Vivir mejor

Transcription

Vivir mejor

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Company
Identification_
BASIC INFORMATION
ADDRESS
Company Name
Empresa Nacional de Telecommunicaciones S.A
(Entel Chile S.A.)
Address
Casilla 4254-Santiago
Registered Address
Santiago, Chile
Tax ID Number
92.580.000-7
Type of Entity
Public Limited Company, registered with the Chilean Securities
and Insurance Supervisor (No. 0162), and governed by the provisions of Act 18,046 and its supporting legislation.
Telephone
+56 2 360 0123
Fax
+56 2 360 3424
General Management
Avenida Andrés Bello 2687, 14th floor, Las Condes,
Santiago de Chile.
Administration and Finance Management
Santiago de Chile.
Investor Relations:
Carmen Luz De La Cerda Castro
[email protected]
Filing Office
Santiago de Chile.
Website
www.entel.cl
*National subsidiaries have the same address and
telephone number as the parent company.
Company Identification
Chairman’s Letter
11 Company Information
51
Market Segments
95 Subsidiaries
12
Profile
52
Industry
14
History
56
Regulatory Framework
16
Landmarks
58
Consumers Segment
20
Corporate Governance
64
Enterprise Segment
22
Board of Directors
68
Corporate Segment
108
Constituting documents
24
Management
72
Wholesale Segment
108
Company Ownership
114
Company Structure
115
Dividend policy
117
Investment Policy
118
Financing Policy
119
Distributable Profits
Results
119
Dividends per Share
86
Consolidated Results
120
Summary of Transactions
88
Mobile Services
121
Financial Activities
90
Wireline Services
122
Risk Factors
91
Wireline Revenue by Segment
125
Comparative Share Price Performance
125
Shareholder Comments
Structure Chart
Top Level Executives
77
78
28
32
38
42
46
85
Entel Call Center
105 Company Information
Todo Chile Comunicado Project
ARTEnas for Chile
Corporate Image
37 Strategic Foundations
100
Policy and Actions
Human Resources
82
Americatel Perú
Corporate Social Responsibility
Workforce
80
96
Infrastructure
Customer Service
Innovation
126
Material Events and Essential Information
131
Insurance Commitments
133
Declaration of Responsibility
135 Subsidiary and Associate Companies
137
Independent Auditor Report
138
Consolidated Financial Statements
144
Notes to the Consolidated Financial Statements
219
Certificate of Accounts Inspectors
221 Subsidiary and Associate Companies
222
Consolidated Balance Sheets for Subsidiaries
contents_
Juan José Hurtado Vicuña
Chairman
Chairman’s
Letter__
Dear shareholders
As you will be able to see in this Annual Report, on behalf of the
Entel Board, I have the pleasure to present excellent results for
2011, a year that marked the beginning of a new stage in our
company’s history.
Our Ability to Adapt to Changes
Fixed-mobile convergence, the exponential growth in connectivity, the development of new IT and cloud services, the enormous penetration of services, and the fast and strong adoption
of technologies across all customer categories made the time
right to restructure our business around an integrated vision of
technologies and markets.
We needed an increasingly agile and flexible organization to
service different types of increasingly demanding customers
with ever more complex and specific requirements.
It is a world in which applications can be used on many devices,
and both applications and data are stored “in the cloud,” on shared infrastructure housed in large data centers.
In this context, it was necessary to make a number of changes
in order to continue carrying out our mission. From an organization structured around two business units (wireline and mobile),
we have transformed into one based around business units for
each market: Consumers, Entreprises, Corporations, and Wholesale. Each unit has a holistic vision of its customer and is responsible for the commercialization and sale of products, as well
as setting prices, and customer service. Cross-cutting units,
such as Technology and Operations, IT Services, Strategy and
Innovation, Human Resources, and Administration were established to support the core business focus on market segments.
This also presented the opportunity to complement the restructuring of our organization with a new slogan: “Live better
connected.” The concept was launched in 2011 and we are convinced it reflects Entel’s spirit and role when it comes to current
uses of technology in people’s lives and day-to-day business
activities.
Strong Commercial Performance
The restructuring and changes made this year an enormously
challenging one. However, Entel rose to the occasion, delivering a
strong performance across all areas. The mobile area saw a good
combination of factors. Mobile broadband (MBB) and the use of
mobile Internet from smartphones were two of the most significant drivers of growth in the industry, reaching 23.6 million customers in Chile during 2011, a market penetration of around 137%.
In light of this change in the market, one of Entel’s main achievements in this area was the significant growth in the number of
MBB customers (including data cards for business applications),
reaching 945,429 users in December (72% more than in 2010).
Furthermore, the number of contract customers with mobile Internet enabled smartphones rose from 17% to 28% of the customer base during 2011.
Together with strong results in the traditional mobile voice business, this allowed Entel to increase the total mobile customer
base to 9,347,434 (as of December 2011), a 24% increase with
respect to the end of 2010, gaining almost three additional percentage points of market share to reach around 39% of active customers, 2.8 million of which have a contract (around 30%).
The wireline business also delivered solid performance. Entel is
currently a market leader in the enterprise segment for wireline
services, providing integrated voice, data, Internet, and IT outsourcing services focused on data center and cloud/on-demand services.
Total revenue from the wireline business rose by 9% in 2011, increasing by 7% for the aforementioned business services (excluding long distance).
Similarly, the Americatel Perú and Entel Call Center subsidiaries
both displayed solid results, in alignment with the company strategy. Americatel strengthened its focus on business services, whose
contribution increased to 48% of its total revenue. On the other
hand, with three new centers in Chile and the country’s first COPC
certification, Entel Call Center has consolidated its excellent Contact Center and technical support platform, both in Chile and Peru,
providing the market with an excellent quality of service. The business represents an important contribution to the Group in terms
of its strategy of providing its customers with first class service.
5
Report 2011
Connectivity is no longer a luxury; today it is essential. Today’s
market is dominated by data connectivity: customers now need
access to voice and Internet services on multiple devices (including telephones, computers, tablets and cameras), services
that must be appropriately tailored to the capabilities of each,
delivering a network experience that provides access to mobile,
fixed, and wireless services, and allows users to switch between
them almost imperceptibly, without any interruption to services
or applications.
CONSOLIDATED REVENUE
DISTRIBUTION OF CONSOLIDATED REVENUE BY BUSINESS
Values calculated under IFRS
In CLP$ million
1%
INTERNATIONAL
OPERATIONS
1,400,000
1,240,914
1,300,000
2%
OTHER
WIRELINE
BUSINESS
1,200,000
1,100,000
19%
1,086,405
994,671
14%
1,000,000
78%
900,000
Report 2011
6
65%
800,000
MOBILE
BUSINESS
700,000
2009
2010
2011
Results
Customer Focus
Strong management across all areas of the business resulted in
consolidated revenue of CLP $1,240,914 million, a 14% increase
from 2010.
Entel is committed to providing first class service and continuous improvement. Its efforts in this area have been recognized by the market in the results of two prestigious surveys: the
National Customer Satisfaction Survey, run by the organization
ProCalidad, which ranked Entel first among mobile telephone
service providers for the ninth year in a row, and the Best Customer Experience award for 2011, run by the Ibero-American
Association for Company-Customer Relations following an
exhaustive study of 32 mobile telephone service providers in
countries including Spain, Mexico and Brazil.
Together with the focus on services with higher profit margins, this increase represents a rise of 16% and 14% in EBITDA and Operating Income, reaching CLP $515,200 million and
CLP $238,227 million, respectively.
Entel’s final profit for 2011 was CLP $180,767 million, representing an increase of 5% on 2010 levels. This figure is a product
of increased non-operating costs, principally associated with
charges in the valuation of derivative instruments, together with
greater tax expenditure as a result of an increase in corporation
tax and the absence of the extraordinary tax credit included in
the previous year’s accounts.
Customer behavior after the introduction of number portability
for mobile telephone services on January 16, 2012, also affirmed our company’s excellent standing. According to official statistics, one month after the launch, 39% of customers who had
switched companies chose Entel as their new supplier. Perhaps
more significantly, 51% of contract customers who switched
suppliers moved to Entel.
Ebitda
2009 to 2011 reported under IFRS
In CLP$ million
600,000
515,200
500,000
401,358
446,018
16%
Corporate Social Responsibility
400,000
300,000
Our corporate social responsibility policy forms part of our
business strategy. It covers all our investments in connectivity, such as the Todo Chile Comunicado project, and our support to rural schools through the provision of technology.
65%
200,000
100,000
In addition to this, USD $230 million was invested in mobile equipment for contract customers in 2011. This is closely
related to the company’s drive to promote the use of mobile
Internet on smartphones, a strategy that requires greater investment in devices that will in turn translate into increases
in revenue further down the line.
0
2010
2011
Investments
At Entel, we believe our services are differentiated by our network and technology infrastructure, which are both resilient
and deliver national coverage. This priority is reflected in our
challenging and significant investment plan.
In order to provide our customers with the best experiences
in the services they use, we have the best possible network,
data center, and technology infrastructure, a fundamental aspect of our strategy. We continue to make significant investments in our infrastructure, with investments for 2011 totaling USD $502 million (not including handsets for postpaid
customers). Of this, USD $300 million (equivalent to 60%) was
spent on development for mobile services and the remainder
on projects for corporate and wholesale customers, platforms,
infrastructure, and fiber optic networks to provide advanced
connectivity, alongside expanding our data centers and cloud
service platforms.
A significant part of this investment is related to the Todo Chile
Comunicado project, delivered through the Telecommunications Development Fund. We began work on the project in 2010
and it will see Internet access provided to 1,474 rural areas. By
the end of 2011, the project was 91% complete, thanks to the
enormous feats of technology and engineering in which more
than 630 people have taken part and in which Entel’s technology partner, Ericsson, has played a significant role.
The Todo Chile Comunicado project, a large-scale publicprivate initiative launched in 2010, meets our fundamental
commitment to connect Chile, in this case helping to close the
digital gap that exists between urban and rural areas in order
to facilitate new economic and social development, and ultimately improve the quality of life of the country’s inhabitants.
Another important CSR initiative involves making our tower
and antennae infrastructure more appealing in terms of its
presence in the city. Our networks form an integral part of
the urban environment and in response to this responsibility,
we have anticipated the requirements to be introduced by the
new ruling legislation to better integrate our mobile telephone antennae with the city.
Our first efforts in this area will see the participation of distinguished architects and artists who will transform a number
of antennae throughout the country into works of art that will
contribute to the urban environment.
We plan to invest USD $45 million in this and other initiatives
that will run throughout 2012.
The consistency between the CSR policy and the company’s
actions was once again recognized by its high ranking among
the most distinguished companies in this area in the MORI
CRS survey for 2011.
7
Report 2011
2009
CONSOLIDATED OPERATING INCOME
ANNUAL PROFIT
Values reported under IFRS
In CLP$ million
Values reported under IFRS
In CLP$ million
250,000
200,000
208,130
14%
238,227
180,000
160,000
180,767
172,971
200,000
300,000
5%
142,260
140,000
184,580
120,000
100,000
150,000
80,000
100,000
40,000
65%
50,000
60,000
20,000
0
0
2009
Report 2011
8
2010
2011
2009
2010
2011
Innovation
Financing
Innovation plays a central role in Entel’s growth, not only in
the development of products and services, but in the creation
of channels, service models, and business models. In 2011 we
created a Strategy and Innovation Department to consolidate
and manage the process of innovation distributed throughout
the company, generating management information and
promoting a culture of innovation.
In December, Entel signed an international bank loan for
USD $200 million with the Bank of Tokio-Mitsubishi and Scotiabank. The loan consists in the payment of a single amortization in December 2014 and an annual variable interest rate
based on the Libor rate with a 0.95% annual spread, payable
quarterly or half-yearly. The entirety of the loan is for the advanced payment of the first installment of an existing syndicated loan whose first capital payment is due in June 2012.
This will allow the company to improve its liquidity.
Entel was recognized as the most innovative business in the
telecommunications industry in a study carried out by the
Business School at Universidad de los Andes (ESE) in 2011.
The ranking shows that the company has systematically
managed to establish innovation as part of its culture.
Entel has an “innovation factory” to take ideas and transform
them into valuable products and services. In 2011 it released
65 innovations onto the market. Part of this innovative spirit
and culture is reflected in the Entel Visa credit card developed
jointly with Banco de Chile, having a long-term strategic
partnership that will ensure the credit card achieves a
significant market position.
The company’s gross debt only increased by 10%, largely as
a result of the 11% fluctuation in the CLP–USD exchange rate,
although this was partially offset by regular payments of bank
debt and leasing.
The risk ratings from the international agencies Standard &
Poors and Moody’s remained at BBB+ and BAA1, respectively.
It is notable that the company has succeeded in maintaining its high level of solvency and liquidity in a year in which,
in addition to the highly significant investments that were
made, CLP $140 billion was paid out in dividends, equivalent
to CLP $595 per share or a dividend yield of 6.12%. This gives
a clear indication of the company’s ability to generate operational cash.
Challenges Going Forward
In 2012, two new mobile companies with their own 3G networks,
VTR and Nextel, will enter the market, causing supply and competition to increase in the industry. Similarly, virtual mobile operators (companies who use the networks of other operators to
deliver their services) will also enter the market. The Department of Telecommunications has awarded 22 virtual mobile
operator licenses and Virgin Mobile and Falabella Móvil have
publicly announced their intention to enter the market.
Our focus remains in our customers: by understanding them,
building close relationships, and providing first class service, we
seek to ensure an integrated, world-class experience from end
to end. All company activities are focused on this goal and we
are convinced it remains the best way to meet the challenges of
competitive markets like the one in which we operate.
In closing, I would like to offer my sincerest gratitude for the
important support of our shareholders and the financial markets, the loyalty of our customers, and the commitment shown
by Entel staff.
Facing these challenges requires the firm commitment and
capability of people satisfied with their role in a company that
creates opportunities. I dare to say our organization is well
equipped for the future. The new Entel, a business made up of
more than 7,000 people, is a vehicle to allow us to transform
our dreams of leading the market, of exploring and taking advantage of new business opportunities, of providing services
of the highest quality, and of ensuring our customers believe
and trust us, of feeling fulfilled and passionate in our work, of
being able to take pride in all of this and, in doing so, making
Chile live better connected.
9
Report 2011
In addition to the above, we have also considered the requirement to strengthen our wholesale networks provision, in this
case by providing roaming mobile and mobile virtual network
operator (MVNO) services. We believe a strategy correctly focused on wholesale services can ensure part of the competitive value of other operators can be delivered and captured
through our network.
Another challenge for 2012 will be the introduction of LTE
networks, recently announced as 4G. Last December, the Department of Telecommunications launched the public tender
process for 2600 MHz spectrum that will allow the new technology to be deployed, resulting in a considerable increase in
browsing speeds on mobile devices.
Entel is in a strong position to face these changes. In 2011, we
became the first operator in Latin America to implement HSPA+
Dual Carrier, a new technological landmark in the evolution
of our network, providing our users with maximum download
speeds of up to 24 Mbps, almost double the existing speed. This
technology is in fact a step to pave the way for 4G networks,
which we will being hearing more about in the near future.
Chairman of the Board
Chapter 1
Company infOrmation_
(*)
profile_
Report 2011
12
Entel provides integrated telecommunications and IT services
for Consumers, Enterprises and Corporates segments, as well
as the leasing of network services for wholesalers. The company operates in Chile, where it leads the industry, and Peru
through its subsidiaries Americatel Perú and Servicios de Call
Center del Perú.
The company provides call center services, remote contact
services, and technical support desks in both countries.
Backed by the best network and data center infrastructure in
Chile, Entel offers integrated solutions with high standards of
service.
NET REVENUE:
CLP $1,241,000 million
EBITDA: CLP $515,000 million
CONSUMERS SEGMENT*
ENTERPRISE SEGMENT*
CORPORATE SEGMENT*
WHOLESALE
(58% of total)
(21% of total)
(13% of total)
(4% of total)
AMERICATEL*
(2% of total)
CALL CENTER*
(2% of total)
*Distribution of gross revenue by Segment
KEY FIGURES 2011
2009
2010
2011
Change
2010-2011 %
Revenue
994,671
1,086,405
1,240,914
14%
EBITDA
401,358
446,018
515,200
16%
Operating Profit
184,580
208,130
238,227
14%
In CLP$ million
Annual Profit
Total Assets
Total Liabilities
Minority Stock
Total Equity
Total Liabilities and Net Equity
142,260
172,971
180,767
5%
1,365,390
1,489,274
1,558,014
5%
704,538
767,900
784,937
2%
0
0
0
660,852
721,375
773,077
7%
1,365,390
1,489,275
1,558,014
5%
Report 2011
With a market capitalization of USD $4,428 million at the end
of 2011 (equivalent to 3% of Chile’s IPSA national share index)
Entel Chile S.A. is one of the largest public limited companies
in the country. Its stock is distributed among 2,134 shareholders and its controller, which holds a 54.8% share, is Altel Inversiones Ltda., a subsidiary of Almendral S.A., an investment
company owned by six business groups.
AT DECEMBER 31, 2011
33,5%
ALTEL INVERSIONES LTDA.
54,8%
11,7%
13
129,530,284
54,8%
PENSION FUNDS
27,605,905
11,7%
FOREIGN/RETAIL FUNDS
79,387,506
33,5%
236,523,695
histOry_
Report 2011
14
Entel has successfully adapted to major
changes in terms of competitiveness,
securing its development through
innovation and a focus on service quality.
Origins
Empresa Nacional de Telecomunicaciones Entel S.A., was formed by the Chilean government in 1964 to connect the country
through a secure and modern long-distance communication
system. During its first two decades, the company installed
microwave networks throughout a large part of the national
territory, as well as the first Latin American satellite station
and the National Telecommunications Center, also known as
the Entel Tower, the core of the country’s communications system. At the start of the 1990s, it consolidated its technological
leadership with the digitalization of its network and the installation of an extensive fiber-optic network, which now provides
coverage from Arica to Puerto Montt.
;)
For 30 years, Entel remained the country’s only long-distance
operator, however, in 1994, reforms to the national telecommunications market made it possible for new players to enter
the industry and for the company to diversify into other highgrowth segments, such as mobile telephony.
Transformation
Maintaining the vision upon which it was founded, Entel restructured its business model to operate in highly competitive
markets, basing its strategy on three fundamental aspects:
high service quality, infrastructure, and innovation. In 1994, it
installed the first GSM network in Latin America, followed by
the first commercial network in Latin America with ATM technology, which became the current multiservice IP network for
fixed broadband solutions in 1997, and the first mobile broadband service delivered over the GPRS platform on the 1,900
MHz spectrum in 2001. In 2005, Entel became the first company in Chile to offer a service providing users email access
from a mobile handset, and in 2006, it became the first operator in Latin America to launch a 3.5G network on a commercial
scale, followed by its HSDPA+ network in 2009.
In 2011, it continued to make progress in this area with the introduction of HSPA+ Dual Carrier technology, being one of the
first companies in the world to offer this standard.
To strengthen and increase innovations of this nature, Entel
has formed strategic partnerships with technological leaders
such as Vodafone, Samsung, and Ericsson.
Ownership
Entel remained a state-owned company until 1986, when the
government began the privatization process that was completed in 1992. In 1993, through a series of stock-market transactions, Chilquinta (today Almendral), acquired 19.9% of the
company’s stock. In June 1996, a meeting of Entel shareholders authorized an increase in capital to allow the entry of
Stet International Netherlands N.V. (later to be taken over by
Telecom Italia), which shared control with Chilquinta through
a shareholder agreement. In March 2001, Telecom Italia purchased the shares owned by Chilquinta and Grupo Matte, increasing its stake in the Company to 54.76%. The Italian group
maintained its stock until March 2005, when Almendral S.A.
re-purchased the stock, which it retained to the end of 2011.
Report 2011
15
landmArks_
1964
1968
1974
1977
CREATION
FIRST SATELLITE STATION
Entel installs Latin America’s first
satellite station In Longovilo
COMMISSIONING OF THE ENTEL
TOWER
SATELLITE EXPANSION
Empresa Nacional de Telecomunicaciones (Entel) was founded on
December 30 by a treasury decree
in order to provide long-distance
national and international telephony and telegraph services to
businesses.
1987
Report 2011
16
Structure with a height of 127 m
and operates the National Telecommunications Center.
Construction of new satellite stations to provide coverage throughout mainland Chile, completed in
1985.
1990
1992
1993
DIGITIZATION OF NETWORK
FIBER OPTIC NETWORK
PRIVATIZATION
INTERNATIONAL EXPANSION
Entel consolidates its technological leadership with the digitization of its long-distance national
and international network.
Start of the development of the fiber optic network which currently
provides coverage from Arica to
Puerto Montt.
Completion of the transfer of
Entel to private ownership, which
was started in 1986.
Entel begins its expansion abroad
with the creation of Americatel
Corp for the provision of longdistance services in the United
States. The following year it takes
over Americatel Centroamerica.
Both were sold in 2006.
1994
1995
1996
MULTICARRIER SYSTEM
INTERNET SERVICES
LOCAL TELEPHONE SERVICE
With multicarrier code 123, Entel
begins to compete with other
operators in its original business
area, long-distance telephone
services.
Entel starts to provide Internet
connection services.
The company begins its operations in this area through the subsidiary Entel Telefonía Local.
ANALOG CELL TELEPHONE
SERVICE
Entel takes over Telecom Celular
S.A., a company providing analog
cell telephone services with coverage throughout various regions of
the country.
1997
1998
2000
2001
PCS MOBILE TELEPHONE SERVICE
DIGITAL MOBILE TELEPHONE SERVICE
CALL CENTER
EXPANSION IN PERU
After being awarded two PCS
(Personal Communication Service) licenses, Entel begins to
offer a mobile telephone service
throughout the entire country.
Entel begins to offer digital mobile telephone services on the 1900
MHz spectrum.
In order to provide its customers with
better service through the promotion of
remote channels, the company creates
the Entel Call Center subsidiary. Services
are subsequently expanded into Peru.
Entel creates Americatel Perú to
provide long-distance and traffic
termination services in the country.
2003
2005
2001
17
ENTEL WILL
Entel PCS launches the first Mobile Broadband service in Latin
America, with the implementation
of the first 1900 MHz GPRS platform, providing Internet access
from mobile handsets.
EntelPhone obtains WILL license
on the 3,500 MHz frequency band
for the provision of wireless fixed telephone services, and two
licenses with a total capacity
of 100 MHz for the provision of
broadband for Internet and local
telephone access (Entel Will).
2005
2006
2008
LAUNCH OF BLACKBERRY
LAUNCH OF 3.5 G
PARTNERSHIP WITH VODAFONE
PURCHASE OF CIENTEC
Entel PCS becomes the first company to offer BlackBerry technology, providing access to email
and web-browsing from a mobile
handset.
Entel becomes the first Latin
American operator to launch a
commercial mobile network based on 3.5G technology.
Creation of a strategic partnership
with Vodafone, the world’s leading
mobile telephone operator.
Entel takes over Cientec Computación S.A., consolidating its strategy in the IT market.
2009
2010
FIRST COMMERCIAL HSPA+ NETWORK
TODO CHILE COMUNICADO
NEW DATA CENTER
PURCHASE OF TRANSAM AND WILL
Completion of the first phase of
the Bicentenary project, Todo
Chile Comunicado, a public-private initiative involving national
and regional government, and
Entel, to roll out mobile broadband (MBB) to 1,474 rural areas
throughout the country.
Entel launches the first phase of
the largest and most modern data
center in Chile in Ciudad de Los
Valles.
Entel acquires all shares in Transam, which provides intermediary telecommunications services and operates a long-distance
service, and Will, which provides
local wireless telephony and data
transmission.
With the operation of the first
commercial HSPA+ network in
Latin America, Entel PCS is able
to offer the fastest broadband access on the market.
NEW SERVICES: MMS AND HOME
AUTOMATION
Entel adds the following to its range of mobile value added services: MMS (Multimedia Messaging
Services), Mobile Office, and Intelligent Home (remote monitoring
of houses over a mobile phone).
IT SERVICES
Entel expands the areas in which
it operates in order to offer IT
services.
Memoria 2011
MOBILE BROADBAND
landmArks 2011_
September
NUMBER ONE
FOR SERVICE
QUALITY
APRIL
For the ninth year in a row,
Entel was ranked number
one in the National Customer
Satisfaction Survey in the
mobile telephone services
category. The ranking, which
has been carried out for 10
years by the organization
ProCalidad and Revista
Capital magazine, is the only
survey to measure customer
satisfaction among service
companies and has a sample
of 28,000 surveys.
DUAL CARRIER
PIONEER
Report 2011
18
Entel became the first
operator in Latin America
to implement HSPA+
Dual Carrier, a landmark
technology in the evolution
of its 3G HSDPA+ network,
providing users with
maximum download speeds
of up to 24 Mbps, almost
double the existing capacity.
COPC
CERTIFICATION
Entel Servicios de
Call Center obtained
COPC® certification, the
management standard
that defines contact center
best practices on a global
level. The only company in
Chile with this certification,
which covers the following
services: Mobile Billing,
Premium Telebilling, Entel
Businesses, and BlackBerry
Service Center.
June
August
RESTRUCTURING
OF ENTEL
SECOND PHASE
OF TODO CHILE
COMUNICADO
In order to build closer
relationships with its
customers, Entel restructured
the organization, integrating
the fixed and mobile
businesses. Under this new
structure, the activities of
the business are organized
into units grouped by market
segments, and these are
supported by cross-cutting
units such as Technology and
Operations, IT Services, and
Strategy and Innovation.
The Chilean government
and Entel launch the
second phase of the
Todo Chile Comunicado
project, sponsored by
the Telecommunications
Development Fund and
which will provide mobile
broadband coverage to 587
new rural areas throughout
the country, benefiting
991,357 people in 1342 total
areas in the country.
October
TIER3
CERTIFICATION
Uptime Institute, the only
body in the world to award
the Tier 3 certification, which
accredits the most stringent
infrastructure, security,
and availability standards,
awarded the certification to
the second phase of Entel’s
data center in Ciudad de Los
Valles that was launched in
October. This certification
strengthens Entel’s position
as the country’s leading
provider of data center
services.
December
ENTEL VISA
CARD ISSUED
TENDER FOR
4G SERVICES
As part of a long-term
partnership with Banco
de Chile saw the company
launch the Entel Visa
Credit Card, attracting
10,000 customers in
the first month. The
new Entel Visa includes
telecommunications related
benefits, such as discounts
on handsets, increased
top ups, the ability to
accumulate Entel Zone
points, and the extension
of the features of Banco
de Chile credit cards.
Both companies have set
themselves the challenge of
making this the leading card
on the telecommunications
market.
The Department of
Telecommunications
launched the public
tender process for
2600 MHz spectrum,
which will permit the
deployment of 4G
networks throughout
the country, providing
a considerable boost
in browsing speeds for
mobile devices.
LAUNCH OF
NUMBER
PORTABILITY
Starting in Arica, and
rolled out gradually
across the country, the
fixed number portability
program was launched
in line with Act 20,471,
giving users the right to
retain their number when
switching companies.
Mobile number
portability will be rolled
out simultaneously
throughout the country
from January 2012.
