Mobile-telephone company Nextel Chile will invest $300 million in its third-generation mobile network to provide mobile phone and Internet services in coming years after winning 60 megahertz of 3G spectrum in a closed tender Tuesday.

Chilean cable-television and broadband operator VTR SA and Nextel both submitted bids Tuesday for three bands of 30 MHz of 3G wireless spectrum, but Nextel was by far the highest bidder on two of the blocks.

"Our strategy was to focus on winning two blocks, which we did ... this is very good news, we are excited," Nextel Chile CEO Eduardo Gonzalez said in an interview.

Nextel bid a total $14.6 million for the two bands it won, totaling 60 MHz of spectrum, while VTR will pay $3 million for one band of 30 MHz. The concession contracts will be signed in coming days.

VTR and Nextel were the only companies to submit bids for the bands in July but the telecommunications regulator Subtel determined the bids were technically tied so the companies were invited to participate in a closed tender.

The companies have 12 months to build their 3G networks and start offering 3G services nationally.

"We are working as hard as we can on our network and hope to have it ready by late 2010," said Gonzalez.

Although a 3G antenna is costly to install, it allows operators to reach a larger number of clients via the airwaves than broadband via cable, and should reduce costs and improve quality of service for Chilean consumers through increased competition.

"The entry of two new companies will increase competition in the mobile phone and Internet business, which is good news for 15 million Chileans," transport and telecommunications minister Rene Cortazar told reporters after the bids were opened.

As to a brewing controversy about the location of 3G antennas in populated areas, a bill is before Congress to regulate their construction, said Cortazar.

VTR and Nextel will compete with Chile's three main mobile-telephone companies that already have 3G spectrum: Empresa Nacional de Telecomunicaciones SA (ENTEL.SN), or Entel; Movistar, a unit of Spanish firm Telefonica SA (TEF); and Claro, a subsidiary of Mexican firm America Movil SAB (AMX).

"We are used to competing with these companies in other countries like Argentina, Peru and Mexico so we are ready to compete here," said Gonzalez.

Nextel, which offers push-to-talk mobile-phone services using its Direct Connect technology, is focused on offering high-speed mobile phone and Internet services to local companies.

Chile's supreme court ruled in January that each company can have no more than 60 MHz of 3G spectrum. Since Entel already has 60 MHz, while Movistar and Claro each have 55 MHz, they decided not to participate in the tender.

Some 15 million Chileans - or about 90% of the population - have mobile phones, which is one of Latin America's highest rates of mobile telephone penetration. Mobile broadband is growing fast, too, with 250,000 users at the end of 2008.

Part of the reason is that long distances between cities and the high cost of laying down cable make broadband via cable expensive outside Santiago.

VTR, the largest cable-television and broadband provider in Chile, is owned by the U.S.'s Liberty Global Inc. (LBTYA) through its subsidiary UnitedGlobalCom Inc.

Nextel Chile is owned by Virginia-based NII Holdings Inc. (NIHD), which provides mobile-communication services in Latin American markets including Argentina, Brazil, Mexico and Peru.

Nextel currently has 40,000 clients in Chile and three offices in Santiago but plans to open at least 20 more throughout the country to offer national services, said Gonzalez.

-By Julian Dowling, Dow Jones Newswires; 56-2-820-4241; julian.dowling@dowjones.com