Skip to main content

Chile's 4G spectrum goes quietly... and cheaply

In all the excitement about Ofcom's announcements regarding the UK's digital dividend auction, the mainstream press missed the latest country to auction off its spectral assets.

Although its only the continent's 6th most populous country, Chile is interesting as it is the most stable and prosperous large country in Latin America and therefore hints at the future direction of other markets on the continent. The results of their regulator, Subtel's auction for 2,600MHz spectrum, suitable for the high bandwidth component of LTE were released on July 31st.

Three operators acquired the spectrum: Claro - a subsidiary of America Movil, local telco Entel and Movistar, a subsidiary of Telefonica.

What interests me most is the low price this spectrum went for. Entel paid the most for their block - $8.84Mn - but even this is a sixth of the global average price for this spectrum in terms of MHz per capita. Market leader, Claro, paid only five percent of the average for their block.

As far as I can see, the reason for this was the lack of alternative bidders for the spectrum. The three winners were the only three bidders. Subtel will hope that this and the aggressive license terms - 98% population coverage in 2 years - will lead to economic benefits. They will also hope for a larger windfall from their more valuable digital divident spectrum at 800MHz.

Even so, the lesson for Ofcom here is that competition for licenses remains the best way of ensuring a good return on the assets. 4 bidders for 4 licenses is not the best outcome for the UK.

Comments

Popular posts from this blog

Impacts of a handset leasing model on mobile telcos

Following yesterday's post, here's some related thinking on the impacts on operators of handset leasing. Handset sales represent around 25% of operator revenues in a typical European market, but generate only around 5% of margin. It may therefore be the case that the scenario described would lead operators to a more profitable structural model than exists today. Oil companies are consistently and acceptably profitable, despite being (literally in some cases) the ‘dumb pipe’ that operators are so desperate to avoid becoming. One of the reasons for the oil majors sustained profitability is clear focus on their role in the value chain – to supply the fuel that enables transportation, relying primarily on location, then brand and finally product innovation to compete. BP or Shell do not need to subsidise the purchase of a car in order to drive consumption of fuel because consumers are ‘hooked’ on it (it gets them from place to place) and there are many credible car manufacturers an...

Differences between Industrial and Digital businesses

Since I'm stuck on a Eurostar crawling through western France I thought I'd use the downtime to share this table I've made on the differences between Industrial and Digital companies across the main business functions. A strange insight into how my mind works... but hopeful a useful summary!

Value drivers for telecoms retail

I've been doing a really large number of driver trees recently - we've taken to using them on every project to get really into the guts of value creation for businesses and thus decide where to focus initiative development (How To Win, if you're keeping score). Anyhow, I had to pause for thought recently to work out how to represent the subscription aspect of telecoms retail for a client. Since it took me a minute, I thought I'd share... its lack of elegance suggests that its not quite right, although it was enough to demonstrate that there was a certain lack of coverage in the initiatives that my client was pursuing and thus spark a debate. Enjoy.