BEST
FINANCIAL
CONTENT IN
2010 REPORT
IBEROAMERICAN
PRIZE FOR BEST
CUSTOMER
EXPERIENCE
The Ibero-American
Association for CompanyCustomer Relations awarded
Entel the prize for Best
Customer Experience for
2011 in the mobile telephone
services category. The Best
Customer Experience survey
involves more than 13,000
customers in different
parts of Brazil, Chile,
Colombia, Spain, Mexico,
and Venezuela, who are
asked about their experience
of factors such as brand,
products and services, and
communication channels.
For 16 years, PwC and
the business newspaper
Estrategia have been
awarding the efforts
made in the preparation
of annual reports.
Chile’s most prestigious
companies took part in the
competition and on this
occasion Entel received the
award for the report with
the best financial content
for 2010.
19
INTERNATIONAL
CREDIT
Entel signed an international
bank loan for USD $200 million
with the Bank of TokioMitsubishi and Scotiabank.
The loan entails the payment
of quarterly or half-yearly
interest, with a single
amortization in December
2014 and an annual dollar
interest rate of 1.65% for
the initial period, including
spread, commissions and
transaction costs. The funds
are wholly destined for the
advanced payment of the first
installment of a syndicated
loan, allowing the company to
improve its liquidity.
Report 2011
November
Since 2009, Entel has had a Code of Conduct
and Ethics in place that covers both the company itself as well as its partners and contractors. The document guides the link between
the company and its shareholders, founded on
the principles of preventing discrimination and
the acceptance of pressure from one group of
shareholders over another.
cOrporate
goveRnance_
Report 2011
20
The aim of Entel’s Corporate
Structure
Governance system is to create value
Entel’s Corporate Governance is led by a Board of Directors
composed of nine members who do not hold executive positions
in the company and are appointed terms of two years, with the
possibility of being re-elected for another term. The current
board was elected in 2010 and will be renewed in 2012. Three
of its members make up the Committee of Directors.
for its shareholders and the company
by making a relevant contribution to the
development of telecommunications in
Chile. The values of excellence, integrity
and responsibility are essential in
The Committee of Directors is composed by: Luis Felipe
Gazitúa Achondo (Chairman of the Committee), Alejandro
Jadresic Marinovic (Independent), Alejandro Pérez Rodríguez
(Independent).
delivering on this commitment.
The main roles of the committee are: to examine the reports
prepared by the external auditors, the balance sheet, and any
other financial statements; to propose the external auditors
and private ratings agencies to the Board of Directors; and to
review transactions between related parties.
Principles
The Board of Directors nominates a Chief Executive Officer,
who has all the powers and responsibilities corresponding
to the position. In line with legal requirements, this position
is incompatible with being a Chairman, Director, Auditor, or
Accountant at the company.
The principles of Entel’s Corporate Governance are: protecting
the rights of shareholders, ensuring all receive equal
treatment; the timely and accurate disclosure of any relevant
information regarding the company; and the responsibility
of the Board of Directors in approving strategic directives,
executive management control, and matters related to
its interest groups (shareholders, employees, customers,
suppliers, and the community).
Additionally, Entel has an Internal Audit division that checks
the Internal Control System operates effectively and efficiently,
identifying potential risks and recommending actions for their
mitigation in a timely manner.
our
valuEs_
Contribute to our customers’ success through
their use of our products
and services, making
a commitment to the
continuous pursuit of
innovation, excellence,
service quality, and
teamwork.
Responsibility and
Sensitivity
Integrity and Fulfillment
Committed to
transparency, integrity,
professionalism, and
fairness in our actions.
We commit to being
efficient and responsible
in the delivery of our
Company’s services,
in the manner and
timeliness in which they
are provided.
Act responsibly and
sensitively with respect
to our customers’
requirements, the wider
community, employees
of the Entel Group, and
all those involved with.
Also ensure that our
services have the highest level of geographic
connectivity.
In 2011, the total value of remunerations to key executives
of equivalent level at Entel was CLP $7,315,163,954, spread
over an average of 84 people (taking into account Entel S.A.
and its subsidiaries). Bonuses payments made over the year
totaled CLP$ 4,717,974,918. Severance merts for 2011 was
CLP$ 1,854,820,592, paid to a total of 12 executives.
During the financial year, the Committee of Directors did not
incur in any expenses or consultants fees.
Investor Relationship
The company has an investor relationship area for servicing
requirements for information from the financial markets and
publishing information about the company in line with the
regulations established by the current standards.
Remuneration
21
World Class Suppliers
Once a year, the remuneration of the directors is approved at
the Ordinary General Shareholders Meeting (detailed in the table below). None of the members of the Board of Directors or
the executives of the organization are paid in shares or stock
in the company’s equity, nor for being directors in subsidiary
companies.
Board of Directors Remuneration
Tax ID Nº
2011
2010
Th. CLP$
Th. CLP$
Juan Hurtado Vicuña
5.715.251-6
73,646
77,968
Luis Felipe Gazitúa Achondo
6.069.087-1
63,174
61,261
Raúl Alcaíno Lihn
6.067.858-8
34,458
21,456
Juan Bilbao Hormaeche
6.348.511-K
33,483
32,479
Juan Claro González
5.663.828-8
29,625
27,821
Andrés Echeverria Salas
9.669.081-9
20,276
-
Alejandro Jadresic Marinovic
7.746.199-K
45,945
44,553
Juan José Mac-Auliffe Granello
5.543.624-K
34,459
33,415
Bernardo Matte Larraín
6.598.728-7
12,286
30,614
Alejandro Pérez Rodriguez
5.169.389-2
53,407
33,415
Total
400,759
362,982
Entel’s main suppliers are: Ericsson Chile S.A, Huawei Chile
SA, RaylexDiginet S.A, Cisco systems S.A, Sice agencia Chile
S.A, Samsung Electronics Chile Ltda, Nokia Inc. and Apple Inc.
Entel’s purchasing policy is expressly set out in its Code of
Ethics. In summary, it states that relationships with suppliers
are governed by the principles of transparency, integrity, honesty and mutual benefit. The selection of a supplier is based
on the principles of merit and ability, in line with the quality
and cost of their product or service. Similarly, all potential
suppliers have identical access to information to allow them
to prepare their offers. Equal opportunities are offered to all
qualified companies wishing to establish a business relationship with Entel. Tenders are analyzed and awarded based on
objective procedures.
Employees activities must avoid any situation that may give
rise to a conflict of interest or represent misconduct.
Report 2011
To be the best
board of dirEctors_
Report 2011
22
Juan José Hurtado
Vicuña
Chairman
Civil Engineering
Universidad de Chile
Tax ID No: 5.715.251-6
Luis Felipe Gazitúa
Achondo
Vice-Chairman
Business Engineering
Tax ID No: 6.069.087-1
Juan Bilbao
Hormaeche
Director
Universidad Católica de Chile
Masters in Business
Administration
The University of Chicago
Tax ID No: 6.348.511-K
Juan José Claro
González
Director
Entrepreneur with degree in
Civil Engineering
and a Masters in Physics
Tax ID No: 5.663.828-8
Report 2011
23
Raúl Alcaíno
Lihn
Director
Civil Industrial
Engineering
Tax ID No: 6.067.858-8
Juan José Mac-Auliffe
Granello
Director
Tax ID No: 5.543.624-K
Alejandro Pérez
Rodríguez
Director
Civil Industrial Engineering
Masters in Economics
The University of Chicago
Tax ID No: 5.169.389-2
Andrés Echeverría
Salas
Director
Masters in Business
Administration
The Anderson School (UCLA)
Tax ID No: 9.669.081-9
Alejandro Jadresic
Marinovic
Director
Industrial Engineering
PhD in Economics
Harvard University
Tax ID No: 7.746.199-K
managEment_
Report 2011
24
Entel’s mobile and wireline businesses
were integrated in June 2011. The
company adapted its organization and
business processes to successfully
meet growing competition in the
markets in which it operates, both
in terms of customer requirements
and the technologies present in the
telecommunications market and the
associated IT services.
Entel was restructured
to reach new levels of
innovation and service, and
deliver closer relationships
with our customers
New Structure
Organizational Change
In its current organizational structure, Entel’s operations are
based around market segments: Consumers, Enterprises, and
Corporations. Each of these units has its own teams for innovation and product development, prices, marketing, sales, and
customer service.
On March 1, 2011, Richard Buchi Buc resigned from the role
of Corporate CEO to take up the position of Executive ViceChairman of the Entel Group. On the same date, Antonio Büchi
assumed the position of CEO for both the wireline (Entel S.A.)
and mobile (Entel PCS) businesses. Both positions will be merged on completion of the integration program.
Traditional technology activities (networks, internal systems,
and operations), together with wholesale services, are grouped under a convergent Technology and Operations area.
IT services is responsible for managing, operating and running
processing, transaction, and connectivity technology platforms
(cloud services, data center, outsourcing).
Antonio Büchi, who holds a degree in Civil Engineering from
Universidad Católica and a Masters in Economics from the
University of Chicago, has worked for Entel for the last 12
years. He joined the company in 2000 as Planning and New
Business Executive.
All cross-cutting units operate under a single leadership. The
structure was designed in line with international best practices, envisaging close integration among different areas as a
result of increasing technological synergies.
Report 2011
25
Structure Chart_
RICHARD BÜCHI B.
Executive Vice-Chairman
ANTONIO BÜCHI B.
Chief Executive Officer
FELIPE URETA P.
Corporate Finance and
Financial Planning
JUAN BARAQUI A.
RAFAEL LE-BERT M.
CRISTIÁN MATURANA M.
Management Executive
Corporate Human Resources
Legal Executive
José luis poch P.
mario núñez P.
JuLIÁN san martín A.
Alfredo parot D.
Vice-Chairman Consumers
Market
Vice-Chairman Enterprises
Market
Vice-Chairman Corporate Market
Vice-Chairman Technology and
Operations
MANUEL ARAYA A.
Regulatory and Corporate
Affairs Executive
Luis Cerón P.
Internal Auditing Executive
Víctor HUGO muñoz A.
Sebastián domínguez P.
IT Services Executive
Strategy and Innovation Executive
Richard Büchi Buc
Executive Vice-Chairman
Civil Engineering
MBA, Wharton School of Business,
University of Pennsylvania.
ID No. 6.149.585-1
_Top Level
Executives
Antonio Büchi Buc
Masters in Economics,
The University of Chicago.
ID No. 9.989.661-2
Memoria 2011
26
Felipe Ureta Prieto
Corporate Finance and
Financial Planning
Universidad Católica
de Chile
ID No. 7.052.775-8
Juan Baraqui Ananía
Management Executive
Universidad de Santiago
de Chile
ID No. 7.629.477-1
Rafael Le-Bert Montaldo*
Corporate Human
Resources Executive
Civil Engineering
ID No. 6.245.545-4
Cristián Maturana Miquel
Legal Executive
Law
ID No. 6.061.194-7
Manuel Araya Arroyo
Regulatory and Corporate
Affairs Executive
ID No. 10.767.214-1
Luis Cerón Puelma
Internal Auditing Executive
Accountancy
de Chile
ID No. 6.271.430-1
José Luis Poch Piretta
Vice-Chairman Consumers
Market
de Chile
ID No. 7,010,335-4
Mario Núñez Popper
Vice-Chairman Enterprises
Market
Universidad Católica de
Chile
ID No. 8.165.795-5
Julián San Martin Arjona
Vice-Chairman Corporate
Market
Universidad de las
Américas
Software Engineering
ID No. 7.005.576-7
Alfredo Parot Donoso
Vice-Chairman Technology
and Operations
Universidad Católica de
Chile
ID No. 7.003.573-1
Víctor Hugo Muñoz Álvarez
IT Services Executive
Universidad Técnica
Federico Santa María
ID No. 7.479.024-0
Sebastián Domínguez Philippi
Strategy and Innovation
Executive
Masters in Economics,
University of Cambridge.
ID No. 10.864.289-0
Álvaro García Leiva
CEO Entel Call Center
Business Engineering,
ID No. 6.920.404-4
Eduardo Bobenrieth Giglio
CEO Americatel Perú S.A.
Civil Engineering,
Universidad de Chile.
Executive MBA, London
Business School, U.K.
ID No. 5.801.691-8
*Stop exercising office in November 2011.
“
workForce*_
Professional and technicians
Employees
Total
Parent
Company
Mobile
Call Center
Other Subsidiaries
Transam–Will
Call Center
Perú
Americatel
Perú
Total
47
55
7
2
1
1
7
120
1,515
1,002
138
66
-
143
45
2,909
685
886
648
373
20
1,158
210
3,980
2,247
1,943
793
441
21
1,302
262
7,009
*Workforce in equivalent hours
Memoria 2011
Executive
27
“
huMan
resOurces_
28
Report 2011
The company’s integration and
cultural transformation determined its
activities in terms of human resource
management for 2011. Consolidating
a new organization focused on various
market segments implies technical
challenges and adaptation.
Integration Strategy
The new stage embarked upon by Entel with the restructuring
of the organization in 2011 made it necessary to develop a human resources strategy specifically focused on creating an environment to make the cultural change required by this transformation possible. This implied strengthening the area with
the creation of an Integration and Cultural Change Department
to provide cross-cutting support to this process through specific actions, such as a complete communications plan that
involved more than 25 meetings between the CEO and executives and managers from all areas of the business, and the
72 projects
were undertaken by Human
Resources Management to facilitate
the integration process.
design and application of integration surveys throughout the
year to measure and analyze the evolution of the areas in
terms of different aspects related to the integration. One of the
most significant achievements in this respect was the creation
of a portal on the company Intranet to allow management to
respond to concerns and receive suggestions. The integration
process will continue with a number of initiatives scheduled
for 2012.
Training
Out of a workforce of 4,764 employees (excluding subsidiaries), 79% took part in training and educational activities
throughout the year. This represents a total of 134,000 man
hours of training and an investment of CLP $1,000 million.
The training programs provided included:
Integrated Induction, to provide new-starts with a general
overview of the company.
Management, a successful program that has been running
for five years in partnership with Universidad de Chile. In 2011,
440 employees participated.
Leadership, a program to promote the capacities and beliefs that facilitate the process of integrating teams and business
areas among Entel’s leaders.
Postgraduate Scholarships, to promote the development
of specific skills. In 2011, 47 employees received this benefit.
Academic Certification Program, delivered in partnership
with Uniacc, the program offers e-learning diplomas every
year, targeting employees who have contact with customers in
the Consumers Market. Upon completion, employees obtain a
higher technical qualification in marketing and sales.
General Training, in partnership with Universidad Adolfo
Ibáñez, this 88-hour program aims to provide employees, managers, directors, and executives with a global and integrated
vision of the business, as well as an understanding of the importance of its people in obtaining results.
29
Organizational Development
The organizational development areas were vitally important
in transforming the corporate culture. A central objective
of this area was to stimulate the working environment to
create motivated and high performing teams. This saw the
development of the Integrated Competencies Management
Model (corporate and functional) to facilitate the evolution
of the new corporate identity in line with the business
requirements and the company’s strategic objectives. An
integrated performance evaluation system was designed
based on this model, with a progressive implementation
aligned with the cultural impact process.
To strengthen trust, close relationships, knowledge, and
commitment in new teams, 32 integration activities took
place, independently designed for each group in line with their
specific requirements. However, the majority of these were
based on three stages: getting to know each other outside
the workplace; revising the historical contributions of each
subgroup; and aligning the group with future challenges. The
Great Place to Work survey was used to gather information
about the working environment in the new organization in
order to provide a basis on which to measure progress from
2012 onwards.
*
*
*
*
*
Report 2011
*
Selection
Salaries
In 2011, the company consolidated new recruitment channels
that provide it with more direct access to potential candidates,
taking advantage of the use of social networking platforms.
In parallel to this, it continued to take part in careers fairs to
ensure Entel is regarded as an attractive company, especially
among young professionals. Furthermore, the focus was on
delivering projects that facilitate the company’s integration,
paying particular attention to the definition of the internal recruitment policy and the implementation of a single portal for
job applications in order to promote personal development opportunities within Entel.
Entel has a salary management model that integrates processes for the analysis and description of internal positions
and the determination of salary and incentive structures in
line with market rates as part of the company’s plan for excellence. Similarly, the company has created a structured compensation system based on management by targets, which
applies to directors, executives and area managers and seeks to align compliance with the objectives set at these levels
with those of the company, helping to maintain a coherent
vision.
Staff Management
Report 2011
30
One of the largest human resources management challenges
for 2011 was the integration of systems required to ensure the
correct management of policies and procedures throughout
the integrated company, guaranteeing that labour legislation
was respected, together with employment contracts, collective
bargaining agreements, and the efficient and timely payment of
salaries. To deliver this, the human resources platforms were
integrated and unified on a SAP-based system. Improvements
were made to this platform, implementing the SAP electronic
medical license process and initiating the project for the
electronic signing of contracts and addendums.
For 2011, the main challenges were related to the creation
of the integrated structure of the new company, the development of new job descriptions aligned with the new Entel, as
well as variable salary consultants and salary scales.
Belonging
Entel has supported its workers in a number of aspects
outside the workplace, fostering a strong sense of belonging,
motivation, and commitment. In 2011, various activities and
events took place for Entel employees and their families,
such as the National Independence Celebrations for all staff
in Santiago, the Family Christmas Party, the Male and Female
Football Championship, and the delivery of gifts for Children’s’
Day and Christmas.
Occupational Health and Safety
The accident rate at Entel was 1.47% in 2001. In line with
information recorded by the Chilean Health and Safety
Association (ACHS), this figure was far below the average for
the telecommunications industry (4.84%) and the Transport
and Telecommunications sector (7.88%).
This strong result is complemented by the Annual Safety
Distinction awarded by ACHS to the subsidiary Entel Servicios
Telefónicos S.A. and the “Acción Pariraria Prize” awarded by
this institution to the General Mackenna facility Committee.
Entel has a permanent goal to achieve high standards of
excellence in risk prevention and occupational health and
safety. In addition to optimizing its operations and promoting
productivity, it seeks to contribute to the quality of wellbeing
of its employees and contracted workers, understanding that
the concern for their life and physical integrity is the most
significant sign of respect towards them.
Integration Party, July, 29. More than
4,000 people from the Entel Team
throughout the country attended the
Integration Party, which took place in
Santiago to involve workers in progress
at various stages of this corporate project
in a positive way. This was one of the
most important and symbolic events.
Report 2011
31
:)
corpOrate
imAge_
32
Report 2011
Trust, leadership, and a strong corporate
reputation make the Entel brand one of
the company’s main assets.
“Live better connected”
Communication
Based on our customers’ requirements and usage patterns, in
2011, Entel launched its new tagline “Live better connected”.
This tagline retains the promise of “Being the first to live the
future,” but is also an invitation to enjoy not only voice connectivity but data connectivity.
During 2011, in the Consumers Market, the company focused
its effort on communicating its range of contract and prepaid
plans, especially for mobile Internet and smartphones, focusing attention on improvements to the browsing experience
using mobile broadband.
The quality of Entel’s infrastructure, its ability to innovate, and
its first class service stand behind this concept.
The marketing strategy also focused on providing benefits valued by users through the Entel Zone, the program that allows
Entel users to accumulate points and exchange them for
packs of minutes, top ups, technical support, and equipment.
In this respect, a landmark for 2011 was the incorporation of
our own points program, since up to 2010 customers accumulated points through the Cencosud Nectar system.
Entel sponsored the Sensation and Creamfields
festivals, and the U2 concert, which drew
landmark crowds to Chile’s National Stadium.
As part of the benefits of the Entel Zone, Entel
offered its customers a 20% discount on tickets
to 33 concerts in 2011. Its traditional New Year
celebration on the Entel Tower attracted a
crowd of over 450,000.
Report 2011
33
The change allowed Entel Zone users to combine points and
money.
The Zone also offers discounts, mainly for cinema tickets,
football matches, pubs, restaurants, festivals, and concerts.
In 2011, some of the most exciting shows for which we offered
our customers cut-price tickets included the U2 concert,
and the Sensation, Creamfields, and Mystery land festivals,
reinforcing our brand leadership at these events. As part of
our efforts to strengthen ties with customers, the Entel Visa
credit card was launched in partnership with Banco de Chile,
becoming the card of the Entel Zone.
In the Businesses and Corporate Market, we focused on
consolidating the company’s position as an integrated supplier
of solutions that help build on the success of our customers’
businesses.
Entel reinforced the association of its brand with the concepts
of innovation and supporting the competitiveness of its
customers, holding the fourth Entel Summit in partnership
with its technology partners. The event brought Gary Hamel,
recognized by Fortune magazine as one of the world’s leading
experts in business strategy, to Chile and was attended by
more than 1,700 people.
To support sport and the family life of the company’s
customers, Entel ran its successful Entel Mountain Bike
Challenge for the third time. The competition took place at
Lago Peñuelas in the Fifth Region, and brought together more
than 3,000 participants.
Entel carried out a tour in nine regions to promote
entrepreneurship, beginning in Antofagasta, with a presentation
by Raúl Bustos, a survivor from the collapse of the San José
mine, discussing how to survive in adverse situations, the role
of leaders, and the importance of communication in these
challenges.
Report 2011
34
Corporate Reputation
Awarded Campaigns
Climbing eight points with respect to its ranking in 2010, Entel
was among the group of companies with a “robust reputation” in
Chile, according to the VI Corporate Reputation Pulse Study run
by the Communications Faculty at Universidad Católica and the
Reputation Institute.
In 2011, Entel received 12 awards for communications and advertising.
Effie Awards
ACHAP Festival
IAB Awards
The 2011 ranking was led by Apple, with 78 points. Entel is the
only telecommunications company in the group of high reputation
companies, with 71 points.
Festival awarding great ideas
giving rise to marketing
strategies with outstanding
creativity and whose results
are successful in practice.
Annual competition that
awards creativity in advertising in Chile
The study defines reputation as the level of attraction people
feel for an organization, taking into account its message, direct
experience when interacting with the company or its employees,
and what third parties say about it, as well as communication
methods.
Gold Award for categoryLaunch of Services I
Multimedia Plans Campaign
IAB Chile award, an
association that brings
together the leading web,
on-line, and creative
agencies, for Internet
media, awarding the best
work in this area.
Ninth Place in Merco Ranking
Entel once again stood out from the country’s companies with
the best corporate reputations, coming ninth in the Merco
Ranking during the second year it has been run in Chile.
The study is carried out by means of surveys sent to 5,200
senior managers of companies with a revenue of more than
USD $30 million.
The evaluation process was run by financial analysts,
consumer associations, non-profit organizations, unions, and
media organizations.
Silver | Viral Marketing |
Entel - New Year Tweet
Silver | Mobile Marketing |
Entel - Ikwest
Bronze | Technological Innovation | Entel - Ikwest
AMRO Chile
Prize awarded by the
Chilean Association of
Marketing and Promotional
Agencies that analyzes and
gives awards for the best
strategies, creative insight,
and measurable objectives
for sales, branding, and
customer loyalty.
Silver | Best Use of Social
Media |
Entel - New Year Tweet
Advisor of the Year |
Entel
Best Innovation of the
Year | Entel - Ikwest
Best Use of Technology |
Entel - Ikwest
Best Viral |
New Year Tweet
Gran Ego 2011
Best Mass-Market, Cultural,
or Sports Event
Gold Ego I
Entel Regional Tour
Best Mobile Initiative of
the Year in Geolocalization |
Entel Ikwest
“Live better connected” Campaign
Top of Mind Awareness and Brand Preference
Scan QR code to see the advert.
In 2011, Entel consolidated its position as the top of mind and
favorite mobile telephony brand.
TOM
First mobile telephone brand that comes to mind.
100%
80%
60%
35
40%
The Copa América took place in 2011, and as the country
was gripped by football fever, Entel, in its capacity as official
sponsor of the national team, made the dreams of its fans
reality through Chile vs Chile. The promotion invited Entel
customers to send one or more text messages to win one of
22 places in a match with the historical Chilean side, joining
idols such as Iván Zamorano, Elías Figueroa, and Patricio
Yañez on the pitch. It was an unforgettable experience.
Professionals and fans played in a full stadium and were
watched live throughout the country on public television.
40
20%
0%
37
23
entel
Company B
Company C
BRAND PREFERENCE
First brand mentioned spontaneously to the interviewer as a preference
100%
80%
The results exceeded all expectations. The campaign
generated 106,000 text messages, 353% more than
expected.
The activity attracted the attention of media organizations
with free publications, exceeding the total invested in the
activity by 65%.
In addition to this, visits to the website www.elhincha.cl,
through which Entel maintains a permanent relationship
with fans, increased by 81% during the campaign.
60%
40%
41
20%
38
21
0%
entel
Company B
Company C
These measurements were taken throughout the year by means
of a semi-structured questionnaire completed by 1,400 people on
a monthly basis (16,850 people each year).
Source: Kronos Chile Markets Research, 2011
Report 2011
Chile vs Chile
Report 2011
36
Chapter 2
Strategic
fouNdations_
infrastructurE_
38
Report 2011
Entel’s growth and support to the
country’s development is based on
the deployment and operation of
the best telecommunications and IT
infrastructure.
With annual infrastructure investment
in the region of USD $500 million over
the last three years, the company has
led Latin America in the introduction
of new network technologies and
the mass-market adoption of
telecommunications services in Chile
through the expansion of its coverage.
Entel spent
USD $502 million
on the development of its technology
and support infrastructure and customer
projects in 2011.
One of Entel’s main strategic
Entel in 2011
objectives is to ensure its infracapacity and coverage as it forms
As of December 2011, as part of the Todo Chile Comunica* do
project, broadband and mobile telephony coverage had
been provided to 1,342 rural areas representing 91% of the
full project. This network consists of a series of base stations distributed in cell configuration and operating on the
1,900 MHz frequency band, providing continuous coverage
in rural areas designated as Compulsory Service Zones. The
network is fully digital and uses Wideband Code Division
Multiple Access (WCDMA) technology.
an essential part of providing
customers with the best service
experience.
introduction of HSPA+ Dual Carrier technology, the most
* The
advanced in Latin America, to the country’s biggest 20 cities.
Of this investment, 60% or USD $300 million was destined for
mobile communication technology. Most notably, USD $270 million was spent on network infrastructure, with emphasis on
the 3G network, expanding coverage, and the Telecommunications Development Fund project. Entel also invested USD $20
million in improving its systems, focusing on the changes required for portability. Investments in business services, including IT and wholesale services, totaled USD $160 million. In
addition to this, approximately USD $20 million was invested
in the new corporate headquarters. Investment in handsets increased as a result of a shift in the mix towards smartphones,
totaling USD $232 million at the end of December.
The deployment of 600 new mobile points of presence, con* solidating
our 7,600 base stations with 2G and 3G technology, and giving our network the best coverage and capacity
in Chile.
ENTEL GROUP INVESTMENTS 2011
0.5%
Continuation of the deployment of the GPON network, provi* ding
a fiber optic service to customers in the Business Market throughout 12 districts of the country.
*
Incorporation of an optical MPLS/ROADM grid transmission
and switching system in Santiago, with dynamic restoration.
americatel perú
0.6%
LD & Call Center
4.2%
3.4%
CORPORATE SUPPORT
Network INFRASTRUCTURE
& others
2.1%
41.0%
LOCAL TELEPHONY
& NGN
MOBILE
INFRASTRUCTURE
*
Deployment of the 900 MHz Transam network across more
than 1,000 points of presence.
