On January 15th, 2021, SUBTEL presented the winning bids for the 5G beauty contest in four different bands: 700 MHz, AWS, 3.5 GHz, and 26 GHz.[1] Three of the four independent contests had to advance to the auction stage. The results in each band where as follows:

  • 700 MHz band

There were two interested parties in the only 20 MHz block available: WOM and Borealnet (new entrant). Both companies’ proposals scored over 90 points and a difference of 4 points or fewer, implying that an auction was needed to decide the winner. Through a first price sealed bid auction, on February 8th 2021, WOM won the auction with an offer of approximately USD 82,5 million and was awarded the spectrum.[2]

  • AWS band

There were three interested parties in the AWS band (one block of 30 MHz) and all of them had a score over 90 and were within 4 points of each other, meaning that the contest had to be decided in the auction stage. The first price sealed bid auction took place on February 11th, 2021, and the winner was WOM with an offer of approximately USD 22,3 million.[4]

  • 3.5 GHz band

The most coveted band was the 3.5 GHz, where 15 blocks of 10 MHz for a total of 150 MHz (with a maximum 50 MHz per operator) were available, for which five different companies had presented offers in the contest: WOM, Claro, Movistar, Borealnet and Entel. All companies presented proposals that scored at least 90 points and had a difference of 4 points or fewer among them, meaning that all companies advanced to the auction stage that took place on February 16th, 2021. A combinatorial first price sealed bid took place[6], three companies were awarded 50 MHz each -Entel, Claro and WOM- for a total of USD 348,7 M.[7]

  • 26 GHz band

There were three interested parties in the 26 GHz band that presented a contest proposal -Entel, Claro and WOM- and given that the three offers complied with the requirements of the contest and there was sufficient spectrum, each company was directly assigned 400 MHz without the need of an auction.[9] In the contest, Claro proposed offering 5G service on the 26 GHz band in 34 regions (“comunas”), Entel in 20 and WOM in 15.

Chile’s spectrum license income

The Chilean government generated an income of USD 453,5 million for 4G-5G spectrum. Additionally, a total of USD 83 million at current value will be generated in the next 30 years in terms of usage commissions for the licensed spectrum.

From 2001 to 2014, a total of USD 70,8 million (at 2018 dollars) was paid for spectrum, in line with a clear policy to incentivize investment in infrastructure by the telecom companies. The 2021 spectrum auction income implies that this single auction has collected 6,4 times the total income generated by spectrum auctions in the past.

The most coveted band by far was de the 3.5 MHz band, where a total of 150 MHz was actioned for a total of USD 348,7 M. In comparison with Chile’s previous auction, the price paid for spectrum was much higher, but compared with the price paid for spectrum in other countries, it was average. In the 3.5 MHz band, Chile’s operators paid an average price of 0.41 per MHz per year per 100 people, positioning itself midway in our own benchmark (see table below). Far from the exorbitant prices paid by the US, Italy, German, and South Korean operators, but a significant price compared with other European countries, such as Spain, Austria, Finland, Ireland, or Sweden. Nonetheless, Chile’s ARPU (average revenue per user) is significantly lower than the average European ARPU (60% higher in the case of Europe and up to 4 times higher in the case of the USA), implying a high price for spectrum given the local conditions.[10]

After the contest, total spectrum allocations and caps would be as follows:

Nonetheless, multiple spectrum devolutions should take place in the following months. Firstly, Entel, Movistar and Claro were sentenced in 2018 to give back the same amount of spectrum acquired in the 2014 700 MHz auction (30 MHz, 20 MHz, and 20 MHz respectively). Movistar has already given back 10 MHz in the 3.5 GHz band and will transfer 10 MHz in the 1900 MHz band to Claro (already sold), Entel will give back 10 MHz in the 900 MHz band and 20 MHz in the 3.5 GHz band, while Claro will give back 20 MHz in the 3.5 GHz. Under the original agreement between Movistar, Claro, Entel and Subtel, the companies have time until October 2021 to fulfill these requirements.

Secondly, Entel is over the dynamic cap in the 3.5 GHz band, so they will have to additionally return 25 MHz to comply with the cap. In total, Entel will have to give back 45 MHz in the 3.5 GHz band before August 2021 to be awarded the new spectrum, ending with a total of 105 MHz in the 3.5 GHz band.

Spectrum holdings after the 2021 contest and the appropriate devolutions by the corresponding parties will end up being as follows:


Chile’s 5G contest/auction was the first of its kind in Latin America, placing it ahead of any other Latin American countries. Traditionally, Chile has assigned “cheap” spectrum to incentivize investment in infrastructure, but the latest contest does not appear to follow this policy (willingly or unwillingly). The 5G auction has generated an income of over 500% compared with the total income from previous contest/auctions, implying that some fiscal considerations might have led to a more aggressive auction design.[13] Two elements may have generated an increase in bidding by the companies.

