Chile's Mundo: 'Our business model can be replicated anywhere'

With a strategy that is strongly focused on fiber optics and transportation networks, telecom operator Mundo is now number two in fiber broadband in Chile and expects a fierce fight next year for the leadership position with Telefónica’s Movistar.

Formerly known as Mundo Pacífico, the company has also passed América Móvil’s Claro to become the third largest fixed broadband provider in the market.

The challenges that Mundo is facing include the offering of unified convergent services and infrastructure sharing among local players. 

BNamericas spoke with CEO Enrique Coulembier (in photo) and commercial manager Harry Cea about the challenges, investment plans and potential expansion to other countries.

BNamericas: Last time we spoke you had high expectations for the year. Now that we are almost in the final quarter, how has 2021 been for Mundo?

Coulembier: We are very happy because we’ve grown a lot. We’ve grown within our plan, which was very ambitious. We’re already at 500,000 connected clients. 

As we talked in our last interview, there’s an important part of this growth generated in the market that we capture from the competition.

In terms of deployments, we’re already at 2.6mn homes passed with fiber and we’ll finish at 3mn on December 31.

In our data network, we’re already close to 6,000km deployed, and we’ll surely get to 7,000km in December.

We’ve made some changes, we’ve fulfilled the obligation to upload the network and today we’re reaching 800Gbps of capacity. 

We’re going to get 800Gbps at least between Concepción and Santiago, which are 500km apart and where there’s more consumption of data today.

We’re also making a major shift in the wholesale, connectivity delivery market. 

We’ve managed to get other players to come into our network and that will also cause a strong impact in the wholesale market for IP transit issues, tremendously lowering the international interconnection prices. 

That’s not only going to improve our cost side, but it’s going to improve the industry.

BNamericas: How about mobile?

Coulembier: We’re doing pretty well in mobile, we’re meeting our budgets. We’ve realized that we can compete in this market, and we’re bringing a lot of third-party portability as we continue to go after our own customer base.

We just had a meeting with the telecommunications part of the government, with the [transport and telecommunications] minister [Gloria Hutt] and the [telecommunications] undersecretary [Francisco Moreno]. 

We went to talk about all this, about convergence. The government told us that they’re working on that.

It called our attention because it’s the first time, at least during the time that I’m here in Chile, that they tell us they’re already working on this issue, that they’ll soon have news about it.

The problem is that we sell a fixed service on the one hand and on the other, totally independent, we have to sell the mobile service. Advertising has to be different, billing, etc. We cannot ‘package’ the services. So that's where a lot of synergy, efficiency is lost. Imagine doing independent projects, independent billing for the client.

We also went to tell them that we’re already at 60% of the population covered under FON [national fiber optics project].

And it called their attention because we not only have it with backbone connectivity, but we also have it with last mile deployment.

BNamericas: In how many locations are you in under FON?

Cea: As of today we’re in close to 105 localities considered in FON. We’ve basically covered the Valparaíso and La Araucanía regions.

The Araucanía region is quite symbolic, where we see conflicts with indigenous communities. And we’re deploying there, which has allowed us to advance in the process of reducing the digital divide.   

In the Araucanía region, in the localities that correspond to FON, we’re going to cover 100% of them this year.

Coulembier: In addition to FON, the idea is to continue our fiber expansion next year and reach 4mn households.

BNamericas: The goal of homes passed with fiber for this year is 3mn, right?

Cea: Yes, 3mn. And 4mn by 2022, all with backbone network, with a widespread network, with a neutral network.

Coulembier: We’ve been trying during two years for operators to join our network and there is still significant resistance. There is significant resistance on the part of operators to get into a third-party network. The opposite of Europe.

BNamericas: How do you assess the increased competition in neutral networks, now with Telefónica also launching an open fiber network project in Chile with KKR, for example?

Coulembier: Look, we feel very confident. I think we’re a totally different company, with a different concept, at least here in Latin America. 

Our concept is that of a transversal structure, in a low-cost structure, and we transfer all of this to customer service and to a low price point, of course.

The other companies are very heavy and it’s going to cost them a lot to maintain these rates, these offers. 

I don't want to get into the competition strategy. But in the case of other players there is an important limitation, because they have sold their infrastructure based on a return for the fund that bought it.

Cea: Putting it into a broader context, today we’re already the third home internet operator in Chile, ahead of Claro. And in fiber we’re already the second operator, behind Movistar.

Coulembier: With the difference that Movistar is migrating clients from [digital subscriber line] DSL networks to fiber networks and we’re generating new customers. 

[We are] a company that four, five years ago, had 40,000 clients and today has 600,000 clients, genuinely generated.

We believe that we’re on track to becoming number one. By the end of 2022 we may be close to that. 

In addition to new fiber clients – as there is still a lot of penetration to grow in Chile – we’re also bringing in clients from other companies.

Cea: And we’re quite comfortable with our cost structure.

BNamericas: How are the operations in Santiago?

Coulembier: We’re already in 18 of 30 municipalities in Santiago and we have about 1.2mn households passed with fiber in the metropolitan area.

Cea: The area which includes Valparaíso and Santiago represents about 40% of our clients.

BNamericas: Some of your competitors are being notified by regulator Subtel because of interruptions in services, which telcos argue are caused by vandalism and cable theft. How do you deal with these issues?

Coulembier: Subtel asked us exactly the same thing. How we deal with it. And we’ve been dealing with it from day one. Not just with vandalism and theft, but harmful actions by competitors, local operators, etc. We confront it with engineering.

We went on to make a lot of redundant [fiber] rings. Our last mile deployment is designed and executed 100%, having all homes connected to it.

And when it comes to the backbone, sometimes we have like three routes going to the same place. Precisely due to this, for redundancy. For many years we’ve been making tiny rings in various routes.

I think competitors made a mistake in this regard, in not having redundant networks.

BNamericas: Besides the convergence of services, what else is critical for Mundo from a regulatory standpoint?

Coulembier: There is an issue that is relevant in all countries in the region, which is infrastructure sharing.

I always say that in Spain it took us a lot of time and effort, but a few years ago the shared use of all the [telecom] infrastructure was regulated, from the façades to the traffic light ducts, the power lines, everything. It also regulated the dominant operator [Telefónica], forcing it to share infrastructure. 

In the countries here in Latin America the same should be done. They are countries that have many aerial [power and telecom wireline] deployments, in a totally disorderly arrangement.

They should work on this at rural levels, mostly, and also bring together road, electrical infrastructure and telecommunication departments.

BNamericas: Do you plan to expand to neighboring countries?

Coulembier: I think that the infrastructure development in Chile, at least for us, will take a year and a half more.

When we have that development completed - and I think that would mean having about 4.5mn homes passed – that could give us the possibility of expanding to any country, because we would be [present with infrastructure] at the extremes of Chile, on the borders.

Plus, our business model, the culture we have created, is standard. Our business model can be replicated by us anywhere.

Today we have 2,500 workers and the vast majority were trained by us, in our own model. We are very proud of that.

BNamericas: Is the investment amount of US$120mn for this year maintained? And how much do you plan to invest in 2022?

Coulembier: Yes. And for next year it will be around the same figure. 

Our investment projections are the same next year for the transportation network and for deployment it will also be the same, perhaps a little more, considering we’re talking about 1mn of homes passed compared to 900,000 or so projected for this year.