TEM/BellSouth acquisition closed

10 Jan 2005

Spain’s Telefónica Móviles (TEM) and US-based BellSouth closed the merger of their Chilean operations on Friday, after receiving the go ahead from the antimonopoly tribunal, the TDLC, on 5 January. The TDLC, however, stipulated that the Spanish company’s local unit Telefónica Móvil and BellSouth Chile must return 25MHz of spectrum through a public auction organised by the regulator Subtel; Telefónica Móvil currently holds 25MHz in the 800MHz band and 20MHz in the 1,900MHz band, while BellSouth has 25MHz in the 800MHz band and 10MHz in the 1,900MHz band. After the auction the merged entity – which will provide services under the Telefónica Móvil brand – would have 55MHz between both bands. TEM and BellSouth have already struck merger agreements in Argentina, Ecuador, Colombia, Guatemala, Nicaragua, Panama, Peru, Uruguay and Venezuela in a deal worth approximately USD5.7 billion.

According to TEM the Chilean transaction is worth USD532 million, and will boost Telefónica Móvil’s customer base to around 4.7 million, up from 3.3 million before the deal. It will become the largest cellco in Chile, with 48.5% of the market; its main rival Entel will have 36.7% and smaller player Smartcom will take 14.8%. BellSouth Chile will continue to operate over its own brand name for a transitory period, despite being under the management of TEM.

The shape of the mobile market looks set to change further still, with a fourth player set to enter the market upon the award of Telefónica Móvil/BellSouth’s returned spectrum. Subtel has been given 18 months to launch the auction; companies wishing to participate must not own more than 60MHz of spectrum, and will be subject to the oversight of the SVS securities regulator. At the end of 2004 there were approximately 9.69 million mobile subscribers in Chile.

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