Nextel Chile To Invest $300 Million After Winning 60MHz Of 3G Spectrum
September 08 2009 - 12:02PM
Dow Jones News
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