Wom Chile could emerge stronger from Chapter 11

Chilean company WOM could emerge stronger from its Chapter 11 bankruptcy protection process in the United States.

The company announced earlier this month that it had received an offer involving an investment of US$500mn, valuing the company at US$1.6bn.

The company has now revealed that it has received an improved binding proposal from the same bidder and plans to close negotiations in the coming days.

The binding offer, structured as a "stalking horse" bid, was submitted by WOM’s bondholders, led by the company’s former CEO, Chris Bannister, according to local reports. 

"WOM Chile continues to make progress in the negotiation of the binding proposal in order to formalize the final version, which it hopes to achieve in the coming days,” the company said in a statement.

Since WOM did not receive any other qualified offers for the acquisition of the company, an auction process is not expected to take place.

Previously, América Móvil and Telefónica had announced that they would back a joint offer for WOM's assets, which include a 4G network, a 5G network that is 60-70% deployed, optical fiber and spectrum. Other bidders such as KKR and DigitalBridge have also reportedly come forward.

If this operation is indeed carried out, the market consolidation, which both rival companies and analysts considered to be necessary, will not take place and Chile will continue to have fierce competition in the mobile market with four operators.

With Claro (América Móvil) taking control of the joint venture with Liberty Latin America, a resurgence of competition is expected as América Móvil seeks to improve its market position.

In this context, if the transaction is completed, WOM will be strengthened to maintain its market position and continue its 5G network deployments.

The lifeline would allow it to maintain its concession contracts, which have been threatened by its failure to comply with the commitments made for the deployment of the 5G network.

Unlike its operation in Colombia, where WOM never achieved a significant market share, in Chile the company had 20.5% of the market at end-June, behind the leader Entel (30.8%) and Movistar (28.1%). Claro was in third place with 18.6%.