Chile Telecommunications Report Q1 2013

BMI View: The Chilean mobile market continued to gain subscribers, although the latest data fromoperators and regulator Subtel show a smaller number of net additions in Q212 compared to previousquarters. While sufficient to affect our five-year forecasts, we are confident that subscriber numbers willrise towards the end of 2012, with a combination of seasonal sales and the launch of Apple’s iPhone 5key growth drivers. Chile’s mobile market is a dynamic one and the introduction of MNP at the beginningof 2012 has confirmed this trend: over 500,000 subscribers had changed operators by mid-2012. Inbroadband, Chile is a regional leader in terms of connection speeds and connectivity. According toSubtel, in August 2012, 92% of Chilean students had access to internet, just below the OECD countryaverage of 93%. Broadband, and in particular, mobile broadband, will continue to drive growth.

Key Data

Since the introduction of MNP in January 2012, 519,000 subscribers had changed their operatorby September 10, 2012. Subtel estimates this figure will reach 1mn by the end of 2012, andattributes the change to aggressive marketing strategies and MVNOs.

Mobile broadband connections in Chile grew by around 105% to 2.96mn in 2011, comparedwith 2.01mn of fixed broadband connections. By the end of Q212, connections had grown to3.85mn and 2.12mn respectively.



Despite net additions of just 82,000 in Q212 (latest data available), ARPUs remained buoyant.Entel led with CLP8,700, followed by Movistar with EUR11.8 and Claro with CLP6,139.

Risk/Reward Ratings

Chile remained in second place in our Q113 Risk/Reward Ratings, despite a downward revision of itsCountry Risks score. Net additions declined considerably in Q212 (latest data available from operatorsand Subtel), but we are optimistic that numbers will rise towards the end of the year. Chile offersinvestors a stable operating environment and is one of the most advanced telecoms markets in LatinAmerica, although its GDP growth forecasts are muted.

Key Trends & Developments

Claro, Movistar and Entel were awarded 4G tenders in July 2012, picking up spectrum in the 2.6Ghzband, with offers exceeding CLP6bn (US$12mn). The operators are keen to minimise costs and areevaluating a joint venture for the launch of 4G in Chile.

Subtel wants Chile’s landlines to be unified with a single tariff by 2014. In October 2012 the regulatorwas awaiting a favourable decision from Chile’s competition courts to be able to implement this.Claro revealed plans to invest US$500mn developing its infrastructure in Chile in 2013.