*
Increase in the capacity of our short messaging service
(SMS) in the event of catastrophes, improvement in the
energy redundancy of critical mobile network sites, and implementation of the alert messaging system, among other
actions related to commitments required following the earthquake on February 27, 2010.
16.6%
Total USD$
733.5 million
DATA,
INTERNET
& IT
31.6%
MOBILE TERMINALS
39
Report 2011
structure is of the highest quality,
40
Faster Mobile Connection
Entel Data Center
Entel became the first Latin American operator to implement
HSPA+ Dual Carrier at the start of 2011. This technology will
make it possible to provide users with maximum theoretical
download speeds of up to 42 Mbps, practically double the
speed available prior to the introduction of this technology.
Entel has six data centers interconnected by fixed and mobile networks. They are named according to their location:
Amunátegui, Pedro de Valdivia, Ñuñoa, Longovilo, Vicuña
Mackenna, and Ciudad de los Valles.
Expansion of the 3G network is considered a stepping stone to
the arrival of 4G technology.
Report 2011
Forthcoming Evolution to 4G
In December 2011, the Department of Telecommunications
launched a new public tender process for the 2,600 MHz spectrum, which will allow the deployment of 4G networks throughout the country.
The capacity of these new networks will allow the use of applications such as high definition television (which requires considerable bandwidth to provide high image and sound quality)
on mobile devices, and in general will improve the browsing
experience of mobile broadband users, absorbing the growing
demand of mobile Internet traffic with higher service quality.
Entel has been testing this technology since the end of 2009 in
strategic partnership with Ericsson and Universidad de Chile.
Through performance evaluations, it has been able to determine that in real operating conditions, customers can obtain
mobile broadband speeds of up to 50 Mbps using 2 x 10 MHz
paired spectrum.
These data centers have a combined surface area of 5,660 m²
that has already been fitted out, and a master plan for growth
of up to 11,660 m². From these Data Centers, Entel provides
outsourcing services for IT operations, ranging from housing
all the way to more complicated services that involve the operation and running of the platforms that support our customers’ business applications.
Tier 3 Certified Design
The design of phase two of the Ciudad de Los Valles data center, whose construction began in September 2011 and is due
for completion in May 2012, was awarded Tier 3 certification
by the Uptime Institute. Recognition by this body confirms that
the planned infrastructure is suitable for providing high-quality uninterrupted services, with an availability of 99.982% and
high standards of construction, sustainability and security.
The first phase of construction of this data center was unveiled
in May 2010 and by October 2011, its occupation rate was already over 90%. The next phase will add another 2,000 m² of
surface area for servers and a generating capacity of 4 MW,
allowing a high degree of energy autonomy.
The Ciudad de Los Valles development plan is for 8,000 m²
constructed in four phases. The second of these entails investment of USD $35 million.
Entel’s has positioned itself as
the country’s leading data center
service provider.
Satellite
Fiber Optic Backbone
Network with 30 land-based stations distributed throughout Chile, including in isolated
areas. The network uses the capacity of the
Intelsat and Telesat satellite systems to provide data and telephone services, in addition
to the transportation of television and digital
audio signals.
The trunk network extends from Arica to
Puerto Montt with 3,450 km of fiber optic
backbone, using DWDM technology that can
reach transport speeds of up to 400 Gbps.
Entel also operates a VSAT platform for
traffic from private LAN/IP and Internet
networks.
In 2011, the company modernized and expanded its VSAT platform to support growth
in traffic and services, allowing point of
presence connectivity for 2G and 3G mobile
In the Metropolitan Region, the backbone has
2,126 km of fiber optic cable deployed in the
main districts of Santiago, with a grid topology that can reach up to 400 Gbps, based
on ROADM optic nodes with 1 and 10 Gbps.
Metro Ethernet ring connections.
This transportation network, which is mainly
used for the IP/MPLS network, moves around
190 Gbps originating from access and mobile
and fixed service aggregation networks, in
addition to interconnecting our various data
centers.
In terms of data, the 3G network supports the
mobile broadband and Internet access service
for smartphone users.
In 2011, more than 500 new sites were added
to existing points of presence on the network.
Furthermore, around 1,000 3G sites were
added on the 900 MHz frequency band for
Transam using existing points of presence.
Important increases in capacity were made to
meet the continually growing customer base
and traffic demand, making our network the
best in the country in terms of quality.
Microwaves
This technology is used for the traffic
branching and aggregation network, made
up of more than 3,500 links that make it
possible to connect many rural and isolated
areas to the fiber optic trunk network. The
network is primarily used nationally for
regional transmission and as an access
network for mobile telephone and wireless
data services. The migration process from
SDH to IP/Ethernet technology capable of
reaching speeds of up to 1 Gbps is currently
under way.
access
networks_
3G Mobile Network
Entel has the most advanced 3G network in
the country. It supports voice and data traffic,
with Full IP and HSPA+ technology at all points
of presence and Dual Carrier technology in the
country’s main cities. This technology allows
for theoretical peak data transmission speeds
of 42 Mbps for downloading and 5.7 Mbps for
uploading.
transport
networks_
2G Mobile Network
IP/MPLS
The 2G network is implemented using GSM/
GPRS/EDGE technology at all points of presence. It is designed and configured to support
voice and data services to meet the highest
international quality standards, allowing data
connection speeds of up to 100 kbps.
The network is made up of 864 nodes spread
across 331 points of presence for the aggregation of access traffic. It has evolved to Gigabit
Ethernet connections throughout the national
territory, making it possible to provide dedicated and high-availability services for voice and
data for the fixed and mobile businesses.
In 2011, the company added almost 570 new
points of presence. This investment provided
coverage to previously isolated rural areas
and strengthened the signal in urban areas.
Furthermore, it provided around 100 new
2G sites on the 900 MHz frequency band for
Transam using existing points of presence.
This network increases coverage in tourist
areas and on major routes.
GPON Network
In 2010, Entel launched an urban fiber optic
network based on GPON technology in order to
connect businesses to data, Internet and telephone services. In 2011, 459 km of fiber optic
cable was deployed, representing an investment
of around USD $10 million, with coverage in nine
districts throughout the country.
41
Report 2011
entel
nEtworks_
custOmer
serVice_
42
Report 2011
The management of service quality
as a continuous and cross-cutting
process is one of the main focuses
of Entel’s strategy. The company
has an integrated approach to quality that makes use of various analysis and management methods,
from customer perception all the
way to the execution and support of
service channels.
Entel in 2011
again, the company led the ProCalidad National Con* Once
sumer Satisfaction Survey in the mobile telephony category.
was distinguished in an Ibero-American study (AIAREC) for
* Itachieving
the “Best Customer Experience.”
became the first Latin American company to imple* Entel
ment Mobile Supportware, an innovative customer service
technology.
It began the implementation of the most modern technology
* for
managing interactions between customers and contact
centers.
reformulated its Contact Center strategy to achieve world* Itclass
performance levels.
company created closer customer relationships through
* The
increased connectivity and innovation at service centers.
The formation of teams dedicated
First in National Ranking
New Service Technology
For the ninth year in a row, Entel came first in the Mobile Telephony category of the National Customer Satisfaction Survey,
carried out by ProCalidad, a non-profit organization with the
participation of Adimark GFK, Praxis, and Universidad Adolfo
Ibáñez.
Entel signed an agreement with the Danish company WorldManuals, a specialist in mobile supportware solutions that will
allow us to provide a world-class standard of online support
tools for use on mobile equipment. Using this technology, Entel
customers will be able to access self-services to help them
operate their mobile phones, allowing them to quickly clear
up problems, concerns and doubts regarding the operation of
their equipment.
to redesigning service experience
self-service capacities through
IVR (Interactive Voice Recognition) and Internet channels.
In 2011, Entel also received the Award for Consistence in Service Excellence, for being the only company that consistently
ranked among the top-performing companies during the last
five years.
Improved Customer Experience
Entel came first among 32 Ibero-American companies for providing the Best Customer Experience for 2011 in the mobile telephony category.
The company was recognized by the Ibero-American Association for Company-Customer Relations (AIAREC), on account of
the Best Customer Experience (BCX) study carried out by the
consultancy firm IZO for telecommunications companies in Brazil, Colombia, Spain, Mexico, Venezuela and Chile. The distinction
is the result of research that gathered more than 13,000 customer opinions on around 130 companies in different areas, considering experiences in terms of brand, products and services,
and interaction with distribution channels.
This will see Entel become the first Latin American company
to implement mobile supportware, a technology currently in
use by large world-class operators such as Vodafone.
Contact Center Modernization
In 2011, the company implemented a new Contact Center technology that provides it with greater control over calls and
records all calls so as to be able to analyze them at a later
date and make the required corrections to processes and people through specific coaching. This new technology also provides greater flexibility for the development of new centers and
skills.
43
Report 2011
has led to significant progress in
Consultancy, good practices and the
international contact network provided by
Vodafone through the renewal of its
strategic partnership with Entel in 2011
allowed the Chilean company to face
the challenges of efficiently delivering
excellent customer service.
Report 2011
44
New Service Strategy
Increased Market Presence
Entel reformulated its Contact Center strategy to strengthen
its leadership in service quality through the incorporation of
world-class best practices in handling telephone service. This
includes demand analysis and forecasting processes, human
resources and selection, having suitable profiles and in the required quantity, and supervision and coaching to ensure the
quality of service and continuous improvement. This will result
in greater accessibility and higher quality solutions that will in
turn deliver high levels of customer satisfaction.
In order to bring the company closer to its customers and increase its presence in commercial affairs, Entel periodically
held the successful Agent Fairs throughout the country in the
busiest streets of cities with the highest population densities.
These activities were geared around providing an informal and
intimate format to showcase smartphone equipment being
promoted, as well as its ease of use and convenience.
Similarly, and in order to create closer relationships through
our stores and the express channel, Entel held “E-days”, a service and sales initiative similar to the best practice in the retail
industry, whereby special solutions and promotions are offered to customers once a month.
Customer Satisfaction
Understanding our customers and increasing their satisfaction
are structural priorities of Entel’s management. Organizing
the business by market segment (Consumers, Enterprises, and
Corporations) has made it possible to build closer customer relationships and hence better meet their needs. One of the management indicators that measures performance across the company is the degree of customer satisfaction, whose monitoring
is undertaken on a monthly basis and which forms the basis of
continuous improvement in all areas that contribute to delivering global service to our customers.
In the Corporate Market, service quality is evaluated by means
of periodical satisfaction surveys covering the full value chain
of the various services provided by Entel, from the process for
detecting new business opportunities all the way through to the
operation and maintenance of products. In order to achieve evaluations that genuinely represent the perception of service qua-
lity, the company has a number of formats and levels of depth
for obtaining information from customers. These include telephone surveys and focus groups to study service experience.
A number of initiatives were implemented to consolidate the gap
between customer satisfaction levels at Entel and those of our
competitors, including those designed to redesign the customer
experience for the most important processes throughout the life
cycle, such as Technical Service and the Theft/Loss of equipment. These redesign seek to optimize customer experience as
part of a multichannel vision, given that today customers make
complementary use of all available channels when interacting
with the company: telephone (Contact Center and IVR), Entel and
Express stores, the web, department stores, account managers,
and agents.
45
Report 2011
NET CUSTOMER SERVICE SATISFACTION
Postpaid voice customers for consumers market.
70%
68
59
60%
18
49
50%
49
45
58
40%
34
23
32
29
30%
26
20%
25
17
10%
16
Entel
Customers recognize gap between
Source: Internal study, tracking consumer satisfaction - Adimark GFC.
DEC ‘11
JUL ‘11
DEC ‘10
JUL ‘10
gap
65%
Nearest competitor
0%
DEC ‘09
Entel and its competitors in service.
innovAtion_
Innovation has been fundamental to the
business since its inception. In 2011, the
46
company reinforced this essential aspect
Report 2011
with a structure that consolidates innovation
as an activity inherent to all processes and
assumed by the whole organization.
Entel in 2011
*
*
Creation of a Strategy and Innovation Department to institutionalize innovation and consolidate it as part of the corporate culture.
First place in the telecommunications category in the annual
ranking of Innovative Companies carried out by Universidad
de Los Andes.
Winner of the “Technology Excellence Partners of the Year
* Award
for Virtualization” for the Southern Cone of Latin
America, awarded by the multinational Cisco. This award
highlights the company’s innovative vision and its status as
a leader in the regional industry for Cloud Computing services.
How Entel Innovates
Entel has settled seven key principles to ensure innovation is manageable and systematic,
establishing how value is to be created through this activity.
At Entel, innovation:
* Is undertaken as part of a team and is a collaborative activity.
* Efforts are focused.
* Begins with problems and challenges.
* Is a discipline that requires knowledge, practice and determination.
* Is continuous.
* Conceives of errors as part of the process (Fail Fast, Fail Cheap, Fail Often).
* Is incentivized and recognized.
Innovators Ecosystem
65 new
products and services
In addition to the formal structure of its Innovation system,
Entel is promoting the creation of an ecosystem of innovators
grouped around tackling a specific challenge.
were launched by Entel in 2011.
The company believes all workers have the potential to innovate and, as such, it is necessary to create organizational conditions that promote and facilitate this activity.
There are two programs to achieve this: participative innovation and managed innovation.
novations, Entel maintains strategic partnerships with Vodafone,
Samsung, and Ericsson, which
have provided it with access to
information on the best practices
at world-class companies.
For Entel, innovation is all about
creation, change, and improvements that create value through
the use of knowledge, regardless of whether it is supported by
In 2011, and for the second year running, Entel was recognized as the most innovative company in the Telecommunications industry, according to a study carried out by Universidad
de Los Andes, ESE. The ranking shows that the company has
systematically managed to establish innovation as part of its
culture.
In 2011, Entel took another step in this area, with the creation
of a Strategy and Innovation Department reporting directly to
the CEO. The department coordinates the activities of professionals that developed products in different commercial areas
for Consumers, Enterprise and Corporate segments based on
specific customer requirements. It also organizes teams activities that research trends and evaluate advances in technology.
technology.
The Innovation Department supports the execution of projects
by providing workshops and clear methodologies to facilitate
creativity and discipline, two key factors in achieving innovation. It also contributes to the Entel Innovation Center, which
has been in operation since 2010. Designed under the Living
Lab concept, it has spaces designed to facilitate the processes
of innovation and knowledge/technology transfer in a collaborative environment.
The second innovation program for managed innovation seeks to support previously established teams within the organization, providing the methodologies and tools required for
innovation. This program begins with the identification of projects and teams upon which innovation may have a significant
impact. The activity is then promoted through workshops and
innovative methodologies.
47
Report 2011
Innovation System
To strengthen and expand its in-
The former identifies the main challenges facing the various
areas of the company and invites all workers to propose ideas
for solutions. The innovation teams are then formed based on
proposals and include the workers who proposed the ideas.
All those who participate in an innovation process obtain the
e-Maker distinction, which denotes an innovative person able
to replicate this experience in their day-to-day work.
I-factory
Entel has created the i-Factory (Innovation Factory) to transform ideas into valuable products and services. The i-Factory
is a team of around 30 professionals responsible for the design,
development, implementation, and release of innovations onto
the market.
Report 2011
48
The i-Factory includes professionals from various specialties
and different areas of the company in a matrix organization
designed in 2011 as part of the corporate restructure. The department has offices covering all the specialist technical areas
(equipment, networks, systems, operations, IT), as well as managers for each segment (Consumers, Enterprises and Corporations). This allows the company to ensure the products that
are developed are the best technological and economical fit for
a given requirement detected in the market.
Strategic Partnership and Innovation
Data Transformation Start of the program that seeks to
*transform
operator capacity into a data company. This entails
the complete transformation from network to systems, the
services offered by the company, through the profitability of
the different plans and services, all the way to the preparation
of the company’s human resources.
Portability Project Supports and contributes to the porta*bility
strategy.
Online Strategy To transform Entel into a leader in digital
*marketing
and the use of online tools in Chile.
Customer Value Management (CVM) Administration and
*supply
to customers throughout the life cycle, understanding
the various stages and the value that must be provided at each
of these.
The Strategic Partnerships that have driven Entel in recent
years are a key aspect of the ecosystem of innovation. The
most important of these are our partnerships with Vodafone,
Ericsson, and Samsung, which allows the continuous transfer
of knowledge and best practices.
Best Network Use of the most advanced tools available to
*support
and ensure the service quality of our network for cus-
As an example, this year Entel renewed its partnership with
Vodafone for the next four years. This allowed the company to
take advantage of the innovative capability of this world-class
leader in technological advances and the development of products and services. In 2011, various projects were undertaken
with different areas of the company, such as:
including LTE.
tomers.
LTE & Technical Evolution Participation of our technology
*teams
in the state of the art evolution of the future network,
Workshops Various workshops and activities for customer
*care,
network, consumer forum, business forum, roaming etc.
The various projects and activities carried out with Vodafone
supports the company’s strategic and tactical objectives, providing access and visibility to the cutting edge of the industry
at a global level.
Report 2011
49
;)
Market
Segments_
Chapter 3
industrY_
The dynamic nature of the market
52
and recent regulatory changes are
Report 2011
driving the reconfiguration of the
telecommunications industry, which
is progressively tending towards
consolidation and fixed-mobile
convergence to meet the needs of
increasingly complex, informed, and
demanding customers. Connectivity is
no longer a luxury; today it is essential.
Profile
In line with the figures available for 2010, sales in the telecommunications industry in Chile totaled CLP $3,968,000 million. Mobile telephony represented around 51% of this value,
followed by IT services (outsourcing) at 12%, and fixed local
telephony at 11%.
At the end of 2011, there were four mobile companies operating cellular networks in Chile: Movistar (a subsidiary of Telefónica, Spain), Claro (a subsidiary of América Móvil, Mexico),
Nextel, and Entel.
In 2012, the industry will see the entry of a new mobile operator, VTR, and the expansion of Nextel’s 3G services.
As of 2011, the Department for Telecommunications has
authorized 22 licenses for virtual mobile operators (companies who use the networks of other operators to deliver their
services). These include Virgin Mobile, Falabella Móvil, and GTD
Mobile, who have all publicly announced their intention to enter the market.
In terms of local telephony, there are 18 companies operating,
present in various regions throughout the country, such as VTR
and GTD.
REVENUE FOR CHILEAN TELECOMMUNICATIONS INDUSTRY
(distribution by business area, December 2010)
The trends observed in 2011 confirm the industry’s status as
one of the economy’s most dynamic sectors. However, without
doubt, the area that best reflects the changes of the industry
in Chile is mobile telephony, which has seen high growth in
customer numbers, the progressive adoption of data services,
the entry of new operators, the start of the 4G tender process,
and the implementation of number portability.
12%
IT
6%
OTHER
Total
Th. CLP$ 3,968
million
LOCAL
TEL.
3%
51%
MOBILE
TELEPHONY
LD
8%
INTERNET
10%
PAY TV
A highly competitive marketplace has led to the adoption of
the most advanced technology and the strengthening of the
Chilean market with technical quality standards, penetration,
and coverage for mobile communications being similar to
levels in developed countries.
Source: Pukará and internal estimates
The Growth of Communications GDP
With an annual compound growth of 9.9% between 2003 and
2010, the telecommunications industry represents an increasingly significant part of the country’s GDP.
GDP OF COMMUNICATIONS AND %GDP
(in CLP$ million, 2003)
CAGR* 9.9%
25,000
3.4%
2.8%
20,000
15,000
2.3%
2.4%
2.4%
2.4%
3.2%
2.6%
1,000
500
0
2003
2004
2005
2006
2007
2008
2009
2010
Source: Central Bank
*Compound annual growth rate.
Mobile broadband (MBB) and the use of mobile Internet
have been the main drivers of growth in the industry, which
reached an estimated total of 23,573,041 subscribers in 2011,
representing a market penetration of 137%.
It is estimated that there are around 1.6 million MBB
connections in the industry, with an approximate annual
growth rate of 67% and a market penetration of 9%, practically
reaching the level for fixed broadband connections.
The expansion of MBB throughout the country will permit
the provision of Internet access in areas with low population
density, the aim of the Telecommunications Development Fund
public-private partnership project being undertaken by Entel.
In line with the global trend, mobile broadband is expected
to reach the same level of subscribers as fixed broadband in
2012. In addition to this, the progressive expansion of mobile
Internet and the increasing penetration of smartphones is also
highly significant both in Chile and beyond.
53
Report 2011
11%
Evolution
Service Trends in Chile
Information Technology
Similar to the rest of the world, mobile broadband leads growth
in the sector in Chile, together with fixed broadband and television. Mobile voice continues to grow, but at a slower rate.
According to IDC estimates, the IT services industry reached
total sales of USD $1,137 million in 2011, representing an increase of 12.2% with respect to the previous year.
SERVICE TRENDS IN CHILE
An annual average growth rate of above 10% has been forecast for the IT industry for the period 2011–2014.
(in millions of subscribers)
Entel has been involved in the industry since 2008, focusing
on IT outsourcing services, providing data center and IT operations, on-demand solutions,and technology platforms, offering an integrated service related to communications and information.
25
20
15
10
5
11
20
09
10
20
08
20
07
20
20
06
05
20
04
20
20
03
02
20
penet 2010
cagr*
08-11
MOBILE VOICE
116%
12%
FIXED VOICE
70%
0%
MBB
6%
93%
FBB
39%
13%
tv
39%
13%
Source: Subtel and operator’s report, December 2011
* CAGR: Compound annual growth rate.
GLOBAL SERVICE TRENDS
(in millions of subscribers)
Global Trends
The first great milestone in telecommunications history
was connecting people by means of a voice service; the
second step will entail the mass-adoption of data services.
Data connectivity dominates the outlook today: customers
require data connectivity across various devices (including
smartphones, tablets, computers, and cameras). The next trend
will be connecting things, or rather using existing technology,
to establish communication between devices, allowing them to
interact with and complement each other.
7.000
6.000
5.000
GLOBAL PENETRATION AND SALES OF SMARTPHONES
4.000
(2008 – 2014)
1.000
1
20
1
10
20
9
8
20
0
20
0
20
07
20
06
20
05
04
20
03
20
20
02
01
20
00
0
penet 2010
%
MOBILE T.
76
PAY TV
67
FIXED T.
70
FBB
28
MBB
8
Source: Ericsson, Merril Lynch, first quarter 2011.
40%
35%
30%
25%
20%
15%
10%
5%
0%
600
500
400
300
200
100
0
2008
2009
Smartphones
2010
2011
2012
2013
Smartphones/total units sold
2.000
Smartphone sales (in millions)
3.000
20
Report 2011
54
20
20
20
00
01
0
2014
Source: Forester and IDC, March 2010.
The superimposition of products and collaboration between the
telecommunications industry and other industries such as finance, health, advertising, entertainment, IT, transport, and safety, was notable in 2011. Major operators shifted their strategic
focus from connection and traditional services to vertical operations encompassing these industries. Health is a good example
of this trend: even if, at a mass-market level, the trend has been
centered around being able to download health applications on
smartphones and tablet devices that make it possible to monitor pulse or different stages of sleep, the trend is advancing
towards the interconnection of machinery and measurement
devices with central monitoring sites. It is a type of communication that will make it possible to offer alert and patient-hospital
interaction services, representing a considerable benefit that
can provide peace of mind to patients suffering from chronic
illnesses that need to be continuously monitored.
Furthermore, this type of connectivity will make it possible to
store and manage data from medical facilities with greater precision, facilitating access to patient files and histories.
Connected Cars
Market leaders in the automotive industry have already developed connectivity solutions and applications for the dashboards
of some of their models. In 2011 a number of brands made use
of this technology to offer customers remote safety services
which, in the event of a vehicle being stolen, made it possible to
block the car and indicate its location.
The idea is that in the near future, cars will be able to connect to
each other and interact with sensors located on roads.
The Phone as a Payment Method
The high penetration of mobile telephony and the growing use
of smartphones throughout the world have created a potential new use for these devices. In 2011, industry world leaders
such as Vodafone came together to launch the use of phones a
new payment method.
In doing so, it was promoted the acceleration of the development and entry of Near Field Communication (NFC), a shortrange, high-frequency, wireless communication technology
that makes it possible to exchange data between devices at
distances of less than 10 cm using compatible phones and
readers at sales points.
Following this trend, another major technology player developed a product that does not require a SIM card and, as such,
fits with the direct management model of banks or cards over
terminals. Mobile payments are expected to be launched in Europe and the United States in 2012.
Growth of Multi-Screen Services
This year took place the merger of content delivery in homes
and over mobile devices, with major international telecommunications providers incorporating multi-screen video services
into the range of services they offer, in addition to a series of
innovations designed to maintain customers within their packages in the home.
Online Information as a Reference for Making
Decisions Offline
The vision of the mobile platform as a marketing method that
allows companies direct access to customers was consolidated in 2011. The use of social networks by users to report their
satisfaction or dissatisfaction with the products they have
used and their favorite brands illustrated how the online platform can be an efficient and direct shop window. This makes it
easier for businesses to segment customers and be aware of
their customers using direct sources.
Customers were willing to share their content online, to
reward products that were environmentally responsible while
punishing others that were not, and to pay for the real value
they perceive even when items are available freely on the web.
Conscious of this change in customer behavior, Entel developed a strategy to allow it to secure its position among the most
followed brands on social networking platforms, according to
the Soy Digital study for 2011, carried out by the consultancy
firm Ayer Viernes.
55
Report 2011
Connectivity Breaking Down Barriers Between
Industries
...
regulatoRy
fraMework_
Report 2011
56
Telecommunications services in Chile are governed by the
General Telecommunications Act (Act 18,168), and its complementary regulations. The legislation establishes the general
principle of free competition with concessions being awarded
based on pre-established and objective regulations, without limits on quantity, service type, and geographic location.
Public and intermediate telecommunications services that
need radio electric spectrum and which for technical reasons
only allow for participation of a limited number of companies
are subject to a public tender process in line with the terms
set out in the specific technical regulations. However, the conditions for awarding concessions are essentially related to the
duration and coverage of the service to be provided.
The interconnection of public and intermediate telecommunications services is mandatory and public tariffs are freely
fixed by the service provider, except where the Tribunal for the
Defense of Free Competition intervenes, such as in situations
where market conditions do not make it possible to guarantee
a free pricing regime. In the past, the tribunal has only subjected fixed telephony companies classified as dominant in certain geographic sectors to tariff regulations.
Authorities
The Department of Telecommunications is the authority
responsible for establishing and enforcing technical regulations,
promoting the development of the sector, and allocating
concessions for the use of the radio electric spectrum through
public tenders when there are limitations on the quantity of
frequencies. Responsibility for the respective tariff decrees falls
jointly to the Ministry for the Economy, Growth and Reconstruction,
and the Ministry of Transport and Telecommunications. The
Tribunal for the Defense of Free Competition must ensure the
competitiveness of the sector, identify monopoly situations
that require the establishment of tariffs for legally mandated
services, issue judgments on company mergers in the sector,
and prevent or sanction behavior that harms free competition.
