Nearshore Americas

In Chile, Telecom Competition Heating Up

Source: America Economia

SANTIAGO — 2010 was the year Chile moved into telecommunications. The GTD Group acquired 96.4% of Telefónica del Sur, $115 million; in August the channel Chilevisión (until then controlled by President Sebastián Piñera) was sold to international group Turner Broadcasting System (TBS) for $150 million. Shortly before the Roman Catholic Church had sold part of its property in Canal 13 (67%) for $55 million to the Luksic family. And Group Saieh (Corpbanca and Copesa) bought 20% of VTR for $300 million.

The two main players in mobile telephony, Entel and Movistar, renewed their brands, while the operator of paid TV and Internet VTR and Nextel France prepare to enter to compete in the area. The adoption of the law on number portability in 2010 and its imminent entry into operation at the end of this year is making the Chilean ITC scene more competitive than in previous years.

Companies are preparing for a scenario in which they seek to capture clients with the quadruple play: Mobile, fixed telephony, TV, and the Internet as a single service and under a single account. “The trend in Chile is more advanced than in other countries of the region,” said Sergio Rodriguez, analyst of telecommunications at Fitch Ratings in Mexico City. “But it is the same: convergence of services by means of packaging.”

“And for operators of fixed telephony, this is a way to strengthen the loyalty of customers to the company and control disconnection rates,” said Rodriguez.

To this end Movistar intends to invest $700 million — part of a larger plan of US$ 2.5 billion — basically in fiber optic networks this year. And according to government estimates, in the coming years there will be investments of about US$7 billion in the sector. “Investments for the coming years will focus on fiber optic to the home and investments in the mobile network to improve the performance of data (mobile broadband) services,” said Patricio Soto, analyst with consulting firm IDC in Latin America.

Mobile telephony has also had a boost with the entrance of increasingly powerful smartphones, which have lowered their costs and have enabled more people to have access to such devices.

“During 2010 and for the next two years the area that most contributed to the growth was mobile data, which includes mobile broadband, mobile Internet (navigation on the phone) and M2M subscriptions,” said Soto. “One of the main factors affecting this growth of the industry is the increase in subscriptions to mobile broadband.”

Chile was a leader in Latin America in terms of penetration of broadband and mobile phones, but in recent months has been moving at a pace slower than other countries. According to the Cisco Broadband Barometer, the country lost the leadership in the region in penetration of fixed broadband, with 10.8%, behind Uruguay (12.3%) and Argentina (11.7%). For Soto, the decline in the figures is misleading, since investments have focused on a second stage: “Leading the way for broadband access to lower socio-economic sectors and increase the speed,” she says.

Sign up for our Nearshore Americas newsletter:

Meanwhile, another battle is being fought in the field of paid TV, where operators like Movistar and Telmex seek to compete with the leader VTR, which has a powerful infrastructure of cabling and fiber optics. A competitive alternative might be to offer satellite connections.

Either way, the Chilean telecommunications industry appears to be in good health and competition is strong. The actors are consolidated and it is difficult for regulations to substantially change the scene, ICT experts say.

 

 

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

Add comment

Advertisement