CHILE: Investment opportunities in the Telecommunications sector - - PowerPoint PPT Presentation

Pamela Gidi Undersecretary of Telecommunications

Ministry of Transport and Telecommunications March, 2019

CHILE: Investment opportunities in the Telecommunications sector

30% 40% 10% 10% 10%

Mobile Communication Services (*) Fixed Telecommunication Services (voice, internet and pay TV)

Source: Undersecretariat of Telecommunica4ons (SUBTEL, Chile) Notes: (*) It includes handsets

Hardware Software IT Services

Total: USD 11.2 billion

ICT Sector Sales as % of GDP Telecommunica4on Annual Investment Telecommunica4on Investment per capita Total services

4.0% USD 89 USD 1.7 billion

Chilean ICT Sector in 2018 (es6mated):

2 53MM

(1) Percentage of inhabited territory.

• Nearly all territory covered for

Mobile Communications (Voice).

• Mobile has led broad adoption of

Internet (after 3G & 4G deployment).

• Access at the household level,

remains a challenge (Digital Divide).

• Coverage vs. capacity:
• Fixed networks provide

virtually limitless capacity but lower coverage.

• Mobile networks provide

dense coverage at lower capacity.

USUARIOS DE TELECOMUNICACIONES

Telecommunica6ons Services

3

66 95%

Coverage

(1)

Internet Users

2013 2017 99% 83

Internet Connec6ons (fixed & mobile)

49 105

Fixed Telephony

19

17

Mobile Subs.

134 125 Per 100 inhab

Pay TV

15 18

Fixed Internet (households, %)

38 49

36 88 13

17 99% 84 105

17

125 18 49

88

17 2018 (e)

Source: Elaborated by Subtel based on reports provided by the main four operators and Subtel statistics. It does not include OTT Services (Internet Applications). Exchange Rate (Dec/31, 2018), CLP/USD=695

MERCADO Y COMPETENCIA

Telecommunica6ons Sector

4

Sectoral income

Million USD nominal

Competition

Income share, 2018 (%) EBITDA/ Income (*) Investment Income Wholesalers and others Mobile (voice and data) Pay TV Fixed Broadband Telephony

• The reforms of 2010-2013 promoted a healthy competition with pressure on the margins due to the aggressiveness of

new entrants (WOM, 4th mobile operator).

Services

Distribution in value, 2018 (%)

6.070 7.162 2012 2018

33% 27% CAGR12 -18 3,4% 23% 18%

29%

27% 15% 12% 17% Telefónica Entel Claro WOM, GTD and others VTR 54% 15% 8% 15% 8%

54% 15%

Internet Mobile (3G+4G)

Fixed Internet Access Market (3Q-2018)

• 3.2 million broadband subs.
• 50% penetra4on (households)
• Fiber remains 18% of total subs.

Mobile Internet Access Market (3Q-2018)

• 17.9 million Internet subs (77,6% are 4G)
• 96.3 subs per 100 inhab.
• 4G grew from 0.3 mill in sept/2014 to 13.9 mill in sept/

2018.

Source: Subtel

0,0 1,0 2,0 3,0 4,0

2010 2011 2012 2013 2014 2015 2016 2017 3Q-2018 Subscriptions Penetration

Fixed Broadband

Million Per 100 inhab. Million Per 100 inhab.

5 9 14 18 23 2010 2011 2012 2013 2014 2015 2016 2017 3Q-2018

Subscriptions Penetration

CAGR 7,3% CAGR 37%

Chilean Internet Landscape

5

(*) Regulator sets access charges only for interconnec4on and use of third party network resources.

6

Three main macro projects in telecom infrastructure 2018-2021

C) National Digital Highway Terrestrial Terrestrial Austral Fiber (Undersea) Austral Fiber (Undersea) Digital Gate from Asia to South America Digital Gate from Asia to South America USD 132 Mill (PPP) (2021) Curie (Google) Curie (Google) USD 300 Mill* (P) (2019)

PPP: Public Private Partnership P: Private Investment (*) Estimates (**) Devices and apps are not included (***) In coverage zones

USD 500-600 Mill (PPP) (2021) Prat Project (GTD) Prat Project (GTD) USD 100 Mill (PPP) (2019-2020) USD 100 Mill (P) (2020) USD 1.270-1.650 ** Mill (P) (Starting 2021) 5G Infrastructure Deployment 5G Infrastructure Deployment 25 fold increment in Chile’s International connectivity Doubles current backbone capacity of data transmission. Proliferation of connected devices and significant quality of service improvement Capacity: from 6 to 160 Tbps Devices: from 17 MM to more than 100 MM ** Speed (peak) : 0,1 Gbps to 10 Gbps Fiber: 18,000 to 36,000 (Km) A) Enhanced International connectivity B) 5G Deployment Fiber Fiber (private private infrastructure infrastructure) USD 120 Mill (P) (2019-2020) Total USD 450 Million

7

Eje Inversión e Infraestructura

A) Undersea Cable: “Digital Gate from Asia to South America”

8

Origin China, Japan, Korea & Singapore Intermediate New Zealand, Australia & Hawaii Branches Landing point Rapa Nui, J. Fernández & French Polynesia Valparaíso, Arica, Punta Arenas, branch to Lima

Route Alternatives (preliminary):

• 1. Conceived to boost Chile as Hub Digital of the Southern Cone,

adding demand for data transport with South American countries, with the confirma?on of Brazil and Argen?na.

• 2. Other interested countries: China, Japan, French Polynesia,

New Zealand and Singapore.

• 3. Main poten?al gains (posi?ve externality) associated to world

class datacenter deployment and transit to other countries in the Southern Cone.

• 4. Increased availability (offer) of interna?onal connec?vity and

redundancy for routes through the South Pacific

• 5. Investment: USD 500-600 million
• 6. First stage: Feasibility study (USD 3 MM, CAF Funding)

Key aspects

Project Schedule (“Digital Gate from Asia to South America”)

9

• Preliminary

agreements among governments of Argentina, Brazil and Chile.

• Prefeasibility Study
• Viability of routes

according to demand and productive sectors

• Governance
• Economic & financial

model

• Presentation of the

project to multilateral

• rganizations and

interested entities.

• Technical

specifications and detailed engineering

• Desktop Study
• Constitution of

legal entity.

10

B) 5G Deployment Chile: Bands under study (deployment in phases)

Bands of potential interest for a wholesale entrant

Network usage Coverage Coverage High Capacity Ultra High Capacity 5G Readiness

2020 2020 2019

2019 700 MHz AWS 1.7 GHz 3.5 GHz 28 GHz 600 MHz

2019

Coverage Coverage Speed

Low Medium High 5G requires portfolio of bands

Road Map: Chile 5G deployment

11

Awarding

12

13

B) 5G Deployment Chile 5G Deployment

Recent 5G networks announcements Recent 5G networks announcements

South Korea USA Australia Switzerland Finland UK Spain Brazil Mexico Chile

C) Na6onal Digital Highway

13

3,000 Km 900 81 Investment (USD Million) 18 1S 2020 Start opera4on 1S 2020* 8,478 1,000 133 10 2S-2021** 2S 2022 3,500 100 1S- 2020

Fibra Óp4ca Nacional + Tarapacá

Doubling optic fiber in Chile over the next 3 years

Submarine Terrestrial FON

Tarapacá

Prat – GTD Cable

* MagallanesTerrestrial Backbone (Aysén and Los Lagos segments under evaluation of proposals). ** Under revision of Tender Documentation.

Gobierno de Chile | Subsecretaría de Telecomunicaciones

Thank you