Termination Rates
Current legislation makes provisions for the authority
to regulate the tariffs of services provided through
interconnections between concession holders every five
years by means of a regulated technical and economic
process in line with the criteria established by the General
Telecommunications Act. Of these tariffs, the connection
charge corresponds to payments for use of networks of
different concession holders and applies to any operator,
regardless of whether they are a long-distance operator
accessing a network to originate or terminate a call, or a
fixed/mobile concession holder accessing another network to
terminate a communication.
The current tariff decrees for mobile companies established
by the Ministry of Transport and Telecommunications came
into force on January 24, 2009 and will run until 2014, meaning
that towards the end of 2012, the process for determining the
new tariffs for the following five year period will begin. The
tariffs set out in this legislation only apply to charges provided
through interconnections services for which charges are made
between telecommunications companies.
Long-Distance Reforms
Towards the end of 2010, the primary zones for long-distance
national communications were restructured, reducing the
number of zones from 24 to 13 from October 2011. This is the
first stage of a legal change that will eventually see the longdistance national category eliminated altogether, 37 months
from enactment of the legislation (subject to a favorable report
from the Tribunal for the Defense of Free Competition). As
December 5, 2011
Fixed Number Portability in Arica.
January 16, 2012
Simultaneous launch of Mobile Number Portability throughout the country.
March 12, 2012
Fixed Number Portability in Santiago.
April 16, 2012
Fixed Number Portability in Iquique, Antofagasta, and Temuco.
May 14, 2012
Fixed Number Portability in Curicó, Talca, Linares, Chillán, Concepción, and Los Angeles.
July 23, 2012
August 27, 2012
Fixed Number Portability in Valparaíso, Los Andes, Quillota, and San Antonio.
Fixed Number Portability in Valdivia, Osorno, Puerto Montt, Copiapó, La Serena, and Ovalle.
such, from this date, fixed local telephony will operate in the
same way as mobile telephony (i.e. without the requirement
to use a carrier for calls between different geographic regions
of the country).
Network Neutrality
The concept of network neutrality came into effect in the second half of 2011 as a result of an amendment to the General
Telecommunications Act (2010) requiring companies that provide Internet access to make more information available on
their websites and undertake quarterly monitoring of technical
service indicators to allow users to make comparisons between different providers and make informed decisions.
Number Portability
The fixed number portability program was launched in Arica on December 5, 2011, and will be progressively rolled out
across the country in line with Act 20,471, giving users the
right to keep their number when switching companies. Mobile
number portability will be rolled out simultaneously across the
country from January 16, 2012.
greater exclusion zones for towers close to sensitive areas
such as hospitals, schools, nursing homes, and nurseries.
This legal initiative will incentivize adapting towers to the urban
and architectural environment of their site, the installation
of smaller antennas, as well as shared infrastructure or colocation, carbon mitigation measures, and compensation to
preserve the extra value of districts with tax incentives.
The construction of antenna support towers and radiating
systems for telecommunications 12 m or higher requires
planning permission from the appropriate public works
department, with a requirement to inform neighbors 30 days
in advance by means of a letter certified in front of a notary
containing the plans for the development to allow neighbors to
express their opinions and take part in the process.
4G Services
In December 2011, the Department of Telecommunications
launched the public tender process for 2,600 MHz spectrum,
which will permit the deployment of 4G or LTE networks
throughout the country, providing a considerable increase in
the browsing speeds of mobile devices.
Antenna Act
Following 10 years of debate in Congress, the
Telecommunications Antenna Act was approved by the Senate
on January 11, 2012. In terms of health, it stipulates that the
regulations for controlling emissions are to be established
as part of the Environmental Act and in line with the
recommendations of the World Health Organization, setting a
level that must be equally rigorous or more so than the average
of the five OECD countries with the strictest standards in this
area. The new law will also establish stricter conditions for
the construction of new telecommunications towers, alongside
The tender is for three blocks of 40 MHz frequency and applicants are only entitled to one block. Furthermore, the regulator
entail a requirement to provide coverage to 181 rural areas
and offer facilities for the service provided by this frequency
band. Applications may be presented until April 19, 2012.
57
Report 2011
June 18, 2012
Fixed Number Portability in Rancagua, Coyhaique, and Punta Arenas.
(*)
Achievements in 2011
Consumers
Segment_
Recognizing the requirements and
behavior of our users, Entel offers
communication and connectivity
solutions with high service standards
in an approach that has allowed us to
consistently increase our market share
and secure high levels of customer
loyalty and permanency.
*Significant growth in postpaid and prepaid customers.
growth in contract customers with integrated
*Strong
connectivity solutions (smartphones and multimedia plans)
adoption of mobile
*Mass-market
postpaid and prepaid segments.
broadband for both
of Entel Visa credit card in partnership with Banco
*Launch
de Chile.
of online management to position Entel as a leading
*Creation
brand on digital media and social networking platforms.
*Expansion
groups.
of services to include C3–D socio-economic
of coverage
*Increase
distribution channels.
through the development of new
place in the mobile telephony category of the National
*First
Consumer Satisfaction Survey for the ninth year.
of 91% in the “Todo Chile Comunicado” rural digital
*Advance
connectivity project.
CONSUMERS SEGMENT SHARE OF TOTAL
CONSUMERS SEGMENT SHARE OF TOTAL
ENTEL REVENUE
ENTEL SERVICES
FIXED SERVICES
14%
74%
MOBILE SERVICES
58%
CONSUMERS
SEGMENT
42%
OTHER
SEGMENTS
0%
20%
40%
60%
80%
100%
CONSUMERS SEGMENT SERVICES
59
OTHER SEGMENTS SERVICES
In 2011, Entel’s active customer base for mobile telephony
grew to 9,347,434 users, an increase of 24% with respect to
the previous year, representing a market share of around 39%
(three percentage points higher than in 2010).
Around 89% of these customers are serviced by the Consumers Market Division.
Through innovation, service quality, and providing best telecommunications network in the country, Entel meets the challenges of this demanding market, whose underlying characteristic is a requirement to provide services to customers who
are increasingly adept at using new technologies and make
continuous usage of the Internet and multiple connection devices.
In line with its objectives, Entel increased the proportion of
postpaid clients to 30% of its total subscriber base. Similarly,
there was strong growth in the number of customers with
smartphone handsets.
In 2011, the company has focused its efforts on capturing
customers with multimedia plans, obtaining an increase of 10
percentage points in its market penetration for the postpaid
base of the Consumers Segment.
The postpaid voice segment grew 17% in 2011, largely driven
by an increased share in the capture of gross sales and migrations from prepaid to postpaid.
During the last year, Entel has made a special effort to expand
its brand to all socio-economic segments, targeting C3 and
D groups by means of marketing events and neighborhoods
sales (E-Days), and the installation of stores for three or four
days in areas of high public concurency (Entel Fairs).
The company has also focused on increasing customer loyalty
by promoting the Entel Zone, relaunched as our own customer
club in July 2010. The strategic objectives for the club in 2011
were to optimize the transparency of member segmentation,
to recognize customer purchase patterns and how long they
remain with the company, and make use of the club as a channel to secure customers.
As of December 31, 2011, the Entel Zone had approximately 5
million members.
Report 2011
Customers
Solutions
Even if mobile communications make up the bulk of the services offered by Entel in the Consumers Segment, long-distance
services from fixed phones are also significant.
In summary, at the end of 2011, Entel offered the following services with various pricing plans:
Report 2011
60
Mobile telephony
* Postpaid
* Prepaid
Mobile Services
Customer Telephone Access Centers
* Account
Management (e.g. Reversed Charges, Balance Alert)
* Social Networking
* Value Added Content (e.g. CDF Premium Football, Video Gol)
*
PENETRATION OF SMARTPHONES
In total base of Entel mobile subscribers
JANUARY
2011
DECEMBER
2011
6%
13%
0%
20%
40%
60%
80%
100%
Smartphones such as the iPhone, the BlackBerry and the Samsung Galaxy
are owned by a increasing number of customers (Consumers, Enterprise,
and Corporate Segments). In 2011, the market penetration of these handsets increased from 6% to 13% of the total number of mobile voice subscribers with Entel.
Mobile Internet
* Broadband
* Mobile Internet
Long Distance
Long-Distance International from Mobile Phones
* Long-Distance
National and International from Fixed Phones
*
International Mobile Roaming
#
945,429
subscribers
MBB services (including data cards for mobile
applications)
Entel, December 2011
(2010: 550,879)
Net Customer Satisfaction
Entel Visa Card
TELEPHONY SERVICE
The new Entel Visa credit card was launched onto the market
in November 2011, a product that is the result of a long-term
partnership between the company and Banco de Chile.
100%
+24 pp
80%
+40 pp
60%
40%
68%
44%
20%
In 2011, the quality of Entel’s mobile telephony service was rec-
28%
0%
entel
COMPANY B
COMPANY C
ognized by two important prizes:
first place in its category in the
National Customer Satisfaction
Survey, run by ProCalidad, for
Consumers Segment
SIZE OF GAP
Internal Customer Satisfaction Tracking GFK - Adimark
the ninth year running, and Best
Customer Expedience for 2011,
awarded by the Ibero-American
Association for Company-Customer Relations.
Entel achieved a net satisfaction level of 68% in the August 2011 customer satisfaction tracking in a study that gathered opinions from mobile
telephone customers with postpaid contracts throughout the country, considering signal, coverage, and quality of communication. This result represents a gap of 24 percentage points between Entel and the second-highest
ranking company.
The product will help Entel to reinforce and promote the
commercial offer.
At the end of the year, there were already 13,000 cardholders,
with the card being promoted in the 32 Entel´s stores and
through remote service channels such as its website and call
centers.
The principal aim of the new card is to ensure the loyalty of
Entel customers by providing benefits associated with both
Entel and Banco de Chile services. These include the ability to
collect Entel Zone points and qualify for special discounts on
events sponsored by Entel, as well as benefits associated with
Banco de Chile cards.
Both companies, backed by the value of their brands, have set
out to make the card the most important in the telecommunications industry.
61
Report 2011
Consumers Postpaid Segment (August 2011)
Percentage of customer satisfaction
Report 2011
62
Online Department
Channels Development
In order to secure Entel’s position as a leading and innovative
brand in online media and the national leader in e-commerce
and e-care, the company created an Online Department reporting to the Consumers Market, although it is also available to
the Enterprises and Corporates divisions.
In 2011, Entel continued expanding its customer sales and service channels with the launch of new Entel Express stores, a
franchise format that creates the potential for fast and efficient
growth while ensuring high levels of service, with these points
of sale making it possible for customers to carry out common
operations (equipment purchase, exchange, and repair) in just
a few minutes.
This new department also has responsibility for providing customers with excellent online service through the leading website in the industry, which provides the best user experience
throughout the full customer life cycle, facilitates knowledge
and the purchase of additional products and services, and promotes strengthening usage.
In recognition of this strategy and its digital media activities, in
2011 Entel was awarded the IAB Chile (Interactive Advertising
Bureau) prize for Best Advertiser of the Year, as well as a number of other acknowledgements.
At the close of the year, the company had 75 Entel Express stores and 57 of its own stores, where it also helps customers to
optimize their plans and provides post-sales service and contracts changes.
The call center was also an important channel during 2011 and
was used to carry out successful sales campaigns and contributed to high levels of service, principally through the technical support desks, such as the BlackBerry Telephone Service
Center.
The activities carried out by the department include El Crack,
the first web series made in Chile, whose success on online
media led to it being broadcast on public television as a telefilm.
Activity for the distributors, department stores, and wholesalers channel grew during the year, driven by new products
associated with mobile broadband.
Similarly, in the context of number portability, the department
developed a mini-site to provide portability instructions delivered by the two characters Professor Rosa and Guru Guru, who
subsequently became icons for portability in Chile.
In addition to all these channels, in 2011, the company launched Entel Fairs, an innovative method of capturing new customers through a sales format with limited days in areas with a
high public concurrency.
In terms of social networking, Entel has consolidated its position as the preferred brand among Chileans (Source: Soy
Digital study, 2011), with activities ranging from customer service to the promotion of product services and events, activities
that have been responsible for the significant increase in the
number of our Twitter and Facebook followers (over 240% and
100%, respectively), leading the industry in terms of the number of followers on the latter platform.
Innovations 2011
The new products and services launched for the Consumers Segment by Entel included:
A service that makes it possible to synchronize, backup, and recover contacts and content stored on a customer’s mobile phone
and the handset SIM card, such as music (polyphonic ringtones,
realtones), calendars, notes, tasks, videos, and images.
Content
Provides customers with a personalized service through
subscriptions to different categories that allow them to download
daily content.
Entel Visa Card
Credit card created as a result of a partnership between Entel
and Banco de Chile that aims to become one of the most popular
cards on the market.
63
Report 2011
Diary Backup +
entErprise
segmEnt_
In 2011, the enterprise segment was
dominated by the integration of the
fixed and mobile operations. This made
it possible to consolidate a range of
innovative, integrated, and convergent
products that allow enterprises of
all sizes to manage their business
processes efficiently and be connected
everywhere 100% of the time.
# ...
*Market leadership in the large companies, with a market
share of over 50% for mobile telephony and over 60% for
mobile broadband.
*Successful integration of
mobile, fixed, and IT services to
customers in the segment.
*High market penetration for products that includes data
onto mobile devices (mobile Internet).
*Significant fiber-optic deployment.
ENTERPRISE SEGMENT SHARE OF TOTAL
ENTERPRISE SEGMENT SHARE OF TOTAL
ENTEL REVENUE
ENTEL SERVICES
21%
ENTERPISE
SEGMENT
3%
IT SERVICES
39%
FIXED SERVICES
79%
OTHER
SEGMENTS
21%
MOBILE SERVICES
0%
20%
40%
60%
80%
100%
65
ENTERPRISE SEGMENT SERVICES
Report 2011
Customers
The Enterprise Segment provides a wide range of solutions
to satisfy the communications requirements of independent
professionals at small- and medium-sized businesses, as well
as large companies. In 2011, its customer base increased to
almost 100,000 companies.
The year was notable for the development of special projects
for the County of Viña del Mar, where an MPLS network with
57 public and private telephony sites covering 1,500 users,
and Internet was installed. In the Municipality of María Elena,
the LAN network was extended across 12 sites using dark fiber, providing telephony to 150 subscribers, alongside secure
Internet, and Wi-Fi. Major projects were also undertaken for
MIMET, ACB Ingeniería, and TJC Chile, involving the implementation of MPLS networks, Internet access, and telephony, together with the provision of other IT services.
During the period, one of the main achievements for the SME
segment was the launch of multimedia plans, a new product
that shifts the traditional focus from voice plans to a vision
satisfying the mobility requirements of companies, connecting
them to the Internet via mobile devices 100% of the time, regardless of location, as well as mobile productivity tools such
as e-mail, information, and GPS maps.
In terms of image, intensive work was carried out to force closer relationships in the segment through active participation in
some of the main SME events and conferences. Effort was also
made to raise awareness of the wide range of fixed and mobile solutions, previously only accessible to large companies,
and which are now accessible to smaller ones. All this was
accompanied by a painstaking revision of our processes and
structures to ensure our key priority of providing the customer
with an excellent experience.
Solutions
Smartphones
Mobile Communications
In 2011 there was an explosive increase in the market share of
*Web Mail, Business SMS, Entel GPS, BlackBerry®, Superchip
3.5G, Mobile Business Solutions: Purchase Order, MSeries
Field Sales, Mobile Management of Online Sales, Mobile
Report 2011
66
Charging Management, Mobile Sales Force Operation, Bi-
smartphones. As the functionality of smartphone is similar to
that of a computer, more intensive use of the devices resulted
in significant results in the market penetration of value added
services.
narioSales, BinarioServices, BinarioWorkflow, BinarioLogis-
Smartphones are a tool that allows businesses to increase
tics, BinarioDataCapture.
their productivity, allowing executives who work on site to be
Connectivity
*Traditional
Telephony, IP Telephony, Long-Distance Tele-
phony, Internet, Data Solutions, Call Center Services.
IT On-Demand
in constant contact, replying to emails, checking their agendas,
or dealing with outstanding tasks. Instant messaging allows
them to stay connected to their team, performing tasks such
as coordinating times and orders.
The mass-market adoption of smartphone equipments fosters
potential growth in terms of new revenue, such as the use of
*
Virtual Dedicated Server, Email Service, Net Billing, Housing,
Hosting, Instant Messaging and Presence Service, Collabo-
new business and management applications for doing business.
rative Internet Services, Web Hosting, SAP and SAP Basis
Hosting, Server Monitoring, Administration of Operating
Systems, Database Administration, Backup Administration
and Monitoring, On-demand Online Service Chat, Workstation Support.
(...)
+50% market share
in mobile services for large companies in the segment
mobile operations was one of the
major management challenges
Expansion of GPON Network
Entel has had an urban fiber optic network based on GPON
Email, Dedicated Virtual Server and Mobile
Applications
for the Enterprise Segment in
technology since 2010, providing businesses with first-class
Major investments were made to upgrade two email platforms
2011, with effort being focused
connectivity and access to a wide range of new services for
in 2011. One of these was the migration from HMC to Exchan-
on offering integrated solutions
data, video, and Cloud Computing tools with fast, high-quality
ge 2010, ensuring Entel to provide an attractive email service
that help customers optimize
service.
for large companies. The other investment was the updating
their business.
Entel continued this deployment throughout 2011 and currently provides coverage to 17% of companies throughout the
country through the Entel GPON network. The companies are
of the Iplanet platform, which provides an email service with
mobility and synchronization for freelancers, as well as smalland medium-size companies.
distributed throughout nine districts (Antofagasta, Las Condes,
Another notable development was the launch of dedicated
Providencia, Vitacura, Lo Barnechea, Conchalí, Rancagua, and
virtual servers. This service allows companies to deal with
Puerto Montt). Levels of coverage vary depending on the area,
periods of high demand without needing to invest in physical
with the highest level being in Vitacura (81%).
servers, since they can increase their storage and processing
The complete project aims to cover the majority of enterprises
in the most densely populated districts of the country through
three projects with similar features between 2011 and 2012,
implying investment of around USD $100 million.
67
capacity by contracting a virtual server when they need it and
only pay for the time used. All this translates into an increase
in working capital for enterprises.
In terms of mobile applications, in 2011 work was undertaken
on an application to allow companies to collect information
through their smartphone. It is hoped that this initiative will
boost the penetration of smartphones and mobile Internet sales.
Report 2011
The convergence of fixed and
cOrporate
segmEnt_
Entel’s objective in the Corporate
Segment is to provide integrated
technology solutions that ensure the
operational continuity of its customers’
businesses, allowing them to focus
on their core activities. It provides
integrated solutions for connectivity
requirements for fixed, mobile, and IT
solutions, supported by its own worldclass data center and expert staff.
increase in the level of sales contracts with respect
* 9.5%
to 2010.
of convergent business model for mobile,
*Consolidation
fixed, and IT solutions services.
in market share in the IT Outsourcing market
* Increase
to 22%, making Entel the third largest provider in this
segment.
3 certification for the design of the second phase of
*Tier
construction of the Ciudad de Los Valles data center.
of the IT on-demand platform that provides
*Consolidation
companies access to the capacity they require in line with
their activities.
level of customer satisfaction for mobile
* High
communications services (77%), and an increase of
13 percentage points in the satisfaction level for fixed
services.
of a new data center for Banco de Chile in
*Launch
Longovilo.
CORPORATE SEGMENT SHARE OF TOTAL ENTEL REVENUE
CORPORATE SEGMENT SHARE OF TOTAL ENTEL SERVICES
13%
CORPORATE
SEGMENT
97%
IT SERVICES
47%
FIXED SERVICES
87%
OTHER
SEGMENTS
5%
MOBILE SERVICES
0%
20%
40%
60%
80%
100%
69
CORPORATE SEGMENT SERVICES
Report 2011
Business Areas
The revenue structure of the Corporate Segment is composed
of three main business areas: mobile services, wireline
services, and IT services. Market share for each of these
services in terms of total revenue for the segment is 32%, 46%,
and 22%, respectively.
Finally, IT services grew by 13%. The strong performance of
the IT outsourcing business and the considerable increase in
data center service sales were offset by a fall in equipment
sales.
In 2011, revenue from the Corporate Segment rose by 23%
with respect to 2010. Half of this growth came from a change
in segmentation criteria, which resulted in an increase in the
Corporate customer base; the other half of this growth was a
result of the strong performance of all its business areas.
Customers
Revenue from mobile services grew by 36% in 2011. Even if
there was strong growth in voice and Value Added Services,
it should also be noted that mobile Internet and blackberry
services grew by 60%, with a strong increase in penetration
above voice areas.
The wireline business grew by 18%, largely as a result of the
strong performance of data services. The remainder of the
wireline business, mainly long distance and local telephony,
followed the market trend.
Entel’s customers in the Corporate Market are characterized
by their requirement for specific, individual, and specialized
solutions, both in terms of technologies and services, since
these are largely responsible for supporting the strategic
processes of their operations.
There are around 600 conglomerates or large companies in
Chile, representing around 80% of total expenditure on ITC
services.
Entel provides various services, such as mobile, fixed, and IT
services, to around 50% of these conglomerates. Due to the
scope and depth of the services provided to these customers,
the company has adopted an integrated approach.
*
Some of Entel’s major customers include Banco de Chile, CCAF
Los Héroes, Banco Internacional, Colbún, AMSA, the Chilean
Health Service, the Department of Libraries, Archives, and
Museums, and the Judiciary.
Report 2011
70
In 2011, in partnership with Los Héroes, Entel developed a
technology project to provide connectivity to 212 branches
throughout the country, the administration of all technology
infrastructure, and transaction processing for the payment of
pensions and benefits for the Department of Social Security.
Los Héroes formed a strategic partnership with Entel, placing
its trust in Entel’s telecommunications and IT solutions to
enable it to provide the best possible service to more than 2
million beneficiaries from Arica to Porvenir.
Similarly, during the last year, Entel signed a contract with
the Santiago Stock Exchange Market to provide an integrated
service that includes the hosting of technology equipment at
its Ciudad de Los Valles data center, continuous monitoring
and operation, and latest generation technology connectivity
between the site and the stock market’s data centers in
Santiago. This solution will allow the stock market to ensure
its operational continuity, increase levels of security, and
improve the service it offers its users. to also provides high
capacity for growth in technology infrastructure using ondemand services.
Solutions
Entel has structured the services it offers to the Corporate
Segment in a broad portfolio of services to provide solutions
that meet the various needs of its customers and the level of
complexity of their operations:
Cloud Computing Services
IT Infrastructure
*On-demand
Cloud Telecommunications
* Demand Cloud)
Services (Private and On-
Information Technology
Equipment and Services (Equipment
*Engineering
Expert Services and Outsourcing of IT Staff)
Sales,
Center: Housing, IT Operation Services, Application
*Data
Solutions (Microsoft Hosted Messaging and Collaboration,
SAP Hosting), End-User Solutions (PC and Printers
Delivered through Leasing, Thin Client Virtual Applications
and Desktops, and Technical Helpdesk and On-Site Support).
Telecommunications
In addition to this, the company developed major technology
solutions for the Ministry of Public Works, the Department
of Social Security, ABC DIN, SAAM, Ultramar, and Presto, in
addition to implementing on-demand services for Scotiabank.
Data
*Private
Telephony (Full IP, Hybrid IP, SIP Trunk, Host IP PBX)
* Audiovisual
(Digital Transmissions Services with
*Radio and TVSolutions
Transmitters and Video Conferencing)
Corporate Internet (Interconnection and Dedicated Access)
* Local
*Long Telephony
Distance (National and International, ISDN Services,
*I80 0 Service,
N600 and N800 Services)
Infrastructure
Email Solutions (Windows Mobile, BlackBerry–Entel,
*Mobile
BlackBerry Enterprise Server, BlackBerry Enterprise Server
To deliver the most secure and advanced cloud computing
services, Entel has a network of six interconnected data
centers, with a total floor space of 5,660 m² and a worldclass on-demand service platform. In 2010, it launched the
first phase of its latest data center located in Ciudad de Los
Valles as part of a master plan to provide flexible growth
in line with the forecast demand, with a total floor space of
8,000 m² and an investment of USD $35 million for the first
phase. The design of phase two of the Ciudad de Los Valles
data center, whose construction began in September 2011
and is due for completion in July 2012, obtained the Tier 3
certification from the Uptime Institute, an award that affirms
the planned infrastructure is suitable for providing highquality, uninterrupted services, since it has an availability level
of 99.982% and high standards of construction, sustainability,
and security.
Express, BlackBerry Internet Service)
Entel GPS
Mobile Broadband
Mobile Internet
Unified Communications
M2M Data Plans
Mobile Enterprise Applications (e.g. Sales Force Solutions,
Field Services, CRM)
*
*
*
*
*
*
Service Quality
Studies carried out by specialist companies show Entel to be
a leader in service quality for the Corporate Segment. In 2011,
its customer satisfaction level was 77% for mobile services
and it was also highly ranked for telecommunications and IT
services. The portion of customers who ranked Entel above its
competitors increased by 10% with respect to 2010.
For the provision of IT services,
the Group has 800 experts employed by the parent company
and around 250 specialists working at the technical support desks
IT services provided by Entel are evaluated as per Service
Level Agreements (SLAs). Each SLA signed with our customers
establishes parameters related to significant aspects
determined by the nature of the service (e.g. the criticality of
the equipment or service provided, the geographic location,
resolution time).
of the Entel Call Center subsidiary, as well as around 50 subcontracted staff.
In terms of operational continuity, Entel’s results for 2011
are 30% higher than those obtained in 2010. Service levels
(number of calls taken by the helpdesk) reached the target of
95%, service response (total calls answered within 15 seconds)
reached 95%, and resolution on first contact for helpdesk
services (total calls solved in the first instance) was 80%.
In addition to this, in 2011 Entel added a new data center room
for Banco de Chile at its Longovilo site, which was incorporated
into Ciudad de Los Valles and included in the process for
consolidating the bank’s sites into two centers.
71
Report 2011
Mobile Services
whOlesaLe
segmEnt_
Owning its own network infrastructure
*15% growth in total revenue.
has provided Entel access to new
*Increase of 18% in revenue from leasing to other operators.
opportunities for growth through the
provision of services to other national
and international operators.
...
*27% increase in wholesale traffic business.
with Nextel to provide national roaming in areas
*Agreement
without coverage.
Business Expansion
In 2011, Entel’s gross revenue (including inter-company revenue) for the Wholesale Market increased by 15% with respect
to the previous year to a total of CLP $131,347 million. Services
for network leasing to other telecommunications companies
contributed CLP $99,260 million, a 12% increase from 2010,
and the wholesale traffic business added CLP $32,087 million,
an increase of 27%.
It is important to note the growth of 18% in revenue from leasing infrastructure to third parties, which includes services
provided to national and international fixed and mobile operators.
One of the most important events in 2011 in this area was the
national roaming agreement signed with Nextel Chile, which
will enter the Chilean market with latest generation mobile
communication services. This agreement will provide Nextel
Chile access to its network in areas of the country where the
operator does not have coverage with its own infrastructure.
The agreement covers both voice and data traffic.
;)
73
Report 2011
The majority of new coming players in the telecommunications
industry do not have their own network, or have not established commercial agreements with other operators for national
and international services. This situation provides opportunities for Entel to grow, due to its robust infrastructure.
