What lies ahead for the 'new' WOM in Chile

Less than a year after filing for Chapter 11 bankruptcy protection in Delaware, Chilean telco WOM emerged from the process with a new operating structure, a new board, fresh injection of capital from creditors and a proposal to be a "new" company.

The Chapter 11 exit was accompanied by the return of co-founder Chris Bannister at the company's helm. WOM was created in 2015 after UK private equity firm Novator Partners acquired assets of Nextel Chile. Bannister had left following the Chapter 11 filing amid disagreements with Novator.

Bannister's return comes on the heels of a new board of directors, established as part of a restructuring bid from the ad hoc group of creditors, and now chaired by Mauricio Ramos.

Ramos is a well-known economist and lawyer who for almost a decade led Millicom, the Luxembourg-based telecom group operating in Latin America under the Tigo brand.

Previously, Colombian-born Ramos had led Liberty Latin America when it was still part of the Liberty Global group, and Liberty's Chilean telco VTR.

In addition to Ramos as chairman and Bannister as director, WOM Chile's new board comprises Eugene Davis, an expert in corporate turnaround processes; Claudio Muñoz, a former president of Telefónica Chile; and Alejandro Puentes, CEO of Chilean financial services company Altis.

The new investors/owners of WOM are New York-headquartered BlackRock, the world's largest asset management fund; Paris-based Amundi Asset Management; Santiago-based Moneda Asset Management; and UK group Man GLG Partners.

WOM's new control structure also includes, for the first time and albeit indirectly, the presence of Brazilian investors, as in 2021 São Paulo-based fund Pátria acquired Moneda.

The merger of the two companies created the largest credit investment platform in the region.

Amundi, for its part, is one of the shareholders of Mexican carrier TotalPlay.

Capital, debt and consolidation

Upon exit, WOM's restructuring plan approved by creditors and the new owners resulted in a reduction in the company's debt load by approximately US$650mn and a capital injection of US$500mn.

With fresh capital and a leaner debt structure, Ramos and CEO Bannister will seek to turn the company around at a particularly effervescent time in the Chilean and Latin American telecoms market, permeated by acquisitions, market exits, 5G advances and operators' difficulties in making investments profitable.

"After nearly 12 months of long, complex negotiations and an injection of US$500m the next phase begins," Bannister wrote on social media.

"The battle has been bruising and sometimes painful but today WOM can move forward with a low level of debt and a healthy balance sheet and in control of its own destiny."

In Chile, a particularly competitive market, the destiny of many companies has been consolidation.

Last year, Claro acquired control of fixed-line operator VTR, then its partner in the ClaroVTR JV; neutral network OnNet Fibra sold part of its network to CMB Prime to comply with competition terms; and Ufinet acquired the operations of Internexa Chile from Colombian state power utility ISA.

More importantly, rivals Telefónica, which has not entirely ruled out the sale of its operations in Chile, and América Móvil announced a joint bid to acquire WOM, which currently holds more than 25% of the Chilean mobile internet market.

Despite that, both Ramos and Bannister have declared that WOM is "not for sale" and are banking on the company's resilience to leverage its growth.

The foundations for this are relatively good. Even amid the restructuring process, the WOM brand has not been significantly tarnished and the company even managed to increase its market share slightly.

Overall, Chile ended 2024 with 23.1mn mobile internet (3G, 4G, 5G) connections, up 2.9% on 12 months earlier, with WOM's accesses growing 2.5%.

Meanwhile, Spain's Telefónica lost 4.6% of its mobile internet base, with its market share falling from 20.9% at end-2023 to 19.4%. Claro's connections grew 7% and Entel's 4.8%.

Entel closed the year with a mobile internet market share of 35.2%, WOM with 25.6% and América Móvil's Claro with 17.3%.

In his social media post, Bannister said WOM still has the biggest 5G network in Chile and more stores than any other telco.

"Now the next journey begins with building trust again with all 'Womers', building trust with our partners and suppliers," said the CEO.

"WOM now needs to work hard together to create a service that excites 20m Chileans," he added.