5G Chile: The Evidence Confirms It

5G in Chile: The Evidence Confirms It

The results of the 5G spectrum auction organized by Chile’s Subsecretaría de Telecomunicaciones (SUBTEL), which concluded in February 2021—over four years ago—provide sufficient time for a thorough analysis. This analysis corroborates earlier studies I conducted while developing our SpectrumInvest methodologies. With concrete evidence now available, we can examine in detail the 5G spectrum auction process carried out by Chile, bearing in mind that it was the first country in Latin America to begin deploying this critical technology. This allows us to assess the effectiveness and appropriateness of the auction design and execution.

At the conclusion of the auction, SUBTEL announced: “The 5G auction generated a total of USD 453 million for the State. This amount significantly exceeds the USD 74 million raised through all previous spectrum auctions in national history.” Clearly, the primary objective of the auction was financial gain, underscoring the perceived attractiveness of Chile’s telecommunications sector.

Three of the four mobile network operators active in Chile secured spectrum in the 3.5 GHz band: Movistar (Telefónica), Entel, and WOM. These companies won the tie-breaking bids after submitting the highest financial offers—USD 163 million from Movistar, USD 139 million from Entel, and USD 45 million from WOM. Each operator was awarded 50 MHz of spectrum, totaling the full 150 MHz available. In addition, they were assigned substantial coverage obligations: WOM committed to deploying 5,000 base stations, Movistar 1,500, and Entel 1,350—all within two years.

In the initial phase of the auction, WOM also won the sole 20 MHz lot in the 700 MHz band, defeating Borealnet. Notably, Borealnet participated with an offer significantly lower than WOM’s, raising concerns about its legitimacy as a bidder. The company appeared to be a "phantom" participant—invited merely to create the illusion of additional interest beyond WOM, which already operated in Chile. Such practices designed to simulate competition are ineffective and underscore the need for greater transparency in future auction processes.

Additionally, the winning bidders committed to extending high-speed mobile internet to 366 localities for the first time and connecting 199 hospitals to the new 5G network. Outside urban centers, various airports, scientific research facilities, and maritime ports were also included in the coverage commitments.

Almost exactly one year later, in early 2022, SUBTEL held another auction to assign an additional 50 MHz of bandwidth in the 3.5 GHz band. This time, only Claro and Entel participated. Claro emerged as the winner since it was the only operator without existing 5G spectrum in this band. Claro submitted a bid of USD 88.7 million, committing to expand 5G coverage to more than 120 new locations.

As in the first auction, Entel already held 50 MHz in the 3.5 GHz band, likely reducing its incentive to compete aggressively and thereby facilitating Claro’s acquisition of the remaining spectrum. As previously noted in our analysis of Costa Rica's auction, a more transparent approach would have been to declare the auction void and directly assign the spectrum to the qualified bidder upon acceptance of the base conditions defined in the tender.

However, the 5G auction process, focused primarily on maximizing revenue while imposing significant infrastructure obligations, failed to account for the realities of Chile’s economic environment, geographic challenges, and the unique characteristics of 5G technology. The consequences became evident in 2024 when WOM declared bankruptcy and filed for Chapter 11 protection in the United States. Clearly, both SUBTEL and the participating operators, including WOM, share responsibility for this outcome.

In March 2025, Chilean telecom operator WOM successfully exited Chapter 11 bankruptcy protection—nearly one year after filing for insolvency in the U.S. However, it remains to be seen the extent to which WOM has fulfilled its 5G coverage obligations, particularly its commitment to deploy 5,000 radio base stations in the 3.5 GHz band.

Movistar also has plans to divest its operations in Chile. On May 12, Telefónica hired Citigroup (CITY GROUP) to facilitate the sale of its Chilean business. Just days earlier, the company released its financial results for the first quarter of 2025, which showed a 6.5% year-over-year decline in revenues.

According to a report published by El Financiero, "In detail, mobile telecommunications revenues from Movistar—which represent 52.4% of total ordinary revenues—declined by 2.6% compared to the previous period. Meanwhile, sales related to fixed telephony, broadband, television, and other services—which account for 35.47% of total revenues—fell by 14.4% compared to Q1 2024. In this context, EBITDA at the end of the first quarter was 5.9% lower than the figure reported on March 31, 2024."