15 %
annual growth
in Wholesale Segment revenue
NET REVENUE FROM NETWORK LEASING INFRASTRUCTURE TO THIRD PARTIES
(in CLP$ million)
(values reported under IFRS)
30,000
22,500
20,246
17,191
17,191
18%
Distinguished Position in International
Voice Traffic
Entel is one of the most important international traffic brokers
in Latin America. It operates in New York, Los Angeles, Rio de
Janeiro, and Lima, processing millions of minutes to destinations across the globe through its international networks
using traditional PSTN and IP protocols.
15,000
7,500
65%
Report 2011
74
0
2009
2010
NETWORK LEASING INFRASTRUCTURE TO THIRD PARTIES
2011
In terms of the wholesale data business, the company has positioned itself as one of the most important operators in the
industry, with a wide range of national coverage and subsea
cables. Its network topology and infrastructure allow it to
transport different latest generation services, practically covering the whole world.
Similarly, with 17 years of experience in successful multiregional projects, Entel has consolidated its position as a market leader for wholesale value added services in the region
through three lines of products (premium voice, mobile, and
Internet).
Memoria 2011
75
Business Areas
Segment
Customers
Services
Data Network Wholesale Business
Long-distance companies, local fixed and mobile telephony
operators, Internet service providers (ISPs), network providers
and international carriers (e.g. Claro, Movistar, VTR, Telsur,
Chile.com, AT &T Corp, Telecom Italia, GTD , LANautilus, Global
Crossing)
National and international transport of voice, data and Internet
services.
International carriers and mobile roaming partners: e.g. AT
&T Corp, Verizon, IDT , US Sprint, Telecom Italia, Deutsche
Telekom, British Telecom, Cables & Wireless, Orange, grupo
Vodafone, Alianza Latinoamericana.
International roaming traffic.
Full range of wholesale customers.
Premium Voice: Entertainment or voice content services
transmitted over traditional telephony networks.
Traffic Wholesale Business
Value Added Wholesale Business
Premium Mobile: Entertainment services based on mobile
technology protocols accessed using a mobile phone.
Premium Internet: Digital entertainment services based on IP
protocols and accessed through websites on the Internet.
National Roaming and MVNO Wholesale Business
Virtual mobile operators (MVNOs).
Leasing of mobile network and infrastructure required to enter
the industry with quality services for end users.
...
Chapter 4
corporAte
sOcial responsibilitY_
pOlicy and
actiOns_
Report 2011
78
Corporate social responsibility forms
Commitment
part of Entel’s business strategy
The strategic planning of each of Entel’s business areas
takes into account each of their stakeholders, ensuring that
the company complies with its duty to provide value to its
customers and new opportunities in the community.
and this is evident in the company’s
willingness to listen , understand, and
satisfy the legitimate expectations and
interests of its various stakeholders.
Its goal is to ensure sustainability,
contributing to the development and
well-being of Chilean society.
Entel makes a significant contribution to the technological
development of the country through network and data center
infrastructure. In recent years, it has made a firm commitment
to the challenge of eliminating the digital gap for Internet
access in rural and urban areas through the expansion of its
networks and mobile broadband services.
As part of its growth, the company has responsibly deployed
its mobile and data network, respecting and adapting to
natural and urban environments, and complying with the most
stringent environmental standards in the construction of its
new data centers and corporate buildings.
Top 10 in CSR
Entel was ranked eighth in general and first for its industry
in the MORI 2011 CSR monitor, the longest running study that
has been identifying the country’s most socially responsible
companies and highlighting trends in the field since 2000. The
ranking is prepared using spontaneous answer questionnaires
completed by 1,200 people over the age of 18 resident in rural
and urban areas between Arica and Punta Arenas.
The challenges and commitments
made by Entel with respect to each
of its stakeholders are aligned with
its business strategy.
#
AREA
GOALS FOR 2011
ACTIONS
Community
Participate in activities to support the community, related to the deployment
of networks and telecommunications to improve quality of life and access to ITC
technology.
Regional CSR seminars in 14 regional capitals, connectivity projects for
schools, publishing of CSR book, regional CSR journalism award.
Environment
To care for the environment with an emphasis on activities related to the business.
Base line study for energy consumption, company paper recycling
campaign, Gonzalo plan promoting mobile equipments recycling.
Staff
Guarantee and promote workers’ rights in a safe working environment, providing
tools for their development and promoting equal opportunities in an environment of
diversity free from discrimination.
Coordination of volunteer work by staff with participation of 15% of staff
throughout the country. Published the summary of third sustainability
report for workers and their families.
Suppliers
Develop a transparent and equitable acquisitions policy and make suppliers aware
of the company’s values, principles and ethics.
Partnership with Ericsson for CSR Book partnerships, regional CSR
seminars and regional CSR journalism awards.
Shareholders
Provide objective and timely information about the economic, environmental, and
social performance of the company.
Publication of third sustainability report for 2010.
Report 2011
79
In August 2011, the second stage of the Todo
Chile Comunicado project to provide Internet
and mobile telephone services to 1,474
rural areas from Arica to Punta Arenas was
launched in the area of Huape, 33 km from
Valdivia The initiative will contribute to the
quality of life of more than 3 million Chileans,
connecting them to the rest of the country
and the world beyond.
tOdo Chile Comunicado
projEct_
80
Report 2011
Closing the Gap
Todo Chile Comunicado is a public-private initiative that aims
to provide Internet access to more than 3 million Chilean
citizens in 1,474 of the country’s rural areas.
The project is made up of three phases that will be fully
operational during the first half of 2012. It constitutes the most
significant connectivity challenge the country has ever seen
and has been made possible thanks to a partnership between
Entel and the Chilean government.
Todo Chile Comunicado requires investment of USD $110
million, USD $65 million of which is provided by Entel
and USD $45 million financed in equal parts by the
Telecommunications Development Fund, administered by
the Department of Telecommunications, and the country’s 15
regional governments.
By the end of 2011, the project was 91% complete, thanks to
the enormous feats of technology and engineering in which
more than 630 people have taken part and in which Entel’s
technology partner, Ericsson, has played a major role.
1,474
areas
will have MBB and Mobile Internet
connections as a result of the plan.
91%
progress
on the project by the end of 2011.
+
3 million
people will benefit when the project
is completed in 2012.
Report 2011
81
(*)
Participants in Entel’s Artennas for Chile project
included the painters Ximena Mandiola and
Ismael Frigerio, architect and design students
Pezo Von Ellrichshausen, Sebastián Errázuriz y
Daw, and LyonBosch, the advertising and design
collective Grupo Grifo, and the sculptors Claudio
Correa and Cristián Salineros, who worked for
over two months on the development of their
respective proposals.
ARTEnas fOr Chile_
82
Report 2011
City-Friendly Infrastructure
ARTEnas for Chile is the name given to an initiative by Entel
aiming to provide a new face for mobile telephone towers
through the work of eight national artists, designers, and
architects. This project aims to make the presence of towers
and antennae infrastructure in the city more appealing.
The first phase of the project will see the company transform
a number of antennas located in different areas of the country
into works of art. Alongside other initiatives, the project will
involve investments of USD $45 million, and will start during
2012.
The first phase of the project met the participation of
distinguished artists and architecture, collectives designers
under the curatorship of gallery manager Patricia Ready and
the architect Pablo Allard, who selected the proposals based
on their technical and economic feasibility, and aesthetic
quality. The work will come to fruition in the first half of 2012
in districts such as Valparaíso, La Florida, San Bernardo, and
Pudahuel.
USD$
45 million
Entel’s investment in transforming
antennas into works of art.
resUlts_
Chapter 5
(*)...
consOlidated
resultS_
86
Entel captured a significant part of
Report 2011
the industry growth during 2011, especially in terms of mobile telephony and
broadband, helping it to consolidate
its leadership in the high-value
customer segment.
The increase in revenue from mobile services, Entel’s main
source of growth, contributed to a 16% EBITDA increase from
2010.
2011
2010
Annual Change
1,240,914
1,086,405
14 %
EBITDA (CLP$ million)
515,200
446,018
16 %
Operating Profit (CLP$ million)
238,227
208,130
14 %
Annual Profit (CLP$ million)
180,767
172,971
5%
764,26
731,31
5%
6,12
5,47
65 pp
24,19
25,03
-85 pp
Consolidated Revenue (CLP$ million)
Profit per Share (CLP$)
Dividend Yield (%)
Return on Equity (%)
DISTRIBUTION OF CONSOLIDATED REVENUE BY BUSINESS
1%
2%
INTERNATIONAL
OPERATIONS
OTHER
19%
78%
MOBILE
BUSINESS
Entel’s mobile
business
contributed 78%
of consolidated revenue in 2011
87
Report 2011
WIRELINE
BUSINESS
Change in Revenue by Service
2011
(CLP$ million)
2010
2010 (CLP$ million)
Change
%
966,709
840,056
15
Data Services (including IT services)
93,703
85,090
10
Local Telephony (including NGN–IP)
41,705
39,677
5
Long Distance
30,687
33,761
-9
Internet
16,585
15,885
4
Service to other Telecommunication
Companies
20,246
17,191
18
Traffic Business
31,696
24,965
27
Americatel Perú
19,147
19,410
-1
Call Center and Other
10,319
7,560
36
Other Revenue – Non Core
10,117
2,810
260
1,240,914
1,086,405
14
Mobile Services
Total Revenue
mobile
bUsiness_
Report 2011
88
Market share rises to over 39%
Entel holds a strong market position for mobile services, a
product of its successful business strategy and recognized
service quality.
GROWTH IN MOBILE SUBSCRIBERS BY SERVICE
(in millions)
24%
In 2011, its market share increased to over 39% of active customers, representing an increase of three percentage points
with respect to the end of 2010.
5.64
4.11
Prepaid and postpaid customers (voice + MBB) grew by 26%
and 17%, respectively, when compared to last year.
0.78
3.33
24%
annual growth
in the total customer base for mobile services.
5.01
1.03
3.98
0.04
6.00
0.13
6.46
0.25
1.45
1.66
1.77
4.15
4.21
4.44
7.57
0.95
0.55
2.34
2.01
5.00
200520062007200820092010
PREPAID VOICE
POSTPAID VOICE
MBB (INC. DATA)
9,347,434
customers
at the end of 2011.
9.35
Entel’s contract customers represent 30% of its customer base.
6.06
2011
72%
annual growth
in the mobile broadband customer base
Total Revenue
Net revenue recorded for the mobile business in 2011 totaled
CLP $988,836 million, an increase of 16% over the 2010 figure.
Mobile Broadband
TOTAL NET REVENUE
(includes data cards for business applications).
Entel’s business policies have resulted in the progressive
growth in the number of mobile broadband subscribers, which
exceeded 945,000 contracts as of December 2011 (including
cards for business applications).
(reported under IFRS)
(in CLP$ million)
250,000
749,529
200,000
854,922
16%
988,836
150,000
MOBILE BROADBAND (MBB) CUSTOMERS
100,000
89
50,000
1,100,000
945,429
990,000
2009
2010
2011
72%
880,000
550,879
660,000
550,000
440,000
330,000
220,000
126,442
EBITDA
248,097
110,000
0
20082009 20102011
Value Added Services (VAS)
Report 2011
770,000
Mobile services recorded EBITDA of CLP $396,348 million for
2011, a figure that represents annual growth of 19%, mainly
associated with an increase in the service profit margin and
partially offset by equipment margin contraction, in line with
higher sales that made it possible to increase market share.
There were also increases in the administration and sales
costs directly associated with the increased customer base.
Revenue from value added services such as mobile Internet
and mobile broadband increased 41% from CLP $148,108 million in 2010 to CLP $208,310 million in 2011.
EBITDA
REVENUE FROM VALUE ADDED SERVICES (VAS)
(in CLP$ million)
(in CLP$ million)
250,000
208,310
200,000
148,108
150,000
100,000
420,000
387,500
41%
303,714
334,038
19%
396,348
355,000
99,505
322,500
50,000
2009
2010
2011
290,000
2009
2010
2011
wirEline
businEss_
Focus on Business Segments
CLP $316,824
million
revenue for wireline business (including
Entel’s wireline business is made up of integrated voice, data
and Internet services, with a strong focus on enterprise segments and services associated with IT and infrastructure network leasing to other companies in the sector.
WIRELINE BUSINESS REVENUE
inter-company sales)
9%
annual growth
(2010: CLP $289,380 million)
DISTRIBUTION OR REVENUE BY MARKET
(in CLP$ million) (including inter-company)
7%
RESIDENTIAL
MARKET
350,000
300,000
284,790
316,824
289,380
18%
9%
ENTERPRISE
MARKET
250,000
200,000
42%
150,000
WHOLESALE AND
OTHER MARKET
100,000
50,000
65%
Report 2011
90
33%
0
2009
2010
2011
CORPORATE
MARKET
wirEline revenUe
by seGment_
Corporate Market
Enterprise Market
Revenue growth was driven by the strong performance of all
services, particularly integrated data and IT services. It was also
affected by the change in customer segmentation criteria in
2011.
Reduction in revenue associated with the new customer segmentation applied in 2011, which affected a proportion of large
companies covered by this market transferred to the Corporate
Market.
NET REVENUE FOR CORPORATE MARKET
NET REVENUE FOR Enterprises MARKET (including
small and medium companies)
(in CLP$ million)
100,000
86,224
105,753
88,578
19%
80,000
70,000
60,000
64,229
40,000
40,000
0
30,000
2009
2010
2011
91
20,000
0
LONG DISTANCE
LOCAL TELEPHONY
2009
DATA & IT
DATA & IT
LONG DISTANCE
Internet
NGN
Residential Segment
LOCAL TELEPHONY
The segment revenue decreased associated with long-distance
services, that was partially offset by increased revenue in local
telephony in-line with the consolidation of Transam operations.
NET REVENUE FOR RESIDENTIAL SEGMENT
(in CLP$ million)
22,500
increased 5% during the period
15,000
to reach CLP $114,301 million.
58,229
10,000
Internet
EBITDA for the wireline business
-11%
50,000
20,000
30,000
65,545
60,000
23,678
21,726
20,667
-5%
7,500
0
2009
LOCAL TELEPHONY
Internet
LONG DISTANCE
2010
2011
2010
2011
Report 2011
120,000
(in CLP$ million)
wirEline revenUe
by services_
Data and IT Services
Long Distance
The greatest sales in this area were for data and IT services,
with revenue of CLP $110,346 million, representing an increase
of 9% with respect to 2010. This reflects the solid position in
data services and the strong market position as a provider of
data center and technology integration services.
Entel’s revenue from long-distance services totaled
CLP $30,875 million, representing a decrease of 9% with
respect to the previous year, as a result of lower traffic activity
and a decline in domestic tariffs, partly due to the reduction in
the number of primary zones.
DATA, INTERNET & IT SERVICES REVENUE
LONG DISTANCE REVENUE
(in CLP$ million)
(in CLP$ million)
92
110,346
120,000
107,500
95,482
Report 2011
95,000
100,977
9%
35,547
36,000
33,761
-9%
30,875
27,000
18,000
82,500
9,000
70,000
0
2009
2010
2011
2009
2010
2011
Local Telephony
Wholesale Traffic and Network Leasing
Entel’s revenue for local telephony increased by 3% to
CLP $41,917 million.
The wholesale traffic business showed significant expansion,
contributing CLP $32,087 million with growth of 27%, while
network leasing services to other telecommunications
companies generated revenue of CLP $99,260 million, a 12%
increase on the 2010 figure.
LOCAL TELEPHONY REVENUE
(in CLP$ million)
42,200
43,000
40,734
3%
41,917
39,750
WHOLESALE SEGMENT REVENUE
(in CLP$ million)
36,500
33,250
30,000
2009
2010
2011
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
91,797
2009
114,242
2010
15%
131,347
2011
TRAFFIC BUSINESS AND OTHER
INFRASTRUCTURE LEASING
Source: Entel
# ...
#
Chapter 6
subsidiAries_
Americatel
pErú_
Report 2011
96
Aligned with the strategic
definitions of its parent company
in Chile, Americatel Perú has
grown towards enterprise markets,
with these contributing 48% of its
revenue in 2011.
Americatel Perú in 2011
*Revenue of USD $43 million (8% increase over 2010).
*Promoted satellite services growth.
*11% increase in customer base in the enterprise segment.
Address: Canaval y Moreyra 480, 20th floor, San Isidro, Lima, Perú.
120% growth
in EBITDA (USD $4 million in 2011).
Strategy
Americatel is focused on the Corporate and SME segments of
the market, for which it has specific goals:
Businesses and SMEs, continue increasing the number of accesses and turnover with bundles that include telephony, Internet, data and other value-added services.
Corporations, focus on maintaining its turnover and customer
portfolio for fixed telephony, broadband, and data links, as well
as increasing average revenue per user (ARPU), offering new
IT and satellite services throughout the country.
Market
Description
Products and Services
Corporate
1,600 companies in the country, with annual
revenue over USD $10 million.
Long Distance, Digital Fixed Telephony, Dedicated Internet, 0800 Lines,
Data Links, NGN (Service Bundling) and Satellite Services for Internet
& Data, and IT Outsourcing Services (Housing, Dedicated Hosting, IaaS
and SaaS).
Businesses and SMEs
Small- and medium-size companies in Lima
Metropolitan Area who use telecommunications
services over USD $100 per month (70,000
points in Lima).
Data Solutions, Voice and Internet (NGN), Fixed Analog Telephony and
ADSL Internet, Long Distance.
Mass-Market
People in A, B, and C segments throughout the
country.
Fixed and Mobile Long-Distance Direct Dial, Contracted Products (LongDistance International Plans for Fixed and Mobile Origin, and LongDistance National Plans for Fixed Origin).
Wholesale
National and International Operators.
Termination of Traffic for Peru and RoW, and 0800 Services. For Local
Operators: Data Links, Internet Access and Datacenter Services (Use of
Infrastructure and Housing).
Report 2011
97
Report 2011
98
Results
Americatel’s revenue for 2011 was USD$ 43 million, representing an increase of 8% over the previous year.
The Enterprise Market revenue posted an increase of 21% with
respect to the previous year. The company managed to grow its
customer base for the SME segment by 11%, increasing to 4,923
businesses. This was largely a result of its NGN services, with
a total of 7,604 points and 80% usage of capacity on the Wimax
network.
Satellite Services now represent 9% of revenue for the Businesses Market, while revenue from broadband Internet and data
services has risen as a result of increased demand for bandwidth among enterprises.
The profit margin of long-distance products stabilized in 2011
as a result of a combination of the stability of revenue and a cost
optimization policy. At the end of 2011, revenue originating from
long-distance products totalled USD $10 million, a decrease of
13% with respect to 2010.
In the Wholesale Segment (traffic business) revenue from minutes terminated in provinces increased by 12% in 2011, representing an increase of 59% from 2010.
REVENUE DISTRIBUTION BY SEGMENT
AMERICATEL PERÚ GROSS REvENUE
(in USD$ thousand)
45,000
40,000
38,973
39,360
42,696
8%
48%
CORPORATE &
SME SERVICES
25%
LD
35,000
99
30,000
25,000
20,000
Report 2011
15,000
10,000
5,000
0
2009
2010
2011
CORPORATE & SME SEGMENT
WHOLESALE SEGMENT
MASS-MARKET SEGMENT
EBITDA EVOLUTION, AMERICATEL PERÚ
(in USD$ thousand)
5,000
3,982
4,000
120%
3,000
1,807
2,000
1,097
1,000
0
2009
27%
TRAFFIC
BUSINESS
2010
2011
Entel call
cEnter_
The flexibility and competitiveness of its
services form a vital part of the Group’s
remote service strategy. With three new
100
call centers in Chile and the first COPC
Report 2011
certification in the country, in 2011 Entel
Call Center consolidated a new platform for
its contact center and technical helpdesk
operations.
Entel Call Center in 2011
company in Chile to obtain the international COPC®
*First
certification for four different services and the first in Latin
America to certify its technical helpdesks.
new centers in Chile; two in Santiago (Amunátegui
*Three
and General Mackenna) and one in the Valparaíso Region
(Curauma).
*Operating income increased by 67% from 2010.
the tender for customer service and document
*Awarded
support platforms for Banco de Crédito del Perú (BCP),
the largest bank in the country. This is the first time it has
outsourced its services.
The Amunátegui center,
located beside the Entel
Tower in Santiago, is
specially designed for
technical helpdesk and
social networking services.
(*)
2,536
active positions
active positions (2010: 2,047).
Entel Call Center in Chile and Perú.
Strategy
The mission of Entel Call Center is to provide end users (its
clients’ customers) with a fast and accurate solution to ensure high levels of satisfaction. It’s goal is to be the leading call
center in terms of innovation, productivity, and service quality,
both for its own customers and end users.
Entel Call Center operates internationally, with four centers in
Chile and two in Peru, all built and equipped to the highest international standards for contact centers, especially with respect to comfort, lighting and climate, all of which are necessary to guarantee a good working environment for the 4,506
staff in both countries.
101
Report 2011
24%
annual growth
The company’s centers are interconnected by a high-availability system with load and call-flow balancing. The company’s
growth has been accompanied by its geographic diversification to achieve high levels of support and service in the face of
events such as the earthquake that struck Chile on February
27, 2010.
In terms of the number of active positions (desks attended by
staff), Entel Call Center is second in Chile behind Atento, and
third in Peru, where competes with Atento and GSS.
Report 2011
102
Services
Description
Service Desk
Technical help desks for Entel Group and external customers. The goal is
to provide support to remote users with the highest FCR rate (First Call
Resolution) to achieve high levels of user satisfaction and allow significant
cost optimization through the recovery of availability and avoiding site
visits.
Customer Service
Multichannel service for inbound and outbound calls, chat, social networks,
IVR or Click to Call, for companies seeking to provide more comprehensive
and personalized service.
Sales Campaigns
Complements face-to-face customers sales channel, through a platform
made up of highly-trained agents who act as remote salespeople.
Technology Services
Administration of technical and management platforms related to call
centers.
COPC® Certification
Results
In April 2011, Entel Call Center obtained the international
COPC® (Customer Operations Performance Center) certification for four of its services: Mobile Billing, Premium Telebilling,
Entel´s Enterprise segment services and BlackBerry Technology Service Center. It is the first company to obtain this award
in Chile for four contact center services, and the first in Latin
America for technical helpdesk (BlackBerry CAT).
In 2011, revenue from Entel Call Center totaled CLP $26,562 million, an increase of 23% over the 2010 figure. This increase in
activity, both in Chile and Peru, resulted in operating income of
CLP $1,698 million, representing an increase of 67% with respect to the previous year.
CONSOLIDATED REVENUE
CONSOLIDATED OPERATING INCOME
(reported under IFRS) (in CLP$ million)
Consolidated EBITDA reached CLP $2,733 million, representing
an increase of 37% over 2010.
(in CLP$ million, including inter-company figures)
30,000
26,562
2,000
1,698
103
25,000
21,557
1,500
18,520
15,000
1,017
67%
1,000
Report 2011
20,000
23%
10,000
500
358
5,000
0
0
200920102011
200920102011
CONSOLIDATED EBITDA
(reported under IFRS) (in CLP$ million)
3,000
2,733
2,250
1,500
1,988
37%
1,355
750
0
200920102011
Chapter 7
compAny
infOrmation_
compAny and
fiNancial
information_
conStituting
documEnts_
Entel Chile S.A. was incorporated as a public limited company
by public deed, notarized before the Santiago Notary Jaime
García Palazuelos on August 31, 1964. The company and its
articles of incorporation were approved by Supreme Decree
5,487, issued by the Ministry of the Treasury on December 30,
1964.
Report 2011
108
The relevant extract is recorded on page 381 No. 191, and the
aforementioned decree on page 384, No. 192, of the Santiago
Trade Register, dated January 18, 1965, published in the state
gazette on January 20, 1965. The company was declared legally established by Supreme Decree 1,088 issued by the Ministry of the Treasury on April 4, 1966. Following this date, the
Name or Company Name
Inv Altel Ltda
Banco de Chile por cuenta de terceros no residentes
company statutes have undergone a range of modifications to ensure
compliance with Executive Order 3,500 (1980) regarding the number
and nationality of directors, the existence of alternate directors, increases in capital, and extensions to the company’s business areas.
compAny
ownErship_
As of December 31, 2011, the capital stock of Empresa Nacional de
Telecomunicaciones S.A. was distributed in 236,523,695 single series shares, fully subscribed and paid in by its 2,134 shareholders.
The list of the twelve largest shareholders of Entel S.A., together with
the number of shares held and the percentage of their stock is given
in the following table:
Stocks as of 12/31/2011
% Stocks
129,530,284
54.76%
27,143,237
11.48%
Banco Itau por cuenta de inversionistas
16,657,395
7.04%
Banco Santander por cuenta de inv extranjeros
10,976,825
4.64%
AFP Habitat S.A.
8,048,927
3.40%
AFP Cuprum S.A.
6,191,161
2.62%
AFP Capital S.A.
6,185,298
2.62%
AFP Provida S.A.
6,010,248
2.54%
BanChile C de B S.A.
2,426,146
1.03%
Larrain Vial S.A. Corredora de Bolsa
2,118,427
0.90%
Penta C de B S.A.
1,667,503
0.71%
Santander S.A. C de B
Others
(*) With shares held by brokers
Does not include shares catalogued as financial investments
1,215,817
0.51%
18,352,427
7.75%
236,523,695
100.00%
}
In compliance with General Regulation No. 30, it is reported
that the only controlling company remains to be Inversiones
Altel Ltda., Tax ID 76.242.520-3, with 129,530,284 shares representing a 54.7642% ownership of Entel. Inversiones Altel
Ltda. is owned by Almendral Telecomunicaciones S.A. (Tax ID
99.586.130-5), with a share of 99.99%, and Almendral S.A. (Tax
ID 94.270.000-8) with a share of 0.01%.
The individuals and legal entities that directly and indirectly
form part of the controlling group are as follows:
Information as per Shareholder Register, December 31, 2011.
Tax ID No.
Shareholders
Quantity of Shares
96.969.110-8
Forestal Cañada S.A.
561,429,758
96.895.660-4
Inversiones El Raulí S.A.
703,849,544
96.878.530-3
Inversiones Nilo S.A. (*)
926,012,160
96.656.410-5
Bice Vida Compañía de Seguros
16,424,086
94.645.000-6
Inmobiliaria Ñagué S.A.
358,008,491
90.412.000-6
Minera Valparaíso S.A.
281,889,680
81.358.600-2
Cominco S.A.
154,795,552
81.280.300-K
Viecal S.A.
95,058,166
79.770.520-9
Forestal y Pesquera Copahue S.A.
454,057,900
79.621.850-9
Forestal Cominco S.A.
78,666,592
77.320.330-K
Inversiones Coillanca Limitada
50,500,000
96.791.310-3
Inmobiliaria Teatinos S. A.
215,905,538
96.800.810-2
Inmobiliaria Canigue S. A.
287,874,051
96.878.540-0
Inversiones Orinoco S. A.
143,937,025
Patricia Matte Larraín
4,842,182
4.333.299-6
4.436.502-2
Eliodoro Matte Larraín (*)
3,696,822
6.598.728-7
Bernardo Matte Larraín (*)
3,696,695
Grupo Matte (17)
4,340,644,242
Inversiones Los Andes Dos Limitada
312,672,052
77.677.870-2
77.302.620-3
Inversiones Teval S.A.
