5G market in Chile – opportunities and challenges

The fifth generation of mobile networks, the 5G, is set to revolutionise the way we access information, communicate, work and live. With its faster speeds, lower latency, and increased capacity, 5G will enable new technologies such as the Internet of Things (IoT), autonomous vehicles, and virtual reality. Chile, one of the countries in Latin America that has been quick to adopt 5G technology, is actively working on the deployment of 5G networks and investing heavily in the infrastructure and equipment needed to support it. This article will explore the current state of 5G in Chile, including the challenges and opportunities it presents.

The deployment of 5G networks in Chile is still in its early stages. The country's main telecommunications companies, Claro (America Movil), Movistar (Telefonica), Entel and WOM, have all begun to deploy 5G technology in selected cities, but a nationwide rollout is still in the works.

The Chilean government has set a goal to have 5G coverage in all major cities by the end of 2025. The deployment of 5G will require 9,000 new base stations, of which 67% will be located in provinces and the remaining 33% in capital Santiago metropolitan area. Meanwhile, 366 towns throughout Chile will benefit from high-speed mobile internet connection the first time. In addition, all public hospitals in Chile will be covered by the new 5G network under the operator license obligations. The government also estimates that the deployment of 5G will generate about 68,000 new jobs in the first stage, while the deployment of base stations throughout Chile will generate an additional 2,500 to 3,000 jobs.

In the 5G spectrum auction held in 2021, the Chilean government raised $453 million in four rounds (700 MHz, AWS, 3.5 GHz and 26 GHz), which is 512% more than what was collected in all previous spectrum tenders combined. A total of 1.8 GHz was awarded for mobile broadband. Mobile operators Movistar, Entel and WOM secured 50 megahertz of 3.5 GHz spectrum each. WOM, which is controlled by U.K. fund Novator Partners, also secured additional frequencies. WOM won a 20 MHz block in the 700 MHz band, 30 MHz in the AWS band, and 50 MHz in the 3.5 GHz band, paying around $150 million. Claro and Entel also secured additional spectrum in the 26 GHz band.

5G telecommunications infrastructure is rapidly becoming a major focus for countries around the world, as they look to upgrade their networks and keep pace with the latest technological developments. Chile is no exception, and a number of major players are currently vying for a share of the market in this South American country.

One of the main challenges facing the deployment of 5G in Chile is the lack of infrastructure. Geographically, Chile is a long and narrow country, with a population that is concentrated in a few urban areas. This means that building the necessary infrastructure for 5G networks, such as mobile towers and fibre-optic cables, can be difficult and expensive. Additionally, Chile's rugged terrain and limited access to rural areas also pose a challenge.

In order to provide 5G coverage, telecom companies must first invest in the necessary infrastructure, including base stations and antennas. In Chile, the main providers of 5G services are Entel, Claro, and Movistar, along with a newer carrier WOM. These companies have been working together with the government to roll out 5G networks across the country. The Chilean government has set a goal of reaching 90% population coverage by 2025, and to achieve this, they have been issuing licenses for the use of 5G spectrum. This has enabled telecom companies to begin building the necessary infrastructure to support 5G networks. To support the deployment of 5G infrastructure, telecom companies must also invest in new towers and other supporting structures. In Chile, this has led to an increase in the number of towers and other structures being built across the country.

In addition to traditional macro sites, one of the key components of 5G infrastructure is the use of small cells. These are small, low-power base stations that can be placed in a variety of locations, such as on streetlights, buildings, and lampposts. Small cells are crucial for providing coverage in densely populated areas, where traditional macro cells may not be able to reach.

One of the main challenges facing Chile with regards to 5G towers is the lack of available land. In many urban areas, space is at a premium, and finding suitable locations for towers can be difficult. This has led to the use of innovative solutions, such as the use of existing buildings, lampposts, and other structures to mount antennas and small cells.

The sector watchdog, the Chilean Department of Telecommunications (Subsecretaria de Telecomunicaciones or Subtel) has published overall usage data by operator, reporting a total of 1.587 million active 5G subscriptions in Chile at the end of September 2022. Entel’s accounts made up just under half of that total (737,512) whilst Movistar represented the next largest total with 459,430 subscriptions and WOM claimed the remaining 389,581. 

One of the key players in the 5G telecommunications infrastructure market in Chile is Entel, a leading telecommunications company that has been operating in the country for over 100 years. Entel has been working to upgrade its existing 4G network to 5G, and has already begun deploying 5G infrastructure in key cities such as Santiago and Valparaiso. The company has also announced plans to expand its 5G coverage to other major cities in Chile, including Concepcion, La Serena, and Temuco.

At the start of the initial stage of its 5G deployment plan, Chilean operator Entel announced that residents of 33 metropolitan communes will initially have 5G through the company’s network. The carrier also announced an estimated initial investment of US $230 million within the next three years. Only in 2021 Entel deployed more than 400 antennas, increasing its coverage during 2022 and planning to expand further in 2023 to cover more than 313 districts across the country.

Meanwhile, in late December 2022, Entel Chile reported over a million 5G subscriptions or around 10% of its total number of connections one year on from the launch of its 5G network. The figures are based on the users of 5G-compatible mobile devices who used 5G data in this period. Under its licence obligation, Entel was required to roll out services to over additional 300 sites, including: 199 public hospitals, 25 universities, 24 government ministries, 19 seaports and 15 airports. Alongside the 5G rollout, Entel has committed to invest USD128 million in 4G network improvements, with a focus on rural areas, and USD106 million in the deployment of fibre infrastructure, and is expected to unveil the result of the first stages of these upgrades early in 2023.

