Industry Trend Analysis - Monetisation Opportunities To Arise From Additional Spectrum - OCT 2017

BMI View: New spectrum frequencies will allow Movistar and Claro to expand their LTE coverage and value-added services, opening up new monetisation opportunities. Uruguay's favourable economic and demographic conditions make it a strong market for the uptake of advanced services. However, the auction also confirms the regulator ' s bias in favour of the state-owned incumbent Antel.

URSEC, the Uruguayan regulator, has announced the results of the latest spectrum auction. Am erica Movil-owned Claro won two blocks of 2x5MHz spectrum in the 700MHz band, as well as two other 2x5MHz blocks in the 1700/2100MHz band, for USD35.2mn. Telefonica-owned Movistar paid USD30.9mn for three blocks of 2x5MHz in the 700MHz band. Finally, URSEC reserved a total of 55MHz in the 700MHz and 1700/2100MHz bands for the state-owned incumbent Antel. This development plays out our view that regulators need to proactively make spectrum available to meet the ongoing data demand ( see ' Spectrum Auctions: A Risk/Reward Perspective ' October 21 2016).

We believe Claro and Movistar will use the new spectrum blocks to improve their monetisation strategies by expanding their 4G LTE coverage and offering value-added services (VAS). Our view is that growth in the Uruguay mobile market will come from a stronger uptake of 3G/4G services, since the mobile market at large is very saturated. We estimated a 168% penetration rate in 2016, although we believe the figure is artificially high through inactive SIMs and multi-SIM ownership. And we forecast 3G/4G subscriptions to reach 3.1mn and 57.8% of the mobile market by 2021, up from 47.9% in 2016.

Monetisation Opportunities Remain In 3G/4G Growth
Uruguay - 3G/4G And Mobile Forecasts
Source: National Sources,BMI

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