
Key Trends & Developments
Chile's 4G market is developing rapidly with the three leading operators all on course to have launched commercial services by March 2013. Claro commercially deployed Chile's first LTE network in the Santiago metropolitan area in June 2013. Movistar followed with the launch of services in November 2013, while Entel has stated its service will be available from March 2014. Although all three will offer LTE services, it is Claro that has taken a lead in terms of coverage, claiming it will cover 98% of the population by March 2014. BMI believes Claro is positioned to benefit from first mover advantage in high capacity wireless broadband services; however, all three should derive benefit from migration of subscriptions to higher value services. LTE subscriptions will generate higher average revenues per user (ARPUs), with Claro reporting that its LTE subscribers are signing up to contracts over US$100 a month. This is a positive sign for operators in building up ARPU through data services.
Competition in the wireline market is also centred on the development of higher capacity services. In October 2013, Telefonica awarded a EUR74mn (US$100mn) contract to upgrade and maintain the fixed networks to Ezentis, with a particular focus on fibre-optic infrastructure. This followed report in September 2013 that Entel was preparing to deploy its own national fibre-to-the-home (FTTH) network, beginning with various areas in Santiago before gradually expanding to the rest of the country. The company hopes to launch in 12 months, according to unnamed sources with knowledge of the project. The deployment of a FTTH network will allow it to offer service bundles made up of fixed telephony, pay-TV and fixed broadband - and the prospects for growth are strong by selling to its existing mobile subscription base.