Another major player in the 5G telecommunications infrastructure market in Chile is Claro, a subsidiary of America Movil, one of the largest telecommunications companies in the world. Claro has also been working to upgrade its existing 4G network to 5G, and has already begun deploying 5G infrastructure in Santiago and other major cities in Chile. The company has also announced plans to expand its 5G coverage to other regions of the country, including the southern region of Patagonia.

In September 2022, America Movil, Claro Chile’s parent company and Liberty Global, the parent company of VTR, a well-established primarily fixed line and fixed broadband operator with a wireless connectivity division, announced plans to form a new 50/50 joint venture. The following month, Chile’s national economic prosecutor Fiscalia Nacional Economica (FNE) greenlit the deal, stating that the tie-up did not represent a risk to competition in the telecommunications sector. However, due to a potential concentration of spectrum resources Claro will be required to return 10MHz from each of the 3.5GHz and 1700MHz bands. Claro will also be required to spin off and sell its satellite TV business.  We expect this merger to enable significant investment for expansion of fixed fibre and 5G wireless networks.

At the same time, Claro has also been making headlines recently in regards with Chile’s Antitrust decision to allow the use of existing fixed wireless 3.5GHz spectrum allocations for mobile services, including 5G. Claro Chile holds rights to this spectrum band, but was not allowed to use the airwaves for 5G services under its current concession, which is valid until 2032, rendering the resource being underutilised, to the detriment of customers and the market. The decision now clears the way for the regulator Subtel to alter Claro’s authorisation so that the spectrum can be used for 5G mobile services. TowerXchange expects to see a rapid expansion of 5G deployment by Claro Chile in 2023 as a result of this change.

Last year, America Móvil (operating under the brand name Claro) has also completed separating its cellular infrastructure assets into a separate business called Sites Latinoamerica, who will be the operator’s primary infrastructure partner across 15 countries in Latin America, including in Chile. While for operators this means a potential new tower company to co-locate its assets in the future, for the tower companies already operating in the market the arrival of a new potential competitor may not be the most hotly anticipated development. Nevertheless, the establishment of Sites in Chilean market is expected to play a major role in the continuation of 4G densification and 5G deployment in the country over the next few years.

Similarly to other carriers in Chile, Spanish Telefonoca’s local brand Movistar has announced the initiation of its 5G deployment plan at the end of 2021, aiming to have a national 5G presence in the 16 regions of the country and deploying of nearly 1,500 base stations in the first quarter of implementation alone. In Chile, Movistar is deploying its 5G network in partnership with Nokia and Huawei.

In addition to investing into the development of new 5G-ready sites, Movistar has been undergoing a gradual migration of its 2G operations to more modern networks. Despite Chile being among the most advanced telecommunication markets in Latin America, along with other countries in the region, it still has a significant percentage of users employing 2G services. Citing, among other reasons, the need to achieve its global carbon footprint reduction objectives, Movistar Chile has started decommissioning its 2G equipment in any remaining areas, to offer its users more modern, fast, reliable, and efficient solutions.

In addition to these major players, there are also a number of smaller companies and start-ups that are working to establish themselves in the 5G telecommunications infrastructure market in Chile. These include companies such as WOM, a start-up that is focused on developing 5G infrastructure for rural and remote areas of the country, and Nextel, a company that is working to build a 5G network specifically for the industrial and manufacturing sectors.

In late January 2023, the full-service operator WOM has completed the installation of the first of the rural 4G/5G sites it committed to deploying as part of its licence for 700MHz spectrum in the 5G spectrum auction in 2021. As part of the purchase, the operator has obliged to providing 4G coverage to 366 remote towns. The operator has now unveiled the first of these sites which serves the town of Teguel in Los Lagos region on Chiloe Island, providing 4G and 5G connectivity to the community. The initiative is part of a plan to bring connectivity and promote education and entrepreneurship in the most isolated areas of the country.

WOM Chile made the news in mid-2022 with the announcement of a major infrastructure asset sale to one of the global leaders in wireless infrastructure market – Phoenix Towers International. The operator sold 3,800 sites for a total consideration of USD930 million (including just under 1,5000 towers that will pass into the towerco’s ownership by 2024). PTI will now be the operator’s main infrastructure partner when it comes to densification of the existing 4G network, including into the previously underconnected remote areas, and deployment of new sites as a part of the carrier’s 5G deployment strategy.

Despite the presence of these major players and smaller companies, the 5G telecommunications infrastructure market in Chile is still in its early stages of development. There are also some challenges that need to be overcome in order to fully realise the potential of 5G in Chile. One of the biggest challenges is the lack of investment in the country's digital infrastructure, which is needed to support the deployment of 5G networks. Additionally, there is a need for more regulation and oversight to ensure that the deployment of 5G networks is done in a way that is fair and equitable for all companies.

Despite these challenges, it is clear that 5G telecommunications infrastructure is set to play a major role in the future of Chile's telecommunications market. With a number of major players already investing in the development of 5G networks, and more companies expected to join the market in the coming years, Chile is well on its way to becoming a leader in 5G telecommunications infrastructure in South America.

5G technology is seen as a key driver of economic growth and development in Latin America. With its faster speeds, lower latency, and greater capacity, 5G networks have the potential to bring new opportunities and benefits to the region. However, in order to fully realise the potential of 5G in Latin America, there is a need for significant investment in the deployment and maintenance of 5G networks and the development of new regulatory frameworks and policies to support the deployment of 5G networks and to ensure that the benefits of 5G are shared by all.

The deployment of 5G networks in Chile is still in its early stages, but the country has the potential to be a leader in the region. However, there are challenges that need to be addressed, such as the lack of infrastructure and spectrum. Nevertheless, 5G technology presents many opportunities for Chile, including the potential to support the development of new technologies and industries, as well as improve healthcare and transportation. Chile's government and telecommunications companies must continue to work together to ensure the successful deployment of 5G networks and take advantage of the opportunities it presents.