A look at Chile's upcoming telecom, tech investments

Chile's 5G rollout and the government’s backbone projects, as well as other signature telecom infrastructure projects, will demand US$27.8bn by 2031, according to the construction chamber (CChC).

Meanwhile, investment promotion agency InvestChile is supporting 25 digital infrastructure projects, with a potential investment of over US$3.3bn.

"In the last five years, the technology sector has come to lead the number of projects in the agency’s portfolio," InvestChile said in its 2023 e-book on global services and technology.

"This increased interest is reflected in the numbers: in 2017, there were only 25 projects of this type in the country, worth US$1.5bn. Currently, the agency manages 119 projects in the technology sector, at different stages of completion, with an investment of US$4.5bn, representing a growth of 190%," the agency wrote.

Among other signature projects expected to advance in 2023 are the 14,810 km Humboldt trans-Pacific cable, due to be operational by 2025.

Chile currently has 11 cross-border fiber connections, to be joined by dozens of further connections expected to be ready by 2024. With these included, the country is expected to have 24 connections with Argentina, five with Bolivia, one with Peru and a shared connection with Peru and Bolivia, as well as eight connections with Brazil (via Bolivia and Argentina), according to local authorities.

TELECOM

Following the country’s 5G auction in 2021, Chile anticipated some US$3.5bn in network investments to cover 90% of the population by 2024. Roughly one year after the activation of the technology, it had 1.59mn 5G accesses by September, according to the latest data from regulator Subtel.

Entel

Entel, which claims to have become the first telco to activate the network in all of the country’s 270 municipalities, reported 1.08mn 5G lines as of mid-December, which corresponds to 10% of its total base and around 63% of the country’s 5G accesses. 

According to Entel, 57% of the devices it sells are compatible with 5G.

The company planned to invest US$665mn in 2022, with US$515mn going to Chile, where it is the main player, and US$150mn to Peru. Spent capex for 2022 capex is yet to be announced.

Entel also plans to invest US$350mn in 5G by 2023.

Telefónica

Telefónica’s Movistar Chile reported over 650,000 5G lines by mid-December, with around 40% of new phones sold that year supporting 5G and half the devices in its sales portfolio having 5G. 

Telefónica launched in 2021 its On Net Fibra fiber JV in Chile after selling 60% of its local fiber network to KKR, subsequently announcing plans to invest more than US$100mn by the end of 2022 to increase its FTTH footprint to a minimum of 3.5mn households.

In October, On Net Fibra Chile acquired the nationwide fiber backbone of Entel for around US$360mn. 

Recently, the company said its Chilean operation had become the latest subsidiary to secure 100% of its energy consumption from renewable sources, joining Peru and its main markets Spain, the UK, Germany and Brazil.

WOM

The country’s third 5G-licensee WOM, owned by UK-based fund Novator, invested US$230mn in the 12 months through September, up 126% year-over-year, mainly in 5G. 

By September, WOM had 7.6mn customers, up from 6.7mn a year earlier, including 4.9mn on 4G connections and 305,000 with 5G. 

In the first quarter of 2022, WOM overtook Claro as the third biggest mobile operator in Chile. The company also closed a deal to sell 3,800 of its towers to Phoenix Tower International (PTI) for US$930mn over three years. 

WOM had earlier pledged network investments of US$500mn for 2021-2023.

As for other telcos, Fitch Ratings said in a November report it forecasts negative free cash flow generation for the combined operations of VTR/Claro Chile between 2023 and 2025. 

"This is driven by high capex requirements of the JV in order to improve the quality of its services and network competitiveness; the focus will be related to fiber and 5G development, as the company seeks to maintain healthy organic growth in terms of subscribers in the medium term," the agency wrote.

The effective start of the merged operations is expected for this year. The two companies previously said that they estimated synergies at around US$140mn within the first three years post completion of the deal, mostly related to cost savings arising from it.

Finally, Chilean firm Mundo, sold last year to DigitalBridge, recently announced that it became the first fiber operator to migrate its customers from HFC to fiber optics. 

Betting on the fiber neutral JV offering, competing with On Net, the company had projected capex of US$200mn for the full year and has plans to soon enter Peru and Ecuador.