Contextual Analysis: The Impact of the 5G Auction

This context helps clarify the long-term implications of the 5G spectrum auction. It appears that SUBTEL did not fully grasp the paradigm shift involved in deploying new technology. While the auction had a significant impact on operators' financial health—due to both the high costs of participation and the extensive coverage obligations—the underlying economic conditions further exacerbated these challenges.

Image 1. Population Density.

Key Challenges of 5G Deployment in Chile

It is essential to examine the complexities of rolling out 5G in a country like Chile. As shown in Image 1, Chile’s population density is relatively low at 27 people per square kilometer. However, this population is spread across a vast territory measuring 756,700 square kilometers.

As illustrated in Image 2, Chile's length stretches from coast to coast, comparable to the continental United States. When compared to Europe, it spans the distance from Portugal to Sweden, highlighting the logistical complexity of building a nationwide mobile network.

Image 2. Chilean Territory Compared.

The 3.5 GHz band, which was central to the auction, has a typical coverage radius of 700–800 meters, depending on physical obstacles. Technical data indicates that between 11 and 20 base stations operating in the 3.5 GHz band are required to cover the same area served by just one station using the 700 MHz band. This underscores the significantly higher infrastructure investment needed for 5G deployment in mid-band frequency.

Population Distribution and Economic Factors

Image 1 also illustrates how Chile’s population is distributed across its vast territory, providing clear insight into where mobile operators should focus their 5G rollout efforts. According to the 2024 National Census, Chile has a total population of 18,480,432 people, with approximately 65% in the productive age group (18–65 years)—nearly 12 million individuals actively contributing or capable of participating in the economy.

However, unemployment in Chile reached 8.1% among the working-age population in 2024, while informal employment accounted for 27% of the labor force, equivalent to nearly 2.49 million people, according to the National Institute of Statistics (INE).

Chile's Economic Landscape and the 5G Challenge

In 2024, Chile’s economy reached a Gross Domestic Product (GDP) of USD 330.267 billion, translating to a per capita GDP of approximately USD 16,800 annually. Compared to other countries in Latin America, Chile stands out as one of the most productive economies in the region, with relatively low unemployment and informal employment rates.

However, when compared to European countries such as Norway, Sweden, or Finland, Chile’s productivity appears less robust, reflecting structural and developmental differences.

These factors—low population density, geographic dispersion, high infrastructure requirements, and a challenging macroeconomic environment—have created a complex scenario for telecom operators. The 5G auction, designed primarily as a revenue-generating mechanism without adequate consideration of market dynamics, has placed significant strain on players like WOM and now Movistar. Going forward, regulatory frameworks must better align with economic realities and technological constraints to ensure sustainable network development and sector stability.

These economic, demographic, and geographic indicators to better define the environment in which four mobile network operators have attempted to deploy their 5G networks. These networks require a significant increase in the number of radio base stations—far exceeding the 5,000 stations that WOM committed to deploying (but ultimately failed to fully implement).

The rollout of 5G, as designed during the spectrum assignment process in 2021 and reaffirmed last year during the latest auction, has placed two major operators—WOM and Movistar—in vulnerable positions: one entered into Chapter 11 bankruptcy proceedings, while the other is currently seeking to sell its Chilean operations at a price nearly 50% below its initial valuation.

The Need for a Paradigm Shift

5G is undoubtedly a technology with immense potential and transformative advantages. However, as we have emphasized since 2018, its successful deployment requires a fundamental shift in public policy, particularly in how spectrum is valued and assigned.

Moreover, it demands an update to outdated operational models and mindsets still prevalent among mobile operator executives.

The technological transformation driven by 5G—and emerging innovations just beginning to take shape—has left both regulators and industry leaders struggling to adapt. This includes key regional and global organizations such as CITEL, GSMA, ASIET, COMTELCA, and others.

Conclusion

Without a strategic, coordinated effort between regulators and operators to modernize frameworks and align them with market realities, the rollout of next-generation networks will continue to face financial, logistical, and strategic setbacks. The Chilean experience serves as a cautionary tale and a call to action for the broader telecommunications ecosystem.