Claro Chile wins 5G auction with US$90mn bid

América Móvil's Claro Chile won the second 5G tender and will become the fourth operator offering the service in the country. 

“We are very satisfied with the result of this auction, and it meets the objective of having an additional operator in the 5G spectrum,” telecommunications and transport minister Juan Carlos Muñoz, said during the bid opening. 

The auction was part of a plan to rearrange the spectrum and use it more efficiently. Muñoz said that the process will hopefully result in a third 5G tender.

"There will be a significant investment by the successful bidder," Claudio Araya, the head of regulator Subtel, said. 

Claro Chile submitted a single offer of 83.5 billion pesos (US$90.1 million) for the five 10MHz blocks in the 3.5GHz band, with a guarantee of 45bn pesos. Entel, meanwhile, offered 42.4bn pesos for the spectrum.

In the previous auction in March, which resulted in a technical tie, Claro and Entel were the only operators that presented proposals. At the time, each operator paid about 833mn pesos in guarantees.

Claro is now obliged to cover 100 new localities and 1,500km of roads. 

MOBILE MARKET

In February 2021, WOM, Telefónica Movistar and Entel obtained 50MHz each in the 3.5GHz band for 32bn pesos, 117bn pesos and 100bn pesos, respectively. All three operators are offering 5G in Chile.

Operators in Chile also have licenses in the 26MHz band for 5G services.

By March, Chile had 4.2mn 5G broadband connections and 22.9mn internet mobile lines in total. 5G was up 74.4% over the previous 12 months, with penetration surpassing 21%. Meanwhile, 4G slipped 6.6% to 17.3mn accesses and 3G 17.2% to around 910,000.

Entel leads the mobile market with 35.1% of all 2G, 3G, 4G and 5G connections, followed by WOM with 25.2%, Telefónica with 20.3%, Claro with 17.3% and VTR Mobile with 1.4%. 

But the mobile business landscape is set to change.

In April, WOM filed for Chapter 11 proceedings in the District Court of Delaware after securing a US$200mn debtor-in-possession financing line from JPMorgan. And the operator is planning to relinquish its 26GHz concession as the market couldn’t develop a business in that band. 

The future of the 50:50 ClaroVTR JV is also uncertain. A capitalization agreement between América Móvil and VTR owner Liberty Latin America stipulates that each company must buy one half of the JV's convertible notes before August 1 for ClaroVTR to remain a 50:50 JV. 

América Móvil has fulfilled its obligation and bought notes for 721bn pesos. If Liberty does not follow suit, the former will become the majority owner.