Entel Chile eyes 5% annual fiber growth

Chilean operator Entel plans to grow its fiber market share at a rate of 5% annually and reach 25% after the approval of its infrastructure deal with OnNet, a joint venture between Telefónica and KKR.

Entel sold its fiber infrastructure to OnNet and will gain access to the latter's network, which will increase its number of homes passed with fiber by from 1.3mn to 4.3mn.

Competition authority FNE recently approved the deal under the condition that fiber networks in six districts of Santiago, as well as in Calama, Antofagasta region, and in Concón (Valparaíso) must be sold.

Entel is expecting significant business this year, Marcelo Bermúdez, vice president of corporate finance, said during the firm's 4Q23 results presentation.

For each new subscriber, the company must also deploy fiber optics to the home, which costs US$200-2,500.

The company registered 516,750 income-generating household units, including video and OTT, down 6.7% year-on-year due to the disconnection of wireless services, which was partially offset by 31,000 new fiber connections, up 14.5%.

Entel registered 243,000 fiber optics connections last year. Fiber sales represent 74% of Entel Hogar's total income. The penetration of connections over homes passed was 19.6%.

The integration of the OnNet network is expected to help improve the company’s position, but most of the generated cash will be consumed by fiber optics, according to Bermúdez.

In Peru, the company signed a similar agreement with Telefónica and KKR, still under review by competition authorities and expected to be approved this year.

OnNet plans to continue investing in fiber optics and reach 5mn homes passed in Chile. The company will invest close to US$120mn in the next three years to leverage this growth, according to local media.

5G INVESTMENTS

Last year's capex reached 476bn pesos (US$522mn), down 7.6% and below expectations due to the need to defer fiber investments because of the delayed approval of the operation with OnNet.

The funds went mainly to the 5G network. The company has completed the deployment of all mobile sites corresponding to the second phase.

In 2024, the company will begin shutting down the 2G network to concentrate on 4G and 5G.

Last year, the company served 1.5mn 5G customers.

RESULTS

Entel recorded net profits of 88.8bn pesos in 2023. Consolidated revenues amounted to 2.57tn pesos, down 18%. Considering the extraordinary effect of the sale of datacenters in Chile and Peru and the OnNet agreement, the reduction is 2.7%.

Ebitda fell due to lower consumer spending and increased costs associated with inflation and energy, among others, but Entel expects demand to recover this year.

The company served 20.2mn mobile service customers in Chile and Peru, an increase of 2%.

PERU

Entel registered a base of 9.6mn mobile subscribers and growth of 0.5% in the subscription segment last year, despite intense competition.

ARPU for services increased 5.8%.

The company is planning to grow the postpaid subscriber base, which “is a challenge due to the economic situation,” Bermúdez added.

Revenues decreased 9% annually to 832bn pesos due to lower economic activity that impacted sales of terminals and accessories.