1,290,595,292
Grupo Fernández León (2)
1,603,267,344
96.950.580-0
Inversiones Huildad S.A.
1,129,980,943
96.502.590-1
Inversiones Metropolitana Ltda.
49,000,000
89.979.600-4
Inversiones Paso Nevado Ltda.
262,000,000
Grupo Hurtado Vicuña (3)
1,440,980,943
*
% Stock
109
4.15%
5.20%
6.84%
0.12%
2.64%
2.08%
1.14%
0.70%
3.35%
0.58%
0.37%
1.59%
2.13%
1.06%
0.05%
0.03%
0.03%
32.07%
2.31%
9.53%
11.84%
8.35%
0.36%
1.94%
10.64%
Report 2011
Controllers
Information as per Shareholder Register, December 31, 2011.
Tax ID No.
110
Shareholders
% Stock
99.012.000-5
Cía. De Seguros de Vida Consorcio
405,540,420
3.00%
79.619.200-3
Consorcio Financiero S.A. (*)
894,655,313
6.61%
Grupo Consorcio (2)
1,300,195,733
9.60%
96.927.570-8
Los Peumos S.A.
264,803,356
1.96%
79.937.930-9
Inmobiliaria Santoña Ltda
105,809,865
0.78%
85.127.400-6
Inmobiliaria Escorial Ltda.
347,973,232
2.57%
79.942.850-4
Inversiones El Manzano Ltda.
79,280,486
0.59%
79.933.390-2
Andacollo de Inversiones Ltda.
38,996,296
0.29%
96.928.240-2
Santo Domingo de Inversiones S. A.
3,079,761
0.02%
79.937.090-8
Andromeda Inversiones Ltda.
102,372,197
0.76%
78.136.230-1
Santa Rosario de Inversiones Ltda.
63,260,509
0.47%
77.740.800-3
Inversiones La Estancia Ltda.
30,805,638
0.23%
77.174.230-0
Inversiones Los Ciervos Ltda.
5,936,539
0.04%
Valdes Covarrubias Maria Teresa
2,471,777
0.02%
4.431.346-4
Report 2011
Quantity of Shares
96.962.800-7
Inmobiliaria Estoril II S.A.
93,631
0.001%
79.934.710-5
Comercial Marchigue S.A. (*)
42,090,874
0.31%
76.072.917-5
Inversiones El Manzano II S. A.
3,079,761
0.02%
76.072.983-3
Andaluza de Inversiones II S. A.
3,079,761
0.02%
76.072.985-K
Inversiones La Estancia II S. A.
3,079,761
0.02%
76.073.008-4
La Esperanza S. A.
3,079,761
0.02%
96.932.040-1
Los Boldos
3,124,495
0.02%
79.966.130-6
Inmobiliaria e Inversiones Santa Sofía Ltda.
3,079,761
0.02%
79.757.850-9
Asturiana de Inversiones Ltda.
3,079,761
0.02%
77.863.390-6
Cerro Colorado de Inversiones Ltda.
3,079,761
0.02%
17.456.060-9
Vicente Izquierdo Toboada
32,300
0.0002%
Grupo Izquierdo Menéndez (23)
1,111,689,283
8.21%
96.949.800-6
Inversiones Green Limitada
371,005,336
2.74%
96.949.780-8
Las Bardenas Chile S.A.
371,005,336
2.74%
Grupo Gianoli (2)
742,010,672
5.48%
Controlling Group (48)
10,538,788,217
77.85%
Minority (1,861)
3,000,833,815
22.15%
Total (1,909)
13,539,622,032
100.00%
(*) With shares held by brokers
Does not include shares catalogued as financial investments
The individual members of the controlling group are as follows:
Grupo Matte
Patricia Matte Larraín (Tax ID 4.333.299-6), Eliodoro Matte Larraín (Tax ID 4.436.502-2), and Bernardo Matte Larraín (Tax ID
6.598.728-7), who, directly and indirectly, and in equal proportions, control the companies through which Grupo Matte acts
as a controlling member of Almendral S.A.
Grupo Fernández León
a) Inversiones Los Andes Dos Ltda., whose ultimate controllers are Eduardo Fernández León (Tax ID 3.931.817-2), Valeria
Mac Auliffe Granello (Tax ID 4.222.315-8), Eduardo Fernández
Mac Auliffe (Tax ID 7.010.379-6), and Tomás Fernández Mac
Auliffe (Tax ID 7.010.380-K), with 37.97%, 25.24%, 18.38%, and
18.41% direct and indirect shares of capital stock, respectively.
b) Inversiones Teval S.A., whose controlling group is made
up of the following:
_Grupo Fernández León, composed of Eduardo Fernández León (Tax ID 3.931.817-2), Valeria Mac Auliffe Granello
(Tax ID 4.222.315-8), Eduardo Fernández Mac Auliffe (Tax
ID 7.010.379-6), and Tomás Fernández Mac Auliffe (Tax ID
7.010.380-K) with 4.735%, 3.615%, 20.78%, and 20.87% indirect share of capital stock, respectively; Grupo Garcés Silva,
made up of José Antonio Garcés Silva (Tax ID 3.984.154-1),
María Teresa Silva Silva (Tax ID 3.717.514-5), María Paz Garcés
Silva (Tax ID 7.032.689-2), María Teresa Garcés Silva (Tax ID
7.032.690-6), José Antonio Garcés Silva (Tax ID 8.745.864-4),
Matías Alberto Garcés Silva (Tax ID 10.825.983-3), and Andrés
Sergio Garcés Silva (Tax ID 10.828.517-6), with 1.71%, 0.32%,
9.594%, 9.594%, 9.594%, 9.594%, and 9.594% of indirect shares of capital stock, respectively.
Grupo Hurtado Vicuña
José Ignacio Hurtado Vicuña (Tax ID 4.556.173-9), María
Mercedes Hurtado Vicuña (Tax ID 4.332.503-5), María Victoria Hurtado Vicuña (Tax ID 4.332.502-7), Juan José Hurtado Vicuña (Tax ID 5.715.251-6), José Nicolás Hurtado Vicuña
(Tax ID 4.773.781-8), and Pedro José Hurtado Vicuña (Tax ID
6.375.828-0), who control, directly and indirectly, and in equal
proportions, the companies through which Grupo Hurtado Vicuña acts as member of the controlling group of Almendral S.A.
Grupo Consorcio
a) Consorcio Financiero S.A., whose ultimate controllers are:
_P&S S.A., with a 47,7% share of capital stock. Additionally,
P&S S.A. is controlled, in equal parts, directly and indirectly,
with a share of 82% of capital stock, by José Ignacio Hurtado
Vicuña (Tax ID 4.556.173-9), María Mercedes Hurtado Vicuña
(Tax ID 4.332.503-5), María Victoria Hurtado Vicuña (Tax ID
4.332.502-7), Juan José Hurtado Vicuña (Tax ID 5.715.251-6),
José Nicolás Hurtado Vicuña (Tax ID 4.773.781-8), and Pedro
José Hurtado Vicuña, Tax ID 6.375.828-0).
Banvida S.A., with a 47,7% share of capital stock, controlled
by Inversiones Teval S.A., with an 80.3% share of capital stock.
b) Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., whose controlling group is the same as that of Consorcio Financiero S.A., through which it holds 99.826227% of
capital stock of the former.
Grupo Izquierdo
a) Los Peumos S.A., whose ultimate controllers are Santiago
Izquierdo Menéndez (Tax ID 5.742.959-3), and Bárbara Larraín
Riesco (Tax ID 6.448.657-8), with a 97.04% and 2.96% direct
and indirect share of capital stock, respectively.
b) Inmobiliaria Santoña Ltda., whose ultimate controllers are
Vicente Izquierdo Menéndez (Tax ID 5.741.891-5) and María Virginia Taboada Bittner (Tax ID 6.834.545-6), with a 93.02% and
6.98% direct share of capital stock, respectively.
111
Report 2011
On January 24, 2005, the board of directors of Almendral S.A.
took control of the company through various shareholders who
signed a joint interest agreement for the company, to allow
them to obtain control, thereby forming the controlling group
of Almendral S.A. and each becoming a member of the group.
c) Inmobiliaria Escorial Ltda., whose ultimate controllers are
Fernando Izquierdo Menéndez (Tax ID 3.567.488-8) and Ida Ester Etchebarne Jaime (Tax ID 5.418.932-K), with a 59.7640%
and 39.2460% share of capital stock, respectively.
d) Inversiones El Manzano Ltda., whose ultimate controllers
are Diego Izquierdo Menéndez (Tax ID 3.932.428-8) and María
Isabel Reyes (Tax ID 5.748.650-3), with a 99% and 1% share in
capital stock, respectively.
e) Andacollo de Inversiones Ltda., whose ultimate controllers
are Gonzalo Izquierdo Menéndez (Tax ID 3.567.484-5) and Luz
María Irarrázaval Videla (Tax ID 5.310.548-3), with a 99.99%
and 0.01% direct share of capital stock, respectively.
Report 2011
112
f) Santo Domingo de Inversiones S.A., whose ultimate controllers are Rosario Izquierdo Menéndez (Tax ID 5.548.438-4)
and Santiago Izquierdo Menéndez (Tax ID 5.742.959-3), with a
99.79% and 0.21% direct share of capital stock, respectively.
g) Andrómeda Inversiones Ltda., whose ultimate controllers
are Roberto Izquierdo Menéndez (Tax ID 3.932.425-3), with
86.9720%, María Teresa Valdés Covarrubias (Tax ID 4.431.3464), with 0.3920%, Roberto Izquierdo Valdés (Tax ID 9.099.5383), with 2.1060%, Francisco Rodrigo Izquierdo Valdés (Tax ID
9.099.540-5), with 2.1060%, Luis Eduardo Izquierdo Valdés (Tax
ID 9.099.537-5), with 2.1060%, José Manuel Izquierdo Valdés
(Tax ID 9.968.191-8), with 2.1060%, María Teresa Izquierdo Valdés (Tax ID 9.099.215-5), with 2.1060%, María Josefina Izquierdo
Valdés (Tax ID 9.099.218-K), with 2.1060% of capital stock.
h) Santa Rosario de Inversiones Ltda., whose ultimate controllers are Rosario Izquierdo Menéndez (Tax ID 5.548.438-4)
and Santiago Izquierdo Menéndez (Tax ID 5.742.959-3), with a
i) Inversiones La Estancia Ltda., whose ultimate controller is
María del Carmen Izquierdo Menéndez (Tax ID 5.548.409-0)
with a 99.99% of capital stock.
j) Inversiones Los Ciervos Ltda., whose ultimate controller is
Diego Izquierdo Menéndez (Tax ID 3.932.428-8), with 99%, and
Doña María Isabel Reyes (Tax ID 5.748.650-3), with 1% of capital stock.
k) Inmobiliaria Estoril II S.A., controlled 100% by Inmobiliaria Estoril I S.A. and ultimate controllers are the Izquierdo
Menéndez family who hold the capital stock in equal proportions: Matías Izquierdo Menéndez (Tax ID 3.674.298-7),
Vicente Izquierdo Menéndez (Tax ID 5.741.891-5), Santiago
Izquierdo Menéndez (Tax ID 5.742.959-3), Roberto Izquierdo
Menéndez (Tax ID 3.932.425-3), Gonzalo Izquierdo Menéndez
(Tax ID 3.567.484-5), Fernando Izquierdo Menéndez (Tax ID
3.567.488-8), Diego Izquierdo Menéndez (Tax ID 3.932.428-8),
Rosario Izquierdo Menéndez (Tax ID 5.548.438-4), Gracia Izquierdo Menéndez (Tax ID 5.742.317-K), Alejandra Izquierdo
Menéndez (Tax ID 5.020.827-3) Carmen Izquierdo Menéndez
(Tax ID 5.548.409-0).
l) Comercial Marchigue S.A., whose ultimate controllers are
Fernando Izquierdo Menéndez (Tax ID 3.567.488-8) and Ida Ester Etchebarne Jaime (Tax ID 5.418.932-K), with a 76.1172%
and 8.1950% share of capital stock, respectively.
m) Los Boldos S.A., whose ultimate controllers are Rosario Izquierdo Menéndez (Tax ID 5.548.438-4) and Santiago Izquierdo
Menéndez (Tax ID 5.742.959-3), with a 99.77% and 0.23% direct and indirect share of capital stock, respectively.
n) San Bonifacio S.A., whose ultimate controllers are Roberto
Izquierdo Menéndez (Tax ID 3.932.425-3) with 86.9720%, María
Teresa Valdés Covarrubias (Tax ID 4.431.346-4) with 0.3920%,
Roberto Izquierdo Valdés (Tax ID 9.099.538-3), with 2.1060%,
Francisco Rodrigo Izquierdo Valdés (Tax ID 9.099.540-5), with
2.1060%, Luis Eduardo Izquierdo Valdés (Tax ID 9.099.537-5),
with 2.1060%, José Manuel Izquierdo Valdés (Tax ID 9.968.1918), with 2.1060%, María Teresa Izquierdo Valdés (Tax ID
9.099.215-5), with 2.1060%, María Josefina Izquierdo Valdés
(Tax ID 9.099.218-K), with 2.1060% of capital stock.
o) Inversiones El Manzano II Ltda., whose ultimate controllers
are Diego Izquierdo Menéndez, Tax ID 3.932.428-8) and María
Isabel Reyes (Tax ID 5.748.650-3), with a 99% and 1% share in
capital stock, respectively.
p) Andaluza de Inversiones II S.A., whose ultimate controller is
María Alejandra Izquierdo Menéndez (Tax ID 5.020.827-3), with
99.99% of capital stock.
r) La Esperanza S.A., whose ultimate controller is Gracia Inés
Izquierdo Menéndez (Tax ID 5.742.317-K), with 99.99% of capital stock.
s) Inmobiliaria e Inversiones Santa Sofía Ltda., whose ultimate
controller is Matías Izquierdo Menéndez (Tax ID 3.674.298-4),
with 99.91% of capital stock.
t) Asturiana de inversiones Ltda., whose ultimate controllers
are Santiago Izquierdo Menéndez (Tax ID 5.742.959-3), and
Bárbara Larraín Riesco (Tax ID 6.448.657-8), with a 97.04% and
2.96% direct and indirect share of capital stock, respectively.
u) Cerro Colorado de Inversiones Ltda., whose ultimate controllers are Gonzalo Izquierdo Menéndez (Tax ID 3.567.4845) and María Irarrázaval Reyes (Tax ID 5.310.548-3), with a
Grupo Gianoli
a) Inversiones Green Ltda., whose ultimate controller is Elina
Patricia Gianoli Gainza (Tax ID 2.942.054-8), with 100% of capital stock.
b) Las Bardenas Chile S.A., whose ultimate controller is Sergio Pedro Gianoli Gainza (Tax ID Rep. of Uruguay 1.088.599-5)
with 100% of company stock.
113
Report 2011
]
q) Inversiones La Estancia II S.A.,whose ultimate controller is
María del Carmen Izquierdo Menéndez (Tax ID 5.548.409-0), with
99.99% of capital stock.
PARENT COMPANY
cOmpany
strUcture_
Entel chile s.a.
99,990
ENTEL
INVERSIONES S.A.
HOLDING
100,000
ENTEL
INTERNACIONAL BVI CORP.
0,010
100,000
ENTEL PCS
TELECOMUNICACIONES S.A.
99,990
SOCIEDAD DE
TELECOMUNICACIONES
INSTA BEEP LTDA.
Report 2011
114
ENTEL
COMERCIAL S.A.
50,000
BUENAVENTURA S.A.
0,001
0,010
10,000
ENTEL
CALL CENTER S.A.
8,580
ENTEL
SERVICIOS TELEFÓNICOS S.A.
91,420
0,010
MI CARRIER
99,990
0,100
SATEL
99,900
0,015
ENTEL SERVICIOS
EMPRESARIALES S.A.
99,985
1,000
ENTEL
TELEFONÍA LOCAL S.A.
99,000
99,000
1,000
EUSA Wholesale inc.
90,000
53,433
99,997
AMERICATEL
PERÚ S.A.
46,567
SERVICIOS DE CALL CENTER
DEL PERÚ S.A.
0,003
OPERATING COMPANIES
99,999
99,999
0,001
TRANSAM
COMUNICACIÓN S.A.
99,886
0,114
WILL S.A.
COMPANIES In Chile
MOBILE BUSINESS
CompaNIeS abroaD
WIrelINe buSINeSS aND otHerS
divideNd
pOlicy_
The dividend policy, approved by the Board of Directors and
communicated at the Ordinary General Shareholders Meeting
on April 26, 2011 is as follows:
The policies for the determination of the liquid distributable
profit for the handling of adjustments for the initial application
of IFRS for the 2009 financial year are maintained as follows:
Dividend policy
a.- As policy to determine the liquid distributable profit for the
financial year, it was agreed to consider the net effect, taking
into account positive and negative variations from changes in
the fair value of assets and liabilities.
In accordance with the regulations set out by the Chilean Securities and Insurance Supervisor, the board of directors must
approve the company’s dividend policy for future years.
For 2011 and subsequent years the board intends to keep a
stable dividend policy and proposes to distribute up to 80%
of the profits earned during each financial year as a dividend
and also, where applicable, to capitalize part of these profits
accrued at the end of each period. It is proposed to pay the final
dividend on or before 31 May of each year. The intention is to
pay an interim dividend in the final quarter of 2011 with the value of this payment to be based on the company’s performance
during the first three quarters of this period.
In the event of a net positive effect (profit), this will be deducted
from the financial profit in order to calculate the liquid distributable profit.
In the event of a negative effect (loss), this will not be added
to the distributable liquid profit. It is expressly stated that this
policy relates to adjustments for the purpose of financial derivative contracts, since at the date of writing, the company
has no recorded assets or liabilities subject to adjustment to
market values as per IFRS.
In determining the percentage of profit and the dates on which
proposed final dividends will be paid, the company seeks to
ensure financial stability while adhering to the established distribution policy. In particular, specific attention has been paid
to safeguards in terms of debt, liquidity, and finance budgeting, and possible covenants that may arise in public supply
contracts and credit agreements entered into by the company.
b.- As policy for handling adjustments for the first-time adoption of IFRS, losses incurred for the first-time adoption of IFRS
will be managed in an equity account. As such, it has been decided not to absorb them by decreasing paid-in capital.
At all times, the board’s intended dividend payments depend
on the results and investment requirements as stated in the
forecasts made regularly by the company.
It is also noted that the policy was communicated to the Chilean
Securities and Insurance Supervisor in a timely manner and that
However, a decision may be taken to absorb this balance by
allocating it against profits for future financial years.
115
Report 2011
:)
it has been acknowledged at the meeting in line with the provisions of Circular 1945 of the Securities and Insurance Supervisor.
Report 2011
116
This policy will regulate future financial years in the above
manner.
Dividend Payment Procedure
Upon written request from any shareholder, dividends will be
deposited in the shareholder’s current or savings account on the
date established for payment. To do so, the shareholder must
communicate the name of the bank, the branch or office, and
the number of their current or savings account at least 24 hours
before the close of the register. The shareholder will remain
bound by this payment method unless written instructions to
the contrary are received.
In addition to this, and in line with shareholders’ wishes, they
must also communicate any requirement for the dividend to be
paid via check in their name and dispatched by recorded post at
least 24 hours before the close of the register.
The company will provide shareholders with forms, available
upon request, to allow them to select one of the established
payment methods.
For shareholders who have not selected one of the
aforementioned payment methods, dividends will be paid
at a bank in Chile’s Metropolitan Region, as selected by the
company, or at the address indicated in the notification referred
to below. Dividends that have not been collected within 60 days
of the due date, will remain available in the at the offices of the
administrator of the register of shareholders.
Parties who wish to withdraw their dividends from a commercial
bank or the from the company’s designated offices, must do
so in person or by a legally authorized representative with the
relevant powers, as stipulated in public law or a private contract
legalized by a public notary. For the latter, either the original
document or a duly certified photocopy should be left with the
company.
The payment of dividends will be communicated through a
national newspaper as chosen at the general shareholders
meeting.
}
The objective of the business is to maximize return on equity
through the analysis, construction, and operation of telecommunications and IT systems and the provision of related services both in Chile and abroad. To ensure compliance with this objective, the company makes investments to meet the demands
of its customers and users as a way of maintaining efficiency,
both technically and financially, and at levels conducive to supporting the maintenance of its facilities and the development of
its operations to ensure they meet the needs of Chile’s telecommunications sector. Consequently, the company will ensure its
investments have a stable rate of return over time and that this
is at least equal to the capital cost of their financing structure.
In 2011, in line with the investment and finance budgets, annual
investment in fixed assets for a value that does not exceed the
debt ratio permitted by the finance policy was authorized. The
investments correspond to company projects both within the
country and abroad.
In line with the rules approved at the general shareholders
meeting, the board must provide details of specific investments
to be made by the company in companies, works, and studies.
Essentially, the values of these investments will depend on the
programs to be undertaken throughout the calendar year.
The company will be authorized to make contributions to subsidiaries and associates within the of this policy.
In order to maximize yields from cash surpluses, the company
will invest in financial assets and/or market securities, in line
with the portfolio selection and diversification criteria. These
criteria will take into consideration liquidity, security, and profitability factors.
*
117
Report 2011
invEstment
pOlicy_
finaNcing
pOlicy_
118
The company’s financing policy primarily involves the following resources:
Report 2011
*Own resources.
derived from the increase in capital stock by
*Resources
issuing and placing shares, both in Chile and abroad.
*Supplier credit
*Loans from banks and financial institutions
*Deferred customs duties
*Offer of public and private bonds
*Leasing and leaseback
The policy sets a maximum debt level based on the greater of:
(Current Liabilities) / (Equity plus Minority Interest), equal to
1.5 (one point five); or (Current Liabilities / EBITDA for last 12
months), equal to 3.0 (three point zero). The current liabilities
will be considered net of financial investments for this purpose.
This level is justified taking into account the changes for IFRS
applied since 2009 and because it allows flexibility in the
management of finances, as well as the development of new
telecommunications projects both in Chile and abroad.
It should be remembered that the company management
cannot agree to specific dividend restrictions with creditors
or grant guarantees of any nature to third parties or other
companies or enterprises that are not affiliates or associates.
(
Additionally, all assets held by the company used for the
operation of national public service contracts that are owned
by Entel and are essential in the provision of its services
are classified as essential to the company’s operations.
Such assets, however, may be changed or replaced, if they
become technically or financially obsolete; they may also be
transferred in the event that they are no longer necessary to
provide a service.
The consolidated income statements for the 2011 financial
year show a profit of CLP $180,766,658,842.
For the purposes of determining the liquid distributable profit
to be considered in the calculation of the minimum compulsory and supplementary dividend, the company has established
a policy of deducting profits originating from the adjustment
of assets and liabilities to fair value while these have still not
been undertaken.
In line with this policy, during the previous financial year,
CLP $885,992,024 was deducted for unrealized profits; in
2011, CLP $434,369,663 of these profits materialized, a value
that must be reinstated to determine the profit to be distributed for 2011. Consequently, the liquid distributable profit for
the 2011 financial year is CLP $181,201,028,505.
An interim dividend of CLP $150 per share, equivalent to a total of CLP $35.478.554.250 was allocated against these profits,
payable on December 12, 2011. The dividend was agreed at the
meeting of the company’s board of directors that took place on
November 7, 2011 and represents 19.58 % of liquid distributable profits for the financial year.
Profits are not subject to any other deductions for distribution.
dividEnds peR
shAre_
Year
Nominal Dividend (in CLP$)
1997
55,67
1998
20,00
1999
10,00
2000
40,00
2001
40,00
2002
43,38
2003
65,00
2004
90,00
2005
895,00
2006
290,00
2007
338,00
2008
443,00
2009
443,00
2010
450,00
2011
545,00
119
Report 2011
)
distribuTable
pRofits_
sumMary of
transactiOns_
Summary share transactions of Empresa Nacional de Telecomunicaciones S.A. over the last three years:
Santiago Stock Exchange
Report 2011
120
Chilean Electronic Stock Exchange
Stock Exchange
Quantity Traded
Value Traded (CLP$)
Average Price
(CLP$)
Quantity
Traded
Value Traded
(CLP$)
Average Price
(CLP$)
Quantity
Traded
Value Traded
(CLP$)
Average
Price
(CLP$)
Quarter 1, 2009
14,502,454
99,061,631,096
6,791
692,358
4,685,454,476
6,756
15,298
106,429,737
6,957
Quarter 2, 2009
20,155,709
146,927,393,588
7,288
1,731,992
12,660,407,486
7,233
65,177
476,923,975
7,317
Quarter 3, 2009
14,275,269
103,834,085,297
7,279
691,801
5,054,328,090
7,272
30,098
220,508,780
7,326
Quarter 4, 2009
19,176,490
135,660,828,421
7,069
7,193,299
51,817,772,057
7,104
27,684
197,375,119
7,130
Quarter 1, 2010
22,608,351
167,919,256,265
7,500
2,177,001
16,343,504,979
7,503
44,473
331,190,839
7,447
Quarter 2, 2010
15,357,515
110,810,176,951
7,211
1,935,426
14,227,081,279
7,262
31,763
229,475,540
7,225
Quarter 3, 2010
16,870,066
131,896,627,021
7,819
2,138,772
16,649,199,323
7,784
90,600
718,469,812
7,930
Quarter 4, 2010
14,362,661
115,509,854,377
8,051
906,176
7,262,801,043
8,069
44,706
366,111,817
8,189
Quarter 1, 2011
15,957,457
126,648,587,797
7,937
1,028,126
8,149,829,990
7,927
26,166
205,368,620
7,849
Quarter 2, 2011
26,293,805
232,657,810,841
8,848
2,501,652
22,374,195,749
8,944
38,985
337,663,018
8,661
Quarter 3, 2011
23,082,175
221,781,884,732
9,608
1,992,263
18,966,299,783
9,520
15,672
146,602,858
9,354
19,554,883
190,830,226,753
9,759
2,413,875
23,484,695,759
9,729
4,202
41,229,141
9,812
222,196,835
1,783,538,363,139
8,027
25,402,741
201,675,570,014
7,939
434,824
3,377,349,256
7,767
Quarter 4, 2011
Totals
Share Transactions
In compliance with the directives set out in General Regulation 269 of the Chilean Securities and Insurance Supervisor,
it is expressly stated that in 2011, in line with our records, the
following share transactions were carried out by the related
shareholders.
Name/Trading As
Type of
Relationship
Transaction Date
Transaction Type
Purchase/
Sale
Place
No. of Shares
Unit Price
(CLP$)
Value Traded
(CLP$)
Tomás Hurtado Cruzat
With owning director
12/21/11
Financial investment
Sale
Stock Exchange
5,907
9,949.98
58,774,517
Yelcho Inmobiliaria S.A.
12/12/11
Sale
Stock Exchange
436,755
9,700.10
4,236,567,176
Yelcho Inmobiliaria S.A.
12/06/11
Sale
Stock Exchange
32,002
9,708.79
310,700,896
The maturity of the first installment of the syndicated loan for
USD $200,000,000 in June 2012, together with the associated
short-term accounting requirement and impact on liquidity indicators, made it favorable for Entel to enter the debt markets
during the financial year.