Firstly, the amount of available spectrum in the coveted 3.5 GHz band (five players presented bids for it) is not enough, given industry recommendations of 80 MHz per player for an efficient 5G network in that frequency.[14] Additionally, Movistar has a point: Entel and Claro have available spectrum that could be quickly reutilized for 5G mobile telecommunications. More spectrum in 3.5GHz band should have been made available for the MNOs and had it been impossible, they should have signaled future availability (future auctions or timetable for the 3.5GHz band).

Secondly, making the four contests simultaneously but independently had a risk, an operator may win spectrum in a certain band (for example, millimeter wave) without having access to other bands (3.5GHz). Operators require a mix of spectrum in three bands (700MHz, 3.5GHz and mmWave) to offer an efficient and complete 5G service and this type of adjudication process generates uncertainty between the interested parties. This could have played an important role in the 700 MHz and AWS band auctions, where WOM and Borealnet were competing without assurance that they would be assigned spectrum in other frequencies forcing WOM to overpay to secure the required spectrum.

In conclusion, Chile had had a very strong policy of prioritizing investment over fiscal revenues in spectrum assignment process. Compared with historical data, the 5G contest counters this preestablished policy given the restricted amount of spectrum licensed in the 3.5GHz band. However, when put in context of other 5G auctions around the world, Chile’s spectrum prices do not appear to be very high. This comparison poses two problems: firstly, most of the 5G spectrum auctions have occurred in developed economies or European countries, Chile is the first Latin American and one of the first developing countries to do so. Secondly, most of the countries in our sample have higher ARPU’s than Chile, implying that in relative terms the price paid by Chile’s telecom operators are higher than those of the European counterparts.

The 5G business model is still uncertain and charging very high prices for spectrum can lead to a crowding out of investment in infrastructure and deployment, so a more cautious position may be recommended given the wide and profound changes this technology may have on the economy and development of a country. Large capital investments by Latin American telecom companies may face even higher capital constraints than those of their European counterparts or even Chile’s telecom companies, the most market friendly country in the region. A clear prioritization of investment over fiscal revenues, and sufficient spectrum, will be a key element for an efficient rollout of 5G in the region.


[1] “Licitación 5G se definirá por desempate en tres de las cuatro bandas”, Subtel, 15/01/2021. Link: https://www.subtel.gob.cl/tablas-para-comunicado-5g/

[2] “Licitación 5G: Se define ganador del bloque de la banda de 700 MHz”, Subtel, 08/02/2021. Link: https://www.subtel.gob.cl/licitacion-5g-se-define-ganador-del-bloque-de-la-banda-de-700-mhz/

[3] Exchange rate (Chilean peso to US dollar): $736,65 on the 8th of February of 2021 (Banco Central de Chile)

[4] “Licitación 5G: Se define ganador del bloque de la banda AWS”, Subtel, 11/02/2021. Link: https://www.subtel.gob.cl/licitacion-5g-se-define-ganador-del-bloque-de-la-banda-aws/

[5] Exchange rate (Chilean peso to US dollar): $728,90 on the 11th of February of 2021 (Banco Central de Chile)

[6] The winning combination of offers that maximizes fiscal income will be chosen. “La asignación del Concurso recaerá en la combinación de ofertas que genera una mayor recaudación fiscal. Para lo anterior, se resolverá el problema que maximice la recaudación mediante la combinación de ofertas únicas de los concursantes.” Art. 32, c), 2), of the 3.5GHz contest terms and conditions.

[7] “Licitación 5G recauda USD 453 millones en total para el Estado”, Subtel, 16/02/2021. Link: https://www.subtel.gob.cl/licitacion-5g-recauda-usd-453-millones-en-total-para-el-estado/

[8] Exchange rate (Chilean peso to US dollar): $718,45 on the 16th of February of 2021 (Banco Central de Chile).

[9] Ibid 22.

[10] Chile has an ARPU of 10,61 USD/month (according to BlueNote Managing Counsulting), slightly higher than the regional 7,92 USD/month average. Europe has a ARPU of USD/month 16,7 (14,9€), South Korea of USD/month 26,5, Japan of USD/month 31,4 and the USA of USD/month 41,3.

[11] The 400 MHz not assigned in the contest are taken into account by Subtel in the total spectrum allocation even though no fourth company expressed interest in it.

[12] Both 50 MHz regional blocks add up to one 50 MHz national blocks.

[13] “Primera subasta 5G en Latinoamérica: Buena motivación, aunque perduran viejas prácticas”, CEABAD, Juan Ignacio Crosta Blanco, 29/10/2020. Link: https://ceabad.com/noticias/primera-subasta-5g-en-latinoamerica-buena-motivacion-aunque-perduran-viejas-practicas/

[14] For example, see:

Subtel agrees with these recommendations. See Ibid 14, section regarding 3.5 GHz capabilities of established players.