America Movil, Telefonica explore alliance to buy WOM

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Chilean telco WOM had filed for bankruptcy in April after failing to refinance its debts América Móvi, through one of its subsidiaries, and Telefónica signed a non-binding agreement to jointly explore their potential participation in the sale process of the assets of Chilean operator WOM and its affiliates in the jointly-administered Chapter 11 bankruptcy proceedings pending in an U.S. bankruptcy court.

In a release, America Movil, which operates in Chile under the Claro brand, said that the parties “may not submit an offer depending on bidding procedures and regulatory authorization required due to WOM undergoing bankruptcy procedure. Authorization is also required from the National Economic Prosecutor’s Office of the Republic of Chile.

“The interest of both companies in jointly exploring their potential participation in the sale process of the assets of WOM and its affiliates in Chile is based on the potential benefits that the transaction could generate for its clients and Chilean consumers in general, given that it would strengthen the telecommunications sector sustainability, increasing the ability to continue investing and competing in high-speed networks and coverage, which is key to the country’s digitalization,” America Mobile said.

After failing to refinance its debts, WOM filed for bankruptcy in April, pointing to macroeconomic conditions as the cause. The operator had rebranded from Nextel Chile to WOM in 2015 to compete with Telefonica’s Movistar, America Movil’s Claro and Entel.

In June, the Chilean government said it had raised nearly $90 million following the conclusion of a new spectrum auction, in which local carrier Claro obtained additional spectrum for 5G services. Chilean telecom regulator Subtel confirmed that local telco Claro, owned by Mexican giant America Movil, and Entel were the two telcos that had submitted bids.

Claro was awarded the five blocks of 10 megahertz of spectrum in the 3.5 GHz band after presenting the best economic offer, according to the Subtel. Entel did not obtain frequencies in this process. The auction included certain conditions for the winning company such as the requirement to increase 5G coverage in more than 120 new locations and connect 1,500 kilometers of highways with 5G. Claro already had 50 megahertz in the 3.5 GHz band to operate fixed wireless services. Under local regulations, however, the bands for fixed services cannot be used for the provision of 5G technology.

Entel currently has 50 megahertz of spectrum in the 3.5 GHz band for 5G networks. The operator has another 50 megahertz for fixed wireless services. Meanwhile, local carriers Movistar and WOM did not submit offers to secure additional 5G spectrum in this later auction.

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