Today's comment: Two new entrants win LTE spectrum in Colombia.
- Claro (America Móvil) and Movistar (Telefónica) have won 4G spectrum in the Colombian auction.
- Two new entrants, satellite TV provider DIRECTV and iDEN operator Avantel, also secured 4G spectrum.
Existing players and new entrants win 4G spectrum: Existing mobile players Claro (America Móvil), a joint venture between ETB and Tigo (Millicom), and Movistar (Telefónica) have won 4G spectrum alongside two new entrants, satellite TV provider DIRECTV and iDEN operator Avantel:
- Claro paid around 120 million Colombian peso (USD62.5 million) for 30 MHz of 2.6-GHz spectrum;
- ETB/Tigo paid USD101 million for 30 MHz of AWS (1.7–2.1-GHz) spectrum;
- Movistar paid USD103 million for 30 MHz of AWS spectrum;
- DIRECTV paid USD37.4 million and USD40.4 million for blocks of 30-MHz and 40-MHz spectrum in the 2.6-GHz band (the latter of which was reserved for new entrants);
- Avantel paid USD50.9 million for a reserved block (30 MHz) of AWS spectrum.
Fibre-backbone and Wi-Fi operators lost out in the two rounds of bidding, which generated around USD400 million for the Colombian state. Following the announcement of the auction results, Movistar said that it planned to launch commercial LTE services in Bogota, Medellin, Cali, and Barranquilla in about a month's time.
Our take
Colombia's Ministry of Information Technology and Communications (MINTIC) designed the auction with two aims: boosting competition in a mobile sector dominated by Claro and aiding the deployment of high-speed internet throughout Colombia. The two blocks of spectrum reserved for new entrants have been snapped up by Avantel and DIRECTV, which also acquired an additional 30 MHz of unreserved spectrum. All five licencees have commitments to deploy their LTE networks to a set number of municipalities: Claro has been allocated the most (660), followed by Movistar (255), ETB/Tigo (144), and DIRECTV and Avantel (57 each). Under their licence obligations, they must also provide a total of 556,374 tablets to poorer students: again Claro must provide the lion's share.
These operators will joint UNE-EPM in the commercial LTE market. The group acquired 50 MHz of 2.6-MHz spectrum in 2010, launched commercial services in June 2012 and had gained around 35,000 LTE subscriptions by the end of last year. The owner of UNE-EPM, EPM, is currently in talks with Millicom, which owns a 51%-plus-one-share stake in Colombia Móvil (Tigo) on a combination of the group's telecoms assets. Consolidation makes some sense: UNE and EPM each owns 24.99% stakes in Tigo and a merger would give the enlarged operator a presence across the fixed voice, fixed broadband, mobile and pay TV segments. It would also own 80 MHz of LTE spectrum, a much higher share than its competitors: this is an issue that MINTIC and other regulators will consider. The auction will also fire the multiplay ambitions of DIRECTV, which had 683,000 pay-TV subscriptions at the end of 2012, according to MINTIC, and will potentially be able to provide these households' mobile broadband services. Its sister company, Sky Brasil, already provides TD-LTE services in Brazil.