CHILE: Investment opportunities in the Telecommunications sector - PowerPoint PPT Presentation

CHILE: Investment opportunities in the Telecommunications sector Pamela Gidi Undersecretary of Telecommunications Ministry of Transport and Telecommunications March, 2019

Chilean ICT Sector in 2018 (es6mated): Total: USD 11.2 billion Fixed Telecommunication Services (voice, internet and pay TV) 30% � 10% � IT Services 10% � Software Mobile Communication 40% � 10% � Services (*) Hardware 4.0% ICT Sector Sales as % of GDP USD 1.7 Telecommunica4on Annual Investment billion Telecommunica4on Investment per capita USD 89 Total services 53MM Source: Undersecretariat of Telecommunica4ons (SUBTEL, Chile) 2 Notes: (*) It includes handsets

USUARIOS DE TELECOMUNICACIONES � Telecommunica6ons Services 2013 � 2017 � 2018 (e) � • Nearly all territory covered for Mobile Communications (Voice). � Per 100 inhab � Internet Users 66 83 84 • Mobile has led broad adoption of Internet (after 3G & 4G Internet Connec6ons (fixed & mobile) 49 105 105 deployment). 36 88 88 13 17 17 • Access at the household level, Fixed Telephony remains a challenge (Digital 19 17 17 Divide). Mobile Subs. 134 125 125 Pay TV • Coverage vs. capacity: 15 18 18 o Fixed networks provide virtually limitless capacity but lower coverage. � Fixed Internet (households, %) 38 49 49 o Mobile networks provide dense coverage at lower capacity. � Coverage (1) 95% 99% 99% 3 (1) Percentage of inhabited territory.

MERCADO Y COMPETENCIA � Telecommunica6ons Sector Sectoral income � Competition � Services � Million USD nominal � Income share, 2018 (%) � Distribution in value, 2018 (%) � Wholesalers 7.162 WOM, GTD and others and others 6.070 CAGR 12 -18 Pay TV 8% � 3,4% VTR Telefónica 17% � 15% � 12% � 29% � Mobile 54% � (voice and data) Telephony 8% � 2012 2018 54% � 15% � Claro EBITDA/ 15% � 33% Income (*) 27% Fixed Broadband 15% � 27% � Investment 23% 18% Entel Income • The reforms of 2010-2013 promoted a healthy competition with pressure on the margins due to the aggressiveness of new entrants (WOM, 4th mobile operator). � 4 Source: Elaborated by Subtel based on reports provided by the main four operators and Subtel statistics. It does not include OTT Services (Internet Applications). � Exchange Rate (Dec/31, 2018), CLP/USD=695 �

Chilean Internet Landscape Internet Mobile (3G+4G) Fixed Broadband Million � Per 100 inhab. � Per 100 inhab. � Million � 4,0 � CAGR 7,3% � 23 � CAGR 37% � 18 � 3,0 � 14 � 2,0 � 9 � 1,0 � 5 � 0 � 0,0 � 2010 � 2011 � 2012 � 2013 � 2014 � 2015 � 2016 � 2017 � 3Q-2018 � 2010 � 2011 � 2012 � 2013 � 2014 � 2015 � 2016 � 2017 � 3Q-2018 � Subscriptions � Penetration � Subscriptions � Penetration � Mobile Internet Access Market (3Q-2018) Fixed Internet Access Market (3Q-2018) ● 17.9 million Internet subs (77,6% are 4G) ● 3.2 million broadband subs. ● 96.3 subs per 100 inhab. ● 50% penetra4on (households) ● 4G grew from 0.3 mill in sept/2014 to 13.9 mill in sept/ ● Fiber remains 18% of total subs. 2018. Source: Subtel 5

(*) Regulator sets access charges only for interconnec4on and use of third party network resources. 6

