Chile - Telecommunication Services: Competitive market with potential for growth (Strategy, Performance and Risk Analysis)
In 2016 two companies dominated the mobile market in Chile, together they accounted for 71% of the total market. Entel edged first position, having 36% share, closely followed by Movistar with 35%. Interestingly, both companies have seen a decline in their subscriptions since 2012. Entel went from 10.1 million in 2012 to 9.5 million in 2016, and Movistar had 10.1 million in 2012, which dropped to 9.3 million in 2016. This trend is projected to continue for both companies until 2021, which opens up opportunities for the new market entrants such as WOM, who had a subscription base of 1.4 million in 2016.
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LTE subscriptions soar
The rise of long-term evolution (LTE) and its adaptation has been exponential. Over the review period, LTE subscriptions grew a considerable CAGR of 289.5%, from 82,000 in 2012 to 4.8 million in 2016, with an anticipated increase over the forecast period at a CAGR of 21.8%, to 13 million in 2021.
Mobile subscriptions shows strong growth
During the review period, post-paid subscriptions increased at a CAGR of 6.6%, from 7.2 million in 2012 to 9.3 million in 2016, and are expected to grow further at a CAGR of 1.1% during the forecast period, to reach 9.8 million in 2021. This is partly due to attractive bundled services offered by post-paid operators, as there has been more focus placed on the post-paid segment in order to maintain a competitive edge. Moreover, LTE subscription continue to grow, consisting of 18% of the total mobile subscriptions in 2016, with expectations to increase to 48.7% by 2021.
Chile a hotbed for investment in Latin America
Chile is one of Latin America’s most promising investment destinations. In terms of investment, infrastructure stands out as particularly attractive, with a significant emphasis by Chile’s Government on large-scale investments into this sector. This is evident, as the Chilean Government announced investment of US$900 million on infrastructure projects. To cater to increasing demand for data connectivity, both the government and operators plan to invest in FTTx/and 4G/LTE infrastructure. The government allocated a budget for the execution of the Southern Optical Fiber Project to improve connectivity in the most remote locations in the country.