To increase financing options and sources, the company signed
two series of local bonds with the Chilean Securities and Insurance Supervisor in August for a total value of UF 5 million, with
three series in UF and CLP being registered for each. The three
current registers have a joint limit of UF 5 million and an expiry
date for the payment of capital of between 5 and 21 years. The
bonds may be placed on the market within 36 months following registration. After evaluating the market and the various options, a decision was taken to postpone the placement of these
securities and give priority to bank finance instead. In November,
a loan was structured on the international debt market and full
payment of the facility was obtained in December from TokioMitsubishi and Scotiabank. This is a three-year loan with a single
amortization in 2014 and was used for the advanced payment of
the full amortization installment of the current syndicated loan
of equal value, which has remaining amortizations of equal value
in 2013 and 2014. The financial conditions of this new loan were
attractive when compared with similar placements during the
year, both in the local bond market and in bank loans provided by
financial institutions in Chile. As a result of the above, the company’s debt structure remained long-term at the end of the year.
In short-term financial activities, occasional use was made of
overdrafts and commercial bills to finance temporary cash deficits. In October, the final payment was made for the purchase of
Transam, bringing the total for the year to CLP $3,564,609,540, in
addition to the payment made in 2010.
Similarly, the financing requirements arising from the investment in the new company headquarters in Parque Titanium were covered from our own resources and totaled
CLP $10,094,608,084 for the year.
In March, advanced payments were made for loans of the acquired company, Transam, as well as for the costs of rescinding
associated derivatives.
During the year, Entel continued its strategy of contracting derivative contracts that cover its full net exposure to exchange
rate fluctuations arising from debt liabilities in dollars and obligations to pay suppliers in foreign currencies. This has been
balanced by structuring forwards, options, and cross currency
swaps. The latter have also partly covered the risks associated
with fluctuations in the Libo interest rates upon which international credit is based.
With respect to exchange rate hedges provided by forward contracts, the Group has retained an average purchase portfolio of
approximately USD $360 million with a range of terms based on
the best rate prevailing at the close.
Cash surplus balances continued to be invested in line with a
strict investment policy and risk classification for issuers.
121
Report 2011
“
finAncial
activitIes_
riSk
factoRs_
Report 2011
122
The Risk of Technological Change
Regulatory Risks
Changes in telecommunications technology make it necessary
to continuously review investment plans to ensure that met
our goal of responding to changes in connectivity requirements adopted by markets. Changes in technology can arise
from both modifications in demand patterns and the development of new forms of communication associated with applications and speeds. The periods of obsolescence for investments
in new technology may be less than those estimated when the
investment is made, meaning that the initial estimates of expected profitability may not be met.
Regulation plays an important role in the telecommunications
industry. Stable regulations and criteria allow for the suitable
evaluation of projects and the reduction of the risk inherent
in investments, although this means it is important to closely
monitor regulatory changes. In this respect, 2011 saw the implementation of the various regulatory directives published at
the end of 2010.
This makes the risk of technological change an inherent part
of the industry in which Entel operates and the company’s position at the cutting edge of technological development means
it is essential that it actively manages technological risk for it
to maintain this position and remain competitive.
Accordingly, Entel has an active and continuous policy of adopting cutting-edge technology as a strategic part of its growth
and development, although always subject to a continuous review of its profitability. This has allowed Entel to position itself
at the forefront of technology, adapting to the use of new technologies and making the transition from offering a single
product to becoming an integrated connectivity provider and
constantly offering new ways of doing business. The appearance and development of new technologies has enabled Entel
to grow, integrate, and diversify, reducing its exposure to individual business areas and segments.
In January 2011, the Entel Phone tariff process to fix access
charges and the costs of other facilities provided to other telecommunications concession holders was completed and will
run for five years from this date. However, at the end of 2011,
the decree was still being processed and will be applied retrospectively from January 2011 when it is finalized and published.
The introduction of network neutrality into the General Telecommunications Act, the main function of which is to establish
requirements to provide users with better information, will
affect the market by making it possible to compare different
operators and make better informed decisions as a result of
the new information. In 2011, the initiative was complemented
by a regulation requiring companies providing Internet access
to make certain information available on their websites and
undertake quarterly measurements of technical indicators for
services providing access to the Internet. The regulation is already in operation and its first impact will be felt during the
coming year, with the publication of the figures for the technical indicators.
In addition to this, the company has continued to pay attention
to the telecommunications convergence process promoted by
the new government through initiatives seeking to increase the
diversity of uses of the radio electric spectrum for telecommunications services. This is in addition to communications from
the industry regulator regarding new spectrum to be tendered
in the medium term. This is of fundamental importance for the
expansion of the company’s operations and in December 2011,
the Ministry of Transport and Telecommunications published
the call to tender for spectrum on the 2,600 MHz band, used in
the majority of countries for the development of LTE technology (Long Term Evolution or 4G).
In addition to this, in line with legal modifications made at
the end of 2010, in 2011, the first steps were taken in the implementation of number portability, taking effect throughout
the country from January 16, 2012, and allowing subscribers from different fixed and mobile telephone companies to
switch supplier while keeping the same number. In the first
phase, changes are only possible between companies operating within an equivalent network (e.g. from one mobile line to
another). This new competitive scenario was initially launched
in Arica’s primary fixed telephony zone in December 2011. It
was then followed by mobile telephone services (national) on
January 16, 2012, and fixed telephone services for the Metropolitan Region in March, after which point it will be progressively rolled-out to incorporate new primary zones. The intention is that the gradual implementation of the system for the
wireline network will be complete on a national scale during
the second quarter of 2012.
There is also currently an investigation under taken by the Tribunal for the Defense of Free Competition to review telephone
services tariffs for on-net calls, the provision of telecommunications services in bundles products is also being analyzed.
In this process, presentations are already being made by all
stakeholders, and the tribunal is considering the information
in order to issue a resolution with respect to the material.
Similarly, during 2011, and following a number of years of
processing, the legislative debate in congress to regulate the
installation of antennae for the emission and transmission
of telecommunications services was completed. In its legislative process, the mixed commission approved a bill of law
with favorable votes in both chambers at the start of January
for subsequent enactment and publication in the official gazette, subject to procedures by the constitutional court for its
constitutional organic regulations. This initiative regulates the
installation of antennas in order to tackle the impact of developments on the urban environment through stricter requirements at a municipal level, as well as the regulation of other
aspects relating to the installation of antennas, such as colocation, and compensation for those living nearby in certain
areas, something which may have an impact on the development of telecommunications networks and imply additional
investments.
All these regulatory changes being introduced by the authority
provide new business opportunities. Additionally, the diversity
and relative size of Entel cushion it from the effects of adverse or inadequate regulation, reducing the risk created for its
operations, cash flows, wealth creation for shareholders, and
contribution to the community. However, within a regulated
industry such as that in which Entel operates, changes in regulations or in the policies of legal and regulatory authorities
cannot be ruled out and have the potential to impact negatively
upon the results of the company or restrict its possibility for
growth.
Exchange Rate Risks
Entel’s financing is largely in foreign currency. Furthermore, a
proportion of Entel’s suppliers permanently generate obligations for foreign currency payments. Both represent liabilities
whose value changes on a daily basis as a result of exchange
rate fluctuations. As a result of this, Entel takes out short- and
long-term contracts in foreign currency assets (hedge derivatives) to protect against such variations and thus eliminate risk
from exchange rate fluctuations.
123
Report 2011
In the national long-distance business, the number of primary
geographical areas defined for national communications was
reduced from 24 to 13 in October 2011. It is estimated that this
legal modification will have no significant effects, however, the
regulations stipulate that 37 months after the law has come
into force (i.e. the second half of 2014), and subject to a favorable report from the Tribunal for the Defense of Free Competition, the national long -distance category will be eliminated. As
such, from this date, fixed local telephone services will operate
in the same way as mobile telephone services, without a requirement to use a carrier for calls between different geographical areas within the country.
Interest Rate Risks
The company’s policy partially covers risks from interest rate
fluctuations and has contracted the corresponding financial
instruments to comply with it. The proportions of variable-rate
debt exposed to fluctuations in the estimated rate behave in
a manner sufficiently similar to business assets and reflects
EBITDA generated during each financial year.
As of December 31, 2011, the Group had credits in foreign currency to the value of USD $600 million, accruing interest based on the variable Libo rate and impacting on financial expenses in the income statements. In order to mitigate the effects
of these variations, the management takes out financial contracts for rate derivatives (Cross Currency Swap), hence fixing
a significant proportion of the interest paid.
124
When there is a rise in the Libo base rate according to market forecasts, the Group’s annual financing costs increase,
although they are still within the limits established by the
management and the financial safeguards guaranteed to its
creditors.
Report 2011
Credit risk
Credit risk derived from the balances of accounts held with
banks, financial instruments, negotiable stocks, and derivatives is managed by the Finance Division in line with investment
capital policies. These policies ensure the diversification of
risk by means of pre-established limits for the duration of the
placement, percentage by institution, and the risk of instruments in which cash surpluses are invested. The investment
instruments approved for use are those issued by the Central
Bank of Chile or banking subsidiaries with high risk ratings.
Investments may be denominated in the national currency or
the main foreign currencies.
Risk exposure associated with the recovery of accounts receivable originating from business operations is derived from the
terms of payment that must be offered as a result of the nature of the telecommunications industry to direct customers,
intermediaries, and other national and international operators
with whom reciprocal connection agreements are held.
Risk management for accounts receivable is designed to minimize exposure, insofar as possible given market conditions.
Risk management processes are differentiated according to
debtors’ profiles in line with segmented portfolio controls:
these include consumers, enterprises, corporations, telecommunications companies, correspondence, distributors, large
retailers, and other channels for the distribution of goods and
services.
For each segment, there are prospective and predictive models that make it possible to devise policies depending on
the origin of the debt. These range from the prepaid services
used for the highest risk customer/product combinations, all
the way to the establishment of credit limits, with and without
collateral guarantees, credit insurance, and other alternatives,
evaluated on a case-by-case basis.
Liquidity Risk
In terms of providing the required liquidity to meet financial obligations in a timely manner, Entel pays future expiries in advance,
seeking options on the market that can provide funds in a timely
manner. As such, during 2011, the amortization installment of the
syndicated loan due in June 2012 was paid in advance, thus avoiding the potential risks of the debt market around the due date.
#
;)
perfOrmance comparEd
with sHare pricE_
Evolution of EntEl’s RElativE shaRE PRicE v. iPsa MaRkEt indEx
(%) for last 24 months
150
132
125
Report 2011
114
96
78
60
E-10M-10
J-10
S-10
D-10
ipsa
entel
sharEholder
comMents_
During the last financial year, the company did not receive requests with comments or proposals related to the course of its
business to be included in this report.
M-11
J-11
S-11
D-11
“
consolidAted materiAl
evEnts 2011_
Report 2011
126
In compliance with the current legal and regulatory
framework, during 2011 the Group Companies informed the
Chilean Securities and Insurance Supervisor of the following
material events or relevant information:
II. Parent Company
Approval of 2010 Report, Dividend Distribution, and Other
Matters
Shareholders Meeting
By Letter 4, dated April 26, 2011, communicated that at the
Ordinary Shareholders Meeting held on the same date, agreement was reached to:
By Letter 3, dated April 4, 2011 communicated that at the board
meeting held on April 4, 2011, agreement was reached to:
a.-Approve the Annual Report, Balance Sheet, and Income
Statement for 2010.
_Schedule an Ordinary Shareholders Meeting for April 26, 2011
and send out the notification and supporting papers in a timely
manner to shareholders and other bodies as required by legal
regulations.
b.- Pay a final dividend of CLP $545 per share, equivalent to
74.52% of net profits for the year. The sum of CLP $100 was
paid in December 2010 as an interim dividend, leaving a dividend of CLP $445 per share, payable on May 24, 2011.
_Propose at the Ordinary Shareholders Meeting the payment of a
final dividend of CLP $545 per share from the profits made during the financial year, from which the sum of CLP $100 per share
should be deducted for the interim dividend paid in December 2010,
leaving a dividend of CLP $445 payable on a date to be agreed at
the Ordinary Shareholders Meeting.
c.- Approve the investment and financing policy and communicate the dividend policy.
I. Parent Company
d.- Maintain the remuneration of directors and the directors
committee, as approved at the previous Ordinary Shareholders Meeting, and establish the committee’s annual budget in
line with the minimum legal requirement. Approve the appointment of KPMG as external auditors and retain the appointed and reserve accounts inspectors, alongside the risk
rating agencies Feller Rate (S&P) and Fitch Ratings, and retain
the newspaper El Mercurio de Santiago for the publication of
company notices and related operations.
Management Changes
By Letter 6, dated June 6, 2011, communicated that at the board
meeting held on the same date, agreement was reached to:
_Acknowledge and accept the resignation tendered by Bernardo Matte Larraín as director of Empresa Nacional de Telecomunicaciones S.A.
_Appoint Andrés Echeverría Salas as replacement for the post
of director of Empresa Nacional de Telecomunicaciones S.A.
IV. Parent Company
on that date between the controller of Entel, Inversiones Altel
Limitada (Altel), subsidiary company of Almendral S.A. and Inmobiliaria e Inversiones El Coigüe Limitada (Coigüe), affecting
Entel as follows (Memorandum of Intent).
1) Non-Binding Agreement for Merger by Absorption of GTD
with Entel
The Memorandum of Intent reflects the willingness of Coigüe,
in its capacity as controller of GTD Grupo Teleductos S.A. (GTD)
and Altel to undertake the merger by absorption of GTD (merged
party) and Entel (acquiring party), through the absorption of the
former (the Merger), however this does not constitute a legally
binding contract for either the parties or Entel.
Distribution of Dividend
By Letter 19, dated November 7, 2011, communicated that at the
board meeting held on the same date, agreement was reached to:
Pay an interim dividend of CLP $150 per share, payable on
December 12, 2011 and allocated against the profits for the
third quarter of this year.
The total payment for this interim dividend was to be
Th.CLP $35,478,554, representing 23.65% of profits as of the
third quarter 2011.
V. Parent Company
Merger by Absorption of GTD
In a letter dated November 28, 2011, it was communicated
that the board of directors, in extraordinary session 942/2011
held on the same date, acknowledged on behalf of the representatives of the controller, the Memorandum of Intent signed
For the purposes of the merger, GTD will be dissolved and its
subsidiary companies, GTD Teleductos S.A., GTD Telesat S.A.,
GTD Internet S.A., GTD Larga Distancia S.A. (reporting company
with registration number 33 in the Special Register of Reporting
Entities), GTD Imagen S.A., and GTD Manquehue S.A. (all private
limited companies), and Compañía Nacional de Teléfonos, Telefónica del Sur S.A. and Compañía de Teléfonos de Coyhaique
S.A. (both public limited companies, with registration numbers
167 and 238, respectively, in the Trade Register of the Chilean
Securities and Insurance Supervisor, will become subsidiaries
of Entel and controlled by it.
GTD and its subsidiaries (GTD Group) had a turnover of approximately Th.CLP $150,000,000 for the 2010 financial year. The
business areas in which they operate include the provision of
business services such as Internet, data, and local telephony, in
addition to the residential provision of Internet and paid television focusing on specific geographic regions, all this delivered
over a platform of fiber-optic and copper access networks.
127
Report 2011
III. Parent Company
2) Shareholding of Coigüe in Entel Following the Merger
Report 2011
128
As a product of the Merger and subject to legally required expert
reports and the agreements that must be passed by extraordinary
shareholder meetings for Entel and GTD in which the Merger
will be approved, the direct and indirect shareholding of Coigüe
in Entel stock will be 9.8% (Coigüe Shareholding Following the
Merger). The Coigüe Shareholding Following the Merger may
only be altered: (i) as a result of a due diligence process by the
GTD group and Entel and its subsidiaries (Entel Group), whose
scope and limitations will be established in the final contracts;
or (ii) by any dividend payment or reduction in capital agreed
after June 30, 2011, the date of the financial information used to
determine the Coigüe Shareholding Following the Merger.
The board agreed that the due diligence process for Entel
should be carried out after adopting all the safeguards for
access to information and confidentiality established by
current legislation and the regulations of the Chilean Securities
and Insurance Supervisor (SIS), authorizing the executive
management and Entel attorney to prepare the information and
sign the contracts guaranteeing its provision.
3) Conditions of the Merger
The Memorandum of Intent stipulates that the Merger must
meet the following conditions, in addition to any that may be
present in the final contracts:
a) All the licenses and authorizations required to complete the
Merger are obtained in a timely manner, including approval
from the boards of directors, shareholder meetings, creditors,
inscriptions and registrations with SIS other and regulatory
bodies, as well as any other requirements from laws,
regulations, company statutes, and contracts signed by the
companies being merged.
b) The merger satisfies the consultations, authorizations, or
approvals of the bodies, which, in line with DL–211 of the
Defense of Free Competition, must be declared for it, insofar
as it is necessary to carry out or make such consultations or
requests.
c) An agreement will be signed by shareholders that will not
represent a joint action agreement with respect to Entel and
will govern matters covered by this type of shareholder agreement, mainly related to the assignability of shares and other
items regarding relationships between Altel y Coigüe in their
capacity as parties to the agreement (Agreement), which contains the following items relevant to Entel:
_The right of Coigüe to choose one (1) director from the nine
(9) directors of Entel with the support of Altel, provided it maintains a minimum percentage of stock or meets a threshold
granting it access to this right, this being established by mutual agreement in the Agreement.
_For a period of two years, and in order to facilitate the execution of the Merger, the provision will be made for Coigüe
to have the right to select, subject to third-party ratification
and in line with the Agreement, two (2) directors of the seven
_Other provisions that aim to facilitate the integration of the
Entel Group and the GTD Group, product of the Merger.
4) Transitional Period
The Memorandum of Intent establishes that between its date
and the shareholder meetings to decide on the Merger, Entel
and GTD must make their best efforts to ensure the GTD Group
and the Entel Group carry on business as usual and abstain
from undertaking or participating in any activity beyond the
remit of their businesses and the ordinary course of business.
5) Merger Contract
Altel and Coigüe declare they will make their best efforts to execute the Merger as soon as possible and, for this purpose, in
the Memorandum of Intent, they undertake to sign a definitive
and legally binding ratification (Merger Contract), by December 23, 2011 at the latest, although this date may be postponed
by mutual agreement between Altel and Coigüe.
The board of directors agrees to begin to process the Memorandum of Intent insofar as it concerns Entel, especially regarding the provision of and handling of information, reports,
invitations to the board, and the next extraordinary shareholders meetings that must agree the Merger, and other steps and
stages required, without affecting this material being definitive and binding, for the effective signing of the announced
Merger Contract.
Regarding the financial effects of the material event disclosed,
with respect to the assets, liabilities, or income of Entel, the
board of directors agrees that these will be reported upon
execution of the Merger, once the steps and activities in the
Memorandum of Intent and the Merger Contract have been
completed, permitting all the information required to determine it appropriately.
129
VI. Parent Company
By letter No. 26, dated December 23, 2011, communicates
that it has been acknowledged by the representatives of the
controller that on this date, Inversiones Altel Limitada (Altel),
controller of Entel, and Inmobiliaria e Inversiones El Coigüe
Limitada (Coigüe), have agreed to modify the Memorandum
of Intent, signed between them on November 28, 2011, and
reported as a material event on the same date (Memorandum
of Intent).
In light of its relevance, it is deemed the agreed modification
constitutes a material event for Entel, as detailed below:
1) The Memorandum of Intent reflects the willingness of
Coigüe in its capacity as controller of GTD Grupo Teleductos
S.A. (GTD) and Altel, to undertake the merger by absorption
of GTD, which will be dissolved, with Entel, which will remain,
(the Merger) however it does not constitute a legally binding
contract.
2) In the Memorandum of Intent, the parties are required to
make their best efforts to execute the Merger as soon as
possible, and to this effect, must sign a final and binding
Report 2011
]
(7) that make up the board of directors of Telsur and Telcoy,
subsidiaries of GTD.
Report 2011
130
“
agreement before December 23, 2011, although this deadline
may be extended by mutual agreement.
VII. Parent Company
3) The modification agreed by Altel and Coigüe consists of
extending the deadline set out in the Memorandum of Intent
for signing the final and binding contract for the Merger to
January 13, 2012.
By Letter 2, dated January 10, 2012, communicated that at
the board meeting held on January 9, 2012, agreement was
reached to:
With respect to the financial effects of the material event being
disclosed on the assets, liabilities, or income for Entel, these
were discussed in the material event dated November 28, 2011.
1°.- Acknowledge the communication by the CEO of Almendral
S.A., which, as a material event, will refer the company to the
Chilean Securities and Insurance Supervisor, reporting that
Juan Manuel Casanueva Préndez, representative and controller of Inmobiliaria e Inversiones El Coigüe Limitada (Coigüe),
which controls GTD Grupo Teleductos S.A. (GTD), retracts
its commitment to comply with the Memorandum of Intent
signed between Inversiones Altel Limitada, subsidiary of Almendral Telecomunicaciones S.A. and controller of Entel S.A.,
and Coigüe, through a private instrument dated November 28,
2011, reported as a material event on the same date, and its
extension, reported as a material event on December 23, 2011.
Consequently Almendral Telecomunicaciones S.A. reports as
a material event that the merger between Entel S.A. and GTD
will not go ahead as previously reported to the market, exclusively due to the unilateral retraction of Juan Manuel Casanueva Préndez, representative and controller of GTD
2°.- Classify the information received from Almendral S.A. as
a material event, authorizing the CEO to communicate it in this
manner to the respective organizations without affecting the
requirement to notify the National Economic Prosecutor and
the Tribunal for the Defense of Free Competition, aware of the
possible merger in uncontested proceedings.
insuranCe
commitmeNts_
Entel has insurance contracts for all its companies to cover
possible events that might affect its assets, equity, and cash
flow by causes losses or reductions in value.
In addition to this, the strategy for contracting insurance
policies attempts to cover, insofar as possible, risks that would
conduct to significant losses while excluding certain minor
risks with minimal financial impact in order to balance low
premium costs with high risk coverage.
131
Report 2011
The contracts for the various insurance policies are based on
a previously defined policy which places special emphasis
on events whose occurrence could have a strong impact
on the economic and financial position of the Group and its
relationships to third parties; the latter as a result of damages
caused accidentally as a result of the activities of the various
businesses.
(*)
The main policies, covered in the Entel insurance program are:
a) Physical Risks to Assets and Losses Arising from
Stoppages. This insures against all risks to all the assets
owned by Group companies and the loss of net income
resulting from potential stoppages caused by sinister.
Report 2011
132
b) Civil Liability. This covers group companies against potential
pecuniary demands for damage caused to third parties or their
assets while carrying out business activities whether at their
facilities, in public areas, or in third-party premises.
c) Directors and Officers Liability (D&O). This protects
directors and executives of Group companies from claims
that may be made against them by third parties, aiming to
compensate for losses to their equity as a result of decisions
taken by others.
d) International Transport. Protects against possible damages
to equipment and material imported by land, sea, and air
transportation.
e) Credit. Protects against possible net losses or deteriorations
in Entel’s net equity as a result of third parties failing to comply
with obligations contracted in funds originating from credit
sales.
f) Miscellaneous. Insurance for vehicles, mobile equipment,
travel, personal accidents, health and life for company staff,
shipping, etc.
g) Insurance program for contractors (OCIP). Provides civil
responsibility and personal accident coverage for contractors
and subcontractors of Group companies to protect the equity
of contractors and their workers.
Insurance Settlement for Property and Damages Due to
Stoppage for the Earthquake on February 27, 2010.
The earthquake that occurred on February 27, 2010, had a
significant effect on the policy for physical assets and losses
arising from stoppages. The event caused material damages
to more than one thousand of the company’s network sites
located between the V and VIII regions in the country, in
addition to damage caused to equipment in storage and a
number of buildings. Together these damages represented
losses in the region of UF 1 million, which was covered by the
policy in force at the time of the event with the RSA insurance
group, coinsured by Chartis.
The settlement for this event was the responsibility of the
insurance loss adjuster Juan Pablo Valdivieso y Asociados, who
provided the definitive settlement for the event on December
30, 2011, which totaled UF 818,102.
deClaration of
reSponsibility_
Report Signatories
Sworn Declaration of Truth
In compliance with General Regulation 283 of the Chilean Securities and Insurance Supervisor, of February 5, 2010, this report
is signed by the absolute majority of the members of the company’s board of directors and the CEO of Empresa Nacional de
Telecomunicaciones S.A.
The undersigned, directors and CEO of Empresa Nacional de
Telecomunicaciones S.A. declare under oath to be responsible
for the truth of the information provided in this Annual Report
for 2011.
Chairman
ID Nº 5.715.251-6
Luis Felipe Gazitúa Achondo
Vice Chairman
ID Nº 6.069.087-1
Juan Bilbao Hormaeche
Director
ID Nº 6.348.511-K
Juan Claro González
Director
ID Nº 5.663.828-8
Raúl Alcaíno Lihn
Director
ID Nº 6.067.858-8
Andrés Echeverría Salas
Director
ID Nº 9.669.081-9
Juan José Mac-Auliffe Granello
Director
ID Nº 5.543.624-K
Alejandro Pérez Rodríguez
Director
ID Nº 5.169.389-2
Alejandro Jadresic Marinovic
Director
ID Nº 7.746.199-K
Antonio Büchi Buc
CEO
ID Nº 9.989.661-2
Report 2011
133
]
Consolidated
Financial
Statements
Report 2011
136
Independent
Auditor Report
Independent Auditor Report,
Dear shareholders and directors of Empresa Nacional de Telecommunicaciones S.A
We have undertaken an audit of the consolidated balance sheets for Empresa Nacional de Telecomunicaciones S.A. and its subsidiary companies, dated December 31, 2011 and 2010, and the corresponding consolidated statements for comprehensive income,
changes to equity and cash flows for the years ending on these dates. The preparation of the financial statements (including the
corresponding notes) is the responsibility of Empresa Nacional de Telecomunicaciones S.A. Our responsibility consists of expressing an opinion regarding the consolidated financial statements based on the audits we have undertaken.
In our opinion, the financial statements mentioned above present fairly and in all significant aspects, the financial position of
Empresa Nacional de Telecomunicaciones S.A. and its subsidiaries as of December 31, 2011 and 2010, together with the income
from their operations and cash flows for the years ending on these dates, in accordance with the International Financial Reporting
Standards (IFRS).
Alejandro Espinosa G.
Santiago, January 30, 2012.
KPMG Ltda.
KPMG Auditores Consultores LTDA., a Chilean limited liability company and an independant member firm of KPMG affiliates to
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
137
Report 2011
Our audits were carried out in accordance with generally accepted auditing standards in Chile. Those standards require that we
plan and undertake our work so as to obtain reasonable assurance as to whether the consolidated financial statements are free
from significant misrepresentations. An audit entails examining the evidence supporting the values and information disclosed in
the financial statements on the basis of tests. It also includes an evaluation of the accounting principles used and the significant
estimates made by the management of the Company, as well as an assessment of the general presentation of the consolidated
financial statements. We believe that our audits are a reasonable basis upon which to form our opinion.