Three main macro projects in telecom infrastructure 2018-2021 A) Enhanced International connectivity B) 5G Deployment C) National Digital Highway Total USD 450 Million � Terrestrial � Terrestrial Prat Project (GTD) � Prat Project (GTD) Curie (Google) � Curie (Google) USD 132 Mill (PPP) � USD 300 Mill* (P) � USD 100 Mill (P) � (2021) � (2019) � (2020) � Fiber Fiber (private private infrastructure infrastructure) � USD 120 Mill (P) � Digital Gate from Asia to South America Digital Gate from Asia to South America � (2019-2020) � 5G Infrastructure Deployment 5G Infrastructure Deployment � USD 500-600 Mill (PPP) � Austral Fiber (Undersea) � Austral Fiber (Undersea) (2021) � USD 1.270-1.650 ** Mill (P) � USD 100 Mill (PPP) � (2019-2020) � (Starting 2021) � 25 fold increment in Chile’s Proliferation of connected devices and Doubles current backbone International connectivity � significant quality of service improvement � capacity of data transmission. � Fiber: 18,000 to 36,000 (Km) � Devices: from 17 MM to more than 100 MM ** � Capacity: from 6 to 160 Tbps � Speed (peak) : 0,1 Gbps to 10 Gbps � 7 PPP: Public Private Partnership P: Private Investment (*) Estimates (**) Devices and apps are not included (***) In coverage zones �

Eje Inversión e Infraestructura A) Undersea Cable: “Digital Gate from Asia to South America” Key aspects 1. Conceived to boost Chile as Hub Digital of the Southern Cone, adding demand for data transport with South American countries, with the confirma?on of Brazil and Argen?na. 2. Other interested countries: China, Japan, French Polynesia, New Zealand and Singapore. 3. Main poten?al gains (posi?ve externality) associated to world class datacenter deployment and transit to other countries in the Southern Cone. 4. Increased availability (offer) of interna?onal connec?vity and redundancy for routes through the South Pacific 5. Investment: USD 500-600 million Route Alternatives (preliminary): � 6. First stage: Feasibility study (USD 3 MM, CAF Funding) Intermediate � Landing point � Branches � Origin � China, Japan, New Zealand, Rapa Nui, J. Fernández Valparaíso, Arica, Punta Korea & Singapore � Australia & Hawaii � & French Polynesia � Arenas, branch to Lima � 8

Project Schedule (“Digital Gate from Asia to South America”) • Technical • Presentation of the • Preliminary • Viability of routes • Constitution of specifications and agreements among project to multilateral according to demand legal entity. � detailed engineering � governments of organizations and and productive sectors � Argentina, Brazil and interested entities. � • Desktop Study � Chile. � • Governance � • Prefeasibility Study � • Economic & financial model � 9

B) 5G Deployment Chile: Bands under study (deployment in phases) Low Medium High Bands of potential 600 MHz 700 MHz AWS 1.7 GHz 3.5 GHz 28 GHz interest for a wholesale entrant 5G Readiness 2019 2019 2020 2020 2019 Coverage Speed Network usage Coverage Coverage Coverage High Capacity Ultra High Capacity 5G requires portfolio of bands 10

Road Map: Chile 5G deployment Awarding � 11

B) 5G Deployment Chile 5G Deployment Recent 5G networks announcements Recent 5G networks announcements UK Chile Australia Switzerland Brazil USA Finland Mexico South Korea Spain 13 12

C) Na6onal Digital Highway Fibra Óp4ca Nacional + Tarapacá Prat – GTD Cable Submarine Terrestrial FON Tarapacá Km 3,000 900 8,478 1,000 3,500 Investment (USD Million) 81 18 133 10 100 Start opera4on 1S 2020 1S 2020* 2S-2021** 2S 2022 1S- 2020 Doubling optic fiber in Chile over the next 3 years � 13 * MagallanesTerrestrial Backbone (Aysén and Los Lagos segments under evaluation of proposals). � ** Under revision of Tender Documentation. �

Thank you Gobierno de Chile | Subsecretaría de Telecomunicaciones