Tuesday , August 9 2022

2018 is bad for Entel, Movistar and Claro Chile, and good for WOM


In the midst of a strong process of transformation in the industry, which has led companies to adapt their business model to face more market competition with a high level of penetration, the results of the large mobile telephony operators closed 2018 reflected & The effect and revenue discounts for this segment.

The three companies that report their financial statements, Entel, Telefónica (who operate in Chile under the Movistar brand), and Claro, have declined in this item, in a situation that will continue to be marked using strategies to maintain a market share. before new actors proceed as WOM.

"The telecommunications industry will continue to be marked by a strong competition, with a high level of penetration in Chile and Peru, where revenue from mobile telephony services has changed significantly after the implementation of commercial strategies for higher services and costs It is for consumers, "said BCI Corredores de Bolsa in a report on the prospects for the sector in 2019.

The results

In the case of Entel, who reported his financial statements at the end of January, closed 2018 with losses of $ 23,614 million compared to earnings of $ 43,409 million recorded in 2017, although there is a large part of the negative result due to the accounting effect, so that the negative balance is reduced to $ 2,873 million if this factor is cleared.

At the revenue level, whose main source comes from mobile business, the company said that there was a 5% reduction in mobile telephony in Chile that is in contrast to the 3% increase in Mahre . "The fall is mainly due to a reduction in the revenue from various services related to the increase in data quotas and free voice records offered in the evolution of the commercial offer, backpay and pre-paid, "said the company in its statement. results report

In the meantime, Claro Chile dropped its losses last year to $ 75,351 million compared to $ 89,884 million in 2017, according to the results report of his manager, America Móvil from Mexico. However, revenue decreased by 0.9% during the year and fell by 3% in the last quarter, driven by the mobile segment. Business firm Carlos Slim explained that there was a 4.4% reduction in the revenue of mobile services (in the fourth quarter) due to the pre-paid revenue that ended with a # 39 ; the fourth quarter of last year. In this regard, he said "competition in the prepaid segment increased during the second half of 2018 and reached its peak in the Christmas season."

In the case of Telefónica Chile, the company recorded a 2.7% increase in its gross operating result (OIBDA) in 2018 to 617 million euros, driven by the growth in access to value and in the efficiency measures implemented. But the Spanish subsidiary of Chile's Telefónica has also recorded a decline in mobile service revenues, which returned 5.5% in the year, mainly due to the lower customer base.

"Prepayment (which fell by 15%) continued to be affected by mobile access (which fell from 5% to 8.6 million in 2018), in line with the general market trend and affected by contract migration. Access to contracts continues to accelerate their growth to 13% year on year and reach positive net gains of + + 97k access in the 4Q (+ 402k in 2018), improving the mode of movement (positive for the sixth quarter in a row) despite the competitive density in the market, "said Telefonica in the department on Chile, from a report on the results released on Thursday.

Indeed, the three companies drew attention to the fact that this situation has been moving towards a change in customer's composition with a rise in backbone against the free.

But this new strategy has produced costs for operators because of providing more attractive schemes that have to increase the supply of services and lower prices and plans. "The portability has allowed a high migration of customers between different companies, so part of the challenge is to maintain a stable customer base, without losing market share," said BCI report.

Market share

Indeed, according to the latest Sub-Subel data, by September 2018 Chile's mobile telephony penetration reached 129.7 subscribers per 100 residents, that is, 24.1 million subscribers are in a position to increase migration of 4G connections against 3G.

4G access has almost reached 14 million links to September 2018, with a growth of 52.9% in the last 12 months and 6.4% in the last quarter. In this segment, Entel had the largest market share with 31.9% of the total, and Movistar moved with 26.6%, Claro with 20.4%, WOM with 19.3%. VTR, Virgin and Telsur followed a distance of 1%, 0.7% and 0.1% respectively.

As well as adding the 3G and 4G connections, Entel also led the market with a 32.6% share but slightly lower than 32.8% in September 2017. The same is really with Movistar which remained second with 26.5% of the market, but it fell from 28.6%, while Claro dropped from 21.5% to 21% against WOM, which increased from 14.3% to 17.6% .

Regular uncertainty

In this context of increased competition and high penetration in the market, "industry development would be largely the use of the 5G network together with optical fiber, so decisions authorities in this issue are essential, "according to BCI.

However, the definition of the options for the band where the 5G network is being developed and that the spectrum companies can get caught in a series of legal disputes which has increased to the Free Defense Court. Competition (TDLC), the Constitutional Court (TC) and the Supreme Court.

The debate began in June last year when Subtel, in a surprising measure, decided to freeze the commercial use of a 3.5 Ghz band, which was awarded to VTR, Claro, Telsur, Movistar and Entel in 2001 and 2005. as an option for operating the 5G network. A few days later, another blast for the industry would follow, after the Supreme Court, receiving an appeal presented by Conadecus, decided that the companies could have a maximum of 60 MHz and organize Entel, Movistar and Claro – "to get rid of it. The amount of radio spectrum started in the band 700 competition, leaving the choice of the band that will be alienated".

The court also gave the possibility of appealing to the TDLC to increase the required limit, made by Subtel in October together with the partial payment of the 3.5 Ghz band. In parallel, Conadecus asked the court to enforce compliance with the alienation rejected by Entel Movistar and Claro, and the agency referred the matter to the Supreme Court, where Movistar and Claro appealed . they were rejected by the court.

In order to avoid running the same fate in front of the Supreme Court, Entree chose to file an unconstitutional appeal before the Constitutional Court demanding their right of appeal and that the proceedings were suspended in the Supreme Court and TDLC, while the CT has resolved about the fund. At the end of January, the TC received this final claim, but accused Conadecus by submitting a parallel appeal before the Supreme Court asked to dismiss the appeal from Entel, received by the court. So things, the future of what is happening with the definition of the spectrum, will depend on the next steps taken by the TDLC, the Supreme Court and the TC.

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