ConsolidAted financiAl
stAtements_
EMPRESA NACIONAL DE TELECOMUNICACIONES S.A. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2011 and 2010
ASSETS
Report 2011
138
Number
Note
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Cash and cash equivalents
5
23,064,067
75,272,215
Other current financial assets
6
5,407,220
870,798
CURRENT ASSETS
Other current non-financial assets
7
16,754,397
13,145,025
Commercial debtors and other accounts receivable
8
251,229,640
236,011,842
Accounts receivable from related entities
9
722,752
469,192
Inventory
10
63,091,800
36,799,196
Current tax assets
14
5,465,298
17,108,315
365,735,174
379,676,583
Total Current Assets
NONCURRENT ASSETS
Other noncurrent financial assets
6
5,800,553
6,057,517
Other noncurrent non-financial assets
7
4,718,678
3,935,778
Noncurrent rights receivable
Intangible assets
8
5,324,234
2,807,389
11
31,118,433
32,665,098
Goodwill
12
45,895,283
45,821,474
Property, plant and equipment
13
1,056,555,054
978,457,143
Deferred tax assets
14
42,866,597
39,853,167
Total Noncurrent Assets
1,192,278,832
1,109,597,566
Total Assets
1,558,014,006
1,489,274,149
The attached notes, numbered 1–33, form an integral part of these Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
Number
Note
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
139
CURRENT LIABILITIES
Other current financial liabilities
15
18,584,041
14,570,686
Commercial accounts payable and other accounts payable
16
326,224,772
319,275,469
Other provisions
17
578,262
689,270
Current tax liabilities
14
7,951,010
201,105
Other current non-financial liabilities
18
40,923,365
41,634,759
394,261,450
376,371,289
Total Current Liabilities
NONCURRENT LIABILITIES
Other noncurrent financial liabilities
15
353,504,014
350,331,042
Other long-term provisions
17
5,123,356
4,001,616
Deferred tax liabilities
14
11,708,289
21,345,618
Noncurrent provisions for employee benefits
19
7,718,074
8,257,812
Other noncurrent non-financial liabilities
18
Total Noncurrent Liabilities
EQUITY
12,621,732
7,592,249
390,675,465
391,528,337
522,667,566
522,667,566
20
Issued capital
Cumulative earnings (losses)
310,971,878
261,715,066
Other reserves
(60,562,353)
(63,008,109)
Equity attributable to owners of the controller
773,077,091
721,374,523
Non-controlling stock
Total Equity
Total Liabilities and Equity
The attached notes, numbered 1–33, form an integral part of these Consolidated Financial Statements.
-
-
773,077,091
721,374,523
1,558,014,006
1,489,274,149
Report 2011
Liabilities and Equity
CONSOLIDATED INCOME STATEMENT
For the years ending December 31, 2011 and 2010
Income statement
Cumulative
Number
Note
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Revenue from ordinary
22
1,230,798,252
1,083,595,141
Other revenue
22
11,572,942
4,303,159
Expenditure for employee benefits
19
(125,278,220)
(112,119,823)
(269,798,674)
(233,199,472)
Cost of depreciation and amortization
140
Impairment losses (reversals), net
Report 2011
Other expenditure
22
Other profit (loss)
(38,803,907)
(29,542,543)
(568,806,105)
(503,413,628)
(1,456,948)
(1,493,117)
Financial revenue
22
3,059,293
1,381,288
Financial expenditure
22
(10,315,663)
(9,900,811)
Foreign exchange gains (losses)
24
(6,349,377)
1,296,277
Income from currency indexes
24
(5,295,078)
(3,337,075)
219,326,515
197,569,396
(38,559,856)
(24,598,187)
180,766,659
172,971,209
-
-
180,766,659
172,971,209
180,766,659
172,971,209
-
-
180,766,659
172,971,209
764,26
731,31
-
-
764,26
731,31
Earnings (losses) before tax
Revenue (expenditure) for income tax
14
Earnings (losses) from continued activities after tax
Earnings (Loss) from discontinued operations after tax
Earnings (losses)
Earnings (losses) attributable to shareholders with stock in controlling stockholder
equity and minority
Earnings (losses) attributable to holders of stock instruments in controlling shareholder equity
Earnings (losses) attributable to minority shareholders
Earnings (losses)
Earnings per share
Earnings per basic share
Earnings (losses) per basic share for continued operations
Earnings (losses) per basic share for discontinued operations
Basic earnings (losses) per share
CONSOLIDATED INCOME STATEMENT (Continued)
Income statement
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
180,766,659
172,971,209
1,618,714
(479,497)
Earnings (losses) for cash flow hedging
1,002,475
4,096,169
Other components of other consolidated income, before tax
2,621,189
3,616,672
(175,433)
(686,279)
Number
Note
CONSOLIDATED income statement
Earnings (losses)
Components of other consolidated income, before tax
Foreign currency translation
Earnings (losses) for foreign currency translation
141
Income tax related to components of other CONSOLIDATED income
Income tax related to cash flow hedging of other consolidated income
Other consolidated income
2,445,756
2,930,393
Total consolidated income
183,212,415
175,901,602
183,212,415
175,901,602
CONSOLIDATED income attributable to
Controlling owners
Non-controlling stock
Total consolidated income
-
-
183,212,415
175,901,602
Report 2011
Cash flow hedging
STATEMENT OF CHANGE IN STOCKHOLDER EQUITY
Other Reserves
Issued capital
Reserves for foreign exchange
currency
Reserves for
cash flow
hedging
Other reserves
Earnings
(cumulative
losses)
Equity attributable to controlling
owners
Non-controlling
stock
Total equity
Th.CLP$
Th.CLP$
Th.CLP$
Th.CLP$
Th.CLP$
Th.CLP$
Th.CLP$
Th.CLP$
522,667,566
(581,746)
(1,661,482)
(60,764,881)
261,715,066
721,374,523
-
721,374,523
Earnings (losses)
-
-
-
-
180,766,659
180,766,659
-
180,766,659
-
1,618,714
827,042
-
-
2,445,756
-
2,445,756
Consolidated income
-
-
-
-
-
18,212,415
-
183,212,415
Dividends
-
-
-
-
(131,509,847)
(131,509,847)
-
(131,509,847)
Increase (reduction) for transfers
and other changes
-
-
-
-
-
-
-
-
Total changes in equity
-
1,618,714
827,042
-
49,256,812
51,702,568
-
51,702,568
Final balance for current period
12/31/2011
522,667,566
1,036,968
(834,440)
(60,764,881)
310,971,878
773,077,091
-
773,077,091
Initial balance for previous
period 01/01/2010
522,667,566
(102,249)
(5,071,372)
(60,764,881)
204,122,838
660,851,902
-
660,851,902
Initial balance for current period
01/01/2011
CoNSOLIDATED income
Report 2011
142
CoNSOLIDATED income
Earnings (losses)
-
-
-
-
172,971,209
172,971,209
-
172,971,209
-
(479,497)
3,409,890
-
-
2,930,393
-
2,930,393
Consolidated income
-
-
-
-
-
175,901,602
-
175,901,602
Dividends
-
-
-
-
(115,378,981)
(115,378,981)
-
(115,378,981)
Increase (reduction) for transfers
and other changes
-
-
-
-
-
-
-
-
-
(479,497)
3,409,890
-
57,592,228
60,522,621
-
60,522,621
522,667,566
(581,746)
(1,661,482)
(60,764,881)
261,715,066
721,374,523
-
721,374,523
Total changes in equity
Final balance for previous period
12/31/2010
CONSOLIDATED CASH FLOW STATEMENT
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Amount charged to customers
1,418,482,609
1,244,486,693
Payments to suppliers
(694,217,932)
(546,939,360)
Payments to and on behalf of employees
(131,338,793)
(105,102,929)
(53,373,227)
(61,226,536)
Number
Note
Other payments for operating activities
Amounts received for interest classified as operating
1,263,873
1,409,859
Tax on earnings reimbursed (paid)
(30,701,356)
(41,438,730)
Net cash flows used in operating activities
510,115,174
491,188,997
(3,565,222)
(8,078,310)
Cash flows used to obtain control of subsidiaries
Amounts received from the sale of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Dividends received
1,819,380
636,328
(407,532,346)
(321,172,106)
(3,820,678)
(5,128,947)
1,217
981
Interest received
3,059,293
970,282
Government subsidies
5,193,680
15,220,600
Other cash entries (outgoings)
Net cash flows used in investment activities
Amounts proceeding from long-term loans
Amounts proceeding from short-term loans
Loan payments
Payments of liabilities for financial leases
Dividends paid
Interest paid
Other cash entries (outgoings)
Net cash flows used in financing activities
Net increase (decrease) in cash and cash equivalents
Effects of foreign currency variations on cash and cash equivalents
-
39,785
(404,844,676)
(317,511,387)
102,536,000
-
448,197
19,953,797
(106,277,554)
(40,286,051)
(1,403,422)
(2,974,161)
(140,527,007)
(106,391,186)
(9,211,469)
(9,018,815)
(4,210,322)
(23,074,929)
(158,645,577)
(161,791,345)
(53,375,079)
11,886,265
1,166,931
22,808
Cash and cash equivalents at start of period
75,272,215
63,363,142
Cash and cash equivalents at end of period
23,064,067
75,272,215
143
Report 2011
DIRECT CASH FLOW STATEMENT
notes to the consolidated
financial statements_
1. COMPANY INFORMATION
a) Entel Group
Empresa Nacional de Telecomunicaciones S.A. (Entel–Chile S.A.), is constituted and domiciled in the Republic of Chile, with Tax ID 92.580.000-7. Its head office is
Avenida Andrés Bello 2687, piso 14, Las Condes, Santiago, Chile.
144
This is the parent company of the companies of the Entel Group included in these consolidated financial statements.
Report 2011
It is a public limited company, subject to regulation by the Chilean Securities and Insurance Supervisor, with which it is registered under number 0162. Its shares
are listed in the Register of Securities and traded on the national stock market.
The controlling shareholder of Entel–Chile S.A. is Altel Ltda. (Tax ID 76.242.520-3), which owns 54.76% of currently issued stock. Altel Ltda. is 99.99% controlled by
Almendral Telecomunicaciones S.A. (Tax ID 99.586.130-5) and 0.01% by Almendral S.A. (Tax ID 94.270.000-8).
The subsidiary companies included in the consolidated financial statements are domiciled both in Chile and abroad, and details are provided in note 3a.
Subsidiaries based in Chile are represented by private limited companies that are not subject to regulation by the Chilean Securities and Insurance Supervisor; as
such, their shares are not traded or registered with the Registry of Securities.
However, as holders of public telecommunications concessions and in line with legal requirements, the subsidiaries Entel PCS Telecomunicaciones S.A., Micarrier
Telecomunicaciones S.A., and Transam Telecomunicaciones S.A. are registered in the Chilean Securities and Insurance Supervisor Special Register, with registration numbers 33, 247 and 232, respectively. Companies registered in this special register are subject to the same regulations as public limited companies in terms
of market information and circulation, except for the requirement to provide intermediate financial statements on a quarterly basis.
The Group’s workforce totaled 7,009 as of December 31, 2011 and averaged 6,792 throughout 2011.
b) Business Activities
The activities undertaken by the companies that make up the Group involve mobile telecommunication services, including voice, value added services, data, broadband, and mobile Internet. The companies also provide wireline services for the provision of integrated solutions of data network services, local telephone services,
Internet access, long distance public telephone services, IT services (data center, business process outsourcing, and business continuity), network leasing, and
wholesale traffic. The Group also provides call center services both for the enterprise market and its subsidiary companies.
These activities are primarily undertaken in Chile. Activities outside of Chile are carried out by two companies operating in Peru that provide wireline services and
call center services.
2. BASIS FOR THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
a) Declaration of Compliance
The consolidated financial statements, dated December 31, 2011, have been prepared in line with the International Financial Reporting Standards (IFRS) published
by the International Accounting Standards Board (IASB).
On the date on which these consolidated financial statements were published, the IASB had issued the following directives, each with mandatory adoption starting
from the annual periods indicated for each case:
Standards and amendments
Application required by:
NEW IFRS
IFRS 9 – Financial Instruments
Annual periods starting February 1, 2015
IFRS 10 – Consolidated Financial Statements
Annual periods starting January 1, 2013
IFRS 11 – Joint Arrangements
IFRS 12 – Disclosure of Interests in Other Entities
IFRS 13 – Fair Value Measurement
145
AMENDMENTS TO IFRS
Presentation of Other Components of Comprehensive Income
Annual periods starting July 1, 2012
IAS 12 – Income Taxes
Deferred Tax: Recovery of Underlying Assets
Annual periods starting July 1, 2012
IAS 19 – Employee Benefits
Elimination of Corridor Approach for Defined Benefits
IAS 32 – Financial Instruments Presentation
Offsetting Financial Assets and Financial Liabilities
IRFS 1 – First-time adoption of IFRS
(i) Removal of Fixed Dates for First-time Adopters
(ii) Severe Hyperinflation
Amendment to IFRS 7
Financial instruments: Information to Disclose
Disclosures of Transfers of Financial Assets
At the time of writing, no decision has been made to bring forward the adoption of any of these regulatory changes. Furthermore, it is estimated they will not have
a significant impact on the Group’s consolidated financial statements for the initial period in which their application becomes compulsory.
The consolidated financial statements for Entel Chile S.A. for the year ending December 31, 2011, were approved and authorized for publication at the board meeting held on January 30, 2012.
Report 2011
IAS 1 – Presentation of Financial Statements
b) Measurement Bases
The consolidated financial statements have been prepared based on historical cost, except for the following essential items in the balance sheet:
_Derivative financial instruments measured at fair value
_Interest accruing loans measured using amortized cost
_Staff obligations for specific post-employment benefits measured at present value and taking into account actuarial variables.
c) Working and Reporting Currency
Figures in these financial statements and accompanying notes are expressed in thousands of Chilean Pesos (Th.CLP), the Group’s working currency.
d) Use of Estimates and Accounting Judgments
Estimates determined based on the best information available at the close of each financial year have been used in the preparation of the consolidated financial
statements. The estimates affect the valuation of certain assets, liabilities, incomes, and cash flows, and hence there may be significantly affected when new events
result in variations to any assumptions made and other sources of uncertainty assumed on the date.
146
The main estimates are:
Report 2011
_Actuarial assumptions considered when calculating employee separation obligations
_The valuation of assets and goodwill originating from the acquisition of companies that can affect the determination of losses due to impairment in their value.
_The useful life of property, plant and equipment, and intangible assets.
_Assumptions made when determining the fair value of financial instruments.
_Assumptions regarding the generation of future taxable revenue, whose tax would be deductible from assets as deferred tax.
_In establishing the cost of decommissioning installations.
e) Changes to Accounting Policies
Accounting principles have been consistently applied throughout the course of the financial years covered by these consolidated financial statements.
3. SUMMARY OF ACCOUNTING POLICIES
a) Consolidation Bases
The financial statements of subsidiaries are included in the consolidated financial statements from the date control starts until the date it ends.
Control exists when Entel S.A., has a direct or indirect majority of voting rights or has the power to determine (also through agreements) the financial and operating
policies of a company to derive profit from its activities.
In the preparation of these consolidated financial statements, the assets, liabilities, revenues, and costs for the consolidated companies are consolidated line for
line. All direct and indirect subsidiaries of Entel S.A. are 100% controlled and as such there are no non-controlling shares in the consolidated financial statements
of the Entel Group.
For consolidation purposes, significant transactions and balances between consolidated companies have been removed in addition to any balances owed.
The book value of the investment in each subsidiary is offset against its equity, after adjustment to its fair value on the date control was acquired (where applicable). Goodwill from intangible assets is recorded on this date, as described further on, while any earnings from the purchase of a business or negative goodwill are
recorded in the comprehensive income statement.
The assets and liabilities of consolidated foreign subsidiaries expressed in currencies other than Chilean Pesos are converted using the exchange rate on the date of
the statement; revenue and costs are converted at the average exchange rate for the period covered by the financial statements. Exchange rate variations resulting
from this method are classified under equity until disposal of the investment.
147
The subsidiary companies included in the consolidated financial statements are domiciled in Chile and abroad:
Report 2011
The extension provided by IFRS 1 (First-time adoption) for annulling exchange rate differences accumulated at the date of transition to IFRS was not adopted.
a) Summary of accounting policies (continued)
Tax ID
Report 2011
148
Company name
Country of origin
Working
Currency
Percentage of stock
12/31/2011
12/31/2010
Direct
Indirect
Total
Total
99.999
0.001
100.000
100.000
CLP
-
100.000
100.000
100.000
CLP
99.990
0.010
100.000
100.000
CHILE
CLP
91.420
8.580
100.000
100.000
CHILE
CLP
90.000
10.000
100.000
100.000
ENTEL TELEFONIA LOCAL S.A.
CHILE
CLP
99.000
1.000
100.000
100.000
MICARRIER TELECOMUNICACIONES S.A.
CHILE
CLP
99.990
0.010
100.000
100.000
96.553.830-5
SATEL TELECOMUNICACIONES S.A.
CHILE
CLP
99.900
0.100
100.000
100.000
96.672.640-7
ENTEL SERVICIOS EMPRESARIALES S.A.
CHILE
CLP
99.985
0.015
100.000
100.000
79.637.040-8
SOC.DE TELECOMUNICACIONES INSTABEEP LTDA
CHILE
CLP
99.990
0.010
100.000
100.000
96.682.830-7
CIENTEC COMPUTACION S.A.
CHILE
CLP
-
-
-
100.000
96.652.650-5
TRANSAM COMUNICACIÓN S.A.
CHILE
CLP
-
100.000
100.000
100.000
96.833.480-8
WILL S.A.
CHILE
CLP
-
100.000
100.000
100.000
0-E
AMERICATEL PERU S.A.
PERU
PEN
46.570
53.430
100.000
100.000
0-E
SERVICIOS DE CALL CENTER DEL PERÚ S.A.
PERU
PEN
0.004
99.996
100.000
100.000
0-E
EUSA WHOLESALE INC.
USA
CLP
-
100.000
100.000
100.000
0-E
ENTEL INTERNACIONAL B.V.I. CORP.
BRITISH VIRGIN ISLANDS
CLP
100.000
-
100.000
100.000
96.806.980-2
ENTEL PCS TELECOMUNICACIONES S.A.
CHILE
CLP
76.479.460-5
ENTEL COMERCIAL S.A.
CHILE
96.561.790-6
ENTEL INVERSIONES S.A.
CHILE
96.554.040-7
ENTEL SERVICIOS TELEFONICOS S.A.
96.563.570-K
ENTEL CALL CENTER S.A.
96.697.410-9
96.548.490-6
The subsidiary Cientec Computación S.A. was taken over by Entel S.A. on August 1, 2011 by means of a merger by absorption that included the totality of all assets,
liabilities, rights, and obligations, and as such did not cause changes in equity at Group level. Similarly, the merger has not had any impact on consolidated income
and cash flow.
b) Transactions and Balances in Foreign Currencies
Transactions made by Entel S.A. and its subsidiaries in a different currency than their working currency are treated as foreign currency transactions and recorded
using the exchange rate on the date of the transaction.
The balances of monetary assets and liabilities denominated in foreign currencies are presented using the values of the exchange rates at the end of each financial
year. The variation calculated between the original value and the value at the end of the period is allocated to income under Foreign Currency Translation.
Assets and liabilities that should be expressed at fair value (essentially those arising from derivative financial contracts) are exempt from the above. The differences
between the exchange rate at the end of the period and the fair value of these contracts are also allocated against income under Foreign Currency Translation, except
for cash flow hedge contracts whose differences are allocated against equity.
b) Transactions and Balances in Foreign Currencies, Continued
Assets and liabilities in foreign currencies or expressed in currency indexes have been converted using the following rates:
Exchange Rates
Rate at close of period
12/31/2011
CLP$
12/31/2010
CLP$
US Dollar
USD
519.20
468.01
Euro
EUR
672.97
621.53
Nat. Curr. Idx
UF
22,294.03
21,455.55
Peruvian Sol
PEN
193.27
166.79
c) Financial Instruments
For valuation purposes, the group classifies its financial assets under the following categories: financial assets at fair value with changes in income; accounts receivable; and loans. The classification depends on the purpose for which the financial assets are obtained.
The assets are dropped upon their expiry or upon expiry of contractual rights to their cash flows.
_Financial Assets at Fair Value with Changes in Income
Financial assets at fair value with changes in income are financial assets held for trading. The Group companies use this category for derivative instruments that
do not comply with the requirements for the application of hedge accounting. Contracts classified as assets at the end of the period are presented on the balance
sheet under Other Financial Assets, whereas liabilities are presented under Other Financial Liabilities.
_Accounts Receivable and Loans
These correspond to financial assets with fixed determinable payments that do not have a price on the active market. These assets are initially recorded at fair
value plus directly attributable transaction costs. After being recorded in this way, they are valued at their amortized cost using the effective interest rate method,
subtracting losses from impairment.
Commercial accounts receivable are registered using invoice values and making the corresponding adjustment where there is evidence that payment from the
client is at risk (impairment).
Short-term commercial accounts are recorded at current value without discounting to present value. The company has determined that the amortized cost calculation does not differ from the invoice value since the transaction does not have significant associated costs.
_Cash and Cash Equivalents
Covers highly liquid and extremely short-term holdings or investments where the risks of a change in value are not deemed significant. In addition to cash balances
and those held in current accounts it also includes the following: short-term deposits in the financial market; placements for fixed income mutual funds paid in
149
Report 2011
Financial Assets
installments; and operations with buyback and resale options with an original expiry of three months or less. These assets are recorded at their nominal value or
amortized cost, depending on their nature, and recording changes in their values under income. Their valuation includes interest and accrued adjustments at the
end of the financial year.
Financial Liabilities
In the first instance, the Group records issued debt securities on the date they originate. All other financial liabilities (including liabilities at fair value with changes
in income) are initially recorded on the date contracted, this being the date on which the Group becomes related by the instrument’s contractual provisions.
The Group classifies non-derivative financial liabilities under Other Financial Liabilities. These assets are initially recorded at fair value plus any directly attributable
transaction costs. After this initial recording, financial liabilities are valued at their amortized cost using the effective interest method.
Other financial liabilities include loans and obligations, the use of overdraft facilities, and commercial accounts payable and others.
Financial liabilities covered by derivative instruments designated for managing exposure to variations in cash flows (cash flow hedges), are measured at their
amortized cost in line with IAS 39.
Derivatives financial instruments
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150
The Entel Group contracts derivative financial instruments to cover its exposure to foreign currencies and interest rates.
In the event that implicit derivative contracts coexist in certain contracts, these are separated from the principal contract and accounted for separately. This procedure is applied if the financial conditions and risks of the principal contract and the implied derivative are not closely related, if an independent instrument with
similar conditions as the implied derivative would meet the definition of a derivative, and if the combined instrument is not measured at fair value with changes in
income.
In line with IAS 39, financial derivative instruments only qualify for hedge accounting if:
* at the start of the hedge, the hedge relationship is formally designated and documented
* it is expected the hedge will be highly effective
* its effectiveness can be reliably measured
* the hedge is highly effective for all periods in which the financial statements are reported for which it is designated
All derivatives are measured at fair value in line with IAS 39. When a derivative financial instrument qualifies for hedge accounting, the following accounting
procedures apply:
Cash Flow Hedge – When a derivative financial instrument is classified as a hedge against exposure to the variability of cash flows for an asset
*or liability,
or a highly probable planned transaction, the effective proportion of any profit or loss from the derivative financial instrument is directly
recorded under the equity reserve (Cash Flow Hedge Reserve). The cumulative income is removed from equity and recorded under income when the
hedged transaction affects incomes. The earnings or losses associated with the ineffective part of the hedge are immediately recognized under income.
Where hedge operations are no longer probable, the cumulative earnings or losses from the equity reserve are immediately recorded under income.
Where hedges may follow risk management strategies without necessarily satisfying the requirements and tests for effectiveness required by the accounting regulations for the application of hedge accounting, variations in the values of the instruments are allocated to income.
d) Inventory
Goods destined to be sold are valued using the lowest of their weighted average cost and net sale value.
Mobile telephone units for prepaid customers are included in this classification. In this case, possible subsidies when transferring equipment to the customer are
allocated against income as sales costs at that point.
e) Impairment
Non-Derivatives Financial Assets
A financial asset not measured at fair value with changes in income is evaluated for each reporting date to determine if there is objective evidence of impairment.
A financial asset is compromised if there is proof that a loss-causing event has occurred since the asset was first recorded and the event has a negative effect on
the estimated cash flows of the asset for the future and can be reliably estimated.
Differentiated percentages determined by factors such as the age of the debt and possible collection handling costs for different levels of customers are used to
calculate the impairment of accounts receivable. Similarly, a distinction is made between current debts, and renegotiated and documented debts.
151
The discounted values of accounts receivable and loans are not considered when calculating their impairment since they will be paid in the short term, and as such
the difference between their current value and the discounted value is not significant.
Non-Financial Assets
The book value of the Group’s non-financial assets, in contrast to inventories and deferred tax assets, is revised for each date on which the financial statements are
reported to determine if there are any signs of impairment. Where evidence exists, the recoverable value of the asset is then estimated. For goodwill and intangible
assets with an indefinite useful life or still unavailable for use, the recoverable value is calculated at the end of each year. The loss due to impairment is recorded
when the book value of an asset exceeds the estimated recoverable value.
The recoverable value of an asset is the greater of its use value and its fair value minus sales costs. In order to evaluate use value, current value is subtracted from
estimations of future cash flows using a net discounting rate that reflects current market variations to the time value of money and the specific risks of the asset.
In order to verify impairment, assets that cannot be individually tested are grouped as part of a smaller group of assets that generate incoming cash due to their
continued operation and are independent from payments from other assets. The test, as a limit to determine use value, is applied to the business segment in order
to calculate impairment of goodwill.
Losses from impairment are allocated to the income for the period. Reversals are not applied if they correspond to goodwill. In terms of other assets, losses from
impairment recorded in previous financial years are evaluated for each date of reporting when there are signs the loss has decreased or no longer exists. A loss
from impairment is reverted when there has been a change in the estimates used to determine the recoverable value.
A loss from impairment is reverted only insofar as the accounting value of the asset does not exceed the book value that has been determined, net of depreciation
or amortization, without considering the loss of the recorded value.
Report 2011
The factors mentioned above are used to determine estimates for billed services.
f) Property, Plant and Equipment
The acquisition value is recorded, minus cumulative depreciation and the cumulative value of losses from impairment in value.
The acquisition value considers the price of the acquisition of goods and services, including irrecoverable duties and customs obligations. Similarly, placement and
commissioning costs are also included until reaching operational conditions, in addition to estimates of the costs of dismantling and withdrawal.
Net interest for loans directly related to financing construction work accrued during the period of execution until the date on which the work is available for use is
capitalized. This does not apply to projects with a development period of less than six months.
g) Depreciation of Property, Plant and Equipment
Depreciations are applied linearly, considering the useful life of each type of asset in line with technical studies. These studies take into account both an annual study
of technological and commercial developments that make change recommendable, and the final residual value of the assets when decommissioned.
Procedures are also applied to evaluate any signs of depreciation in the value of assets. When the value of assets exceeds their market value or capacity for the
generation of net revenue, adjustments are made for depreciation and allocated against income