ClaroVTR obtained a provisional permit to start service deployments 5G nationwide in Chili. The company is the result of a union of assets of the operator Claro de América Móvil and the cable company Liberty Latin America VTRwhich since October 2022 created that joint venture to compete in the Chilean fixed and mobile markets against Entel, Movistar and wom.
The Undersecretary of Telecommunications of Chile (Subtel) authorized ClaroVTR to exploit its frequencies located in the band of the 3.5 gigahertz to commercialize 5G services to the mass market.
The authorization comes after the Court of Defense of Free Competition of Chile (TDLC) first consented to the elimination of the restrictions that existed in the concessions of 3.5GHz of Claro to exploit that band in mobile services as well as fixed, and after a recommendation also from that same authority for the Subtel, regarding the assessment that the Chilean telecommunications market must have the presence of at least four companies offering 5G services to consumers. Movistar, Entel and Wom already had their respective authorization from 15 months before.
The license granted by the TDLC will have an impact on the investment strategy of Claro, now in a business alliance with VTR, after both companies combined their fixed and mobile Chilean businesses in the same entity and with an investment commitment in the deployment of 5G and fiber optics.
ClaroVTR is now required to present a technical project regarding its 5G network deployments. While the local sector presumes that the company I would invest about 50 million dollars in those early network deployments.
The obligation for ClaroVTR stems from the fact that in 2021, during the auction that the Chilean State undertook to concession 3.5 GHz frequencies, the Claro company, still alone, did not obtain band concessions for having submitted much lower economic offers than others. contestants.
On that occasion, Movistar obtained 50 MHz of signals after offering 163 million dollars; Entel won another 50 MHz for $139 million and Wom won its 50 MHz package after offering $45 million. And this is the parameter that ClaroVTR must adhere to in order to invest at least 45 million dollars in its 5G network, and as mandated by Subtel to avoid distortions in the market.
“As a regulatory entity, we are mandated to make decisions where the national interest is paramount, such as seeking the optimal use of the spectrum (…) This authorization, provisional, is taken with the objective of optimizing the use of the spectrum, so that it can be operated for the benefit of citizens. When there is greater competition, the plans are more attractive, prices drop and people have more options to decide”, said Subtel.
The Chilean Supreme Court It will be resolved later, if the provisional authorization becomes definitive for ClaroVTR.
The decision of the Chilean State with this authorization brings “a new investor in 5G networks, increases competitiveness, enhances service offers for Chileans and will promote the digital economy, although it also creates a precedent for future spectrum allocation processes ”, considered Gerardo Mantilla, an analyst at Artifex Consulting.
In Chile, the operator Claro has 30 Megahertz of frequencies with national coverage within 3.5 Gigahertz, located between the ranges of 3425 to 3440 MHz and 3525 to 3540 MHz. The validity of the Claro concessions in this spectrum ends on December 12, 2031.
In January 2023, the Chilean Competition Court authorized a modification to Claro’s 3.5 GHz spectrum concession, so that this operator can now use its frequencies in mobile services such as 4G-LTE and 5G, in addition to previously authorized fixed wireless such as fixed telephony, but which have ceased to represent an important business for Claro due to the new consumption habits of users who today browse the mobile Internet.
The logic of the Chilean telecommunications market forced Claro and VTR to unite so as not to lose more money, and followed the path that Movistar and the KKR fund had followed long before to create a new company whose goal is to bring fiber optics to the Chilean homes. And a similar case is the alliance of Wom with Mundo Pacífico to offer mobile services and fixed broadband, which to date exceeds 2.6 million houses passed with the latest generation fiber, in both cases, directly impacting Liberty’s VTR.
