Chile clears Claro-VTR merger, but demands satellite business sale

Chilean competition watchdog FNE approved, with restrictions, the merger of América Móvil’s Claro and Liberty Latin America’s VTR.

The merger was announced in September 2021 and involves an undisclosed sum. It focuses on fixed and mobile services.

One condition FNE imposed is the sale of Claro’s satellite pay-TV services.

The parties agreed to transfer ownership of the operation to a fiduciary agent until the sale of the business to a new player takes effect. FNE also accepted a suggestion by the parties to divest part of the spectrum the combined company would concentrate.

VTR and Claro offered FNE to divest 10MHz in the 3.5GHz band and 10MHz in the AWS band. The spectrum returned is expected to be auctioned by telecoms regulator Subtel, as 3.5GHz is deemed the prime band for 5G.

The parties also offered to comply with usage obligations to promote the effective and efficient use of the spectrum. FNE considered the remedies package to be effective, proportional and suitable to prevent the merger from substantially impacting competition.

According to FNE, the competitive pressure exerted by other fixed broadband players, most of which have greater technological advantage because of their larger fiber footprint, such as Telefónica/KKR, Entel and Mundo, whose local operation was recently acquired by DigitalBridge, is sufficient. 

SYNERGIES

The deal was expected to close in the first half, which means expected economic gains could now take longer to materialize.

In May, Liberty’s CEO Balan Nair said the group anticipated around US$180mn in annual synergies from the combination of its VTR fixed operation with Claro’s mobile operation.

MARKET

Overall, Chile had 26.8mn internet connections (fixed, 3G, 4G and 5G) as of end-April, latest Subtel figures show.

The four largest mobile operators account for nearly 99% of the overall market (mobile internet plus 2G). 

Entel grew to 32.4%, from 32.3% in March 2021, and Movistar to 25.2%, from 24.4%. WOM went to 20.5% from 20.4% while Claro fell to 20.1%, from 21%.

The fixed broadband market is led by Telefónica, with 28.7% by end-March, up 15.4%, followed by VTR, with 28.1% (down 5.3%), Mundo (15.1%, up 44.5%), Claro (10.4%, down 7.7%), GTD (7.8%, up 7.6%) and Entel (6.7%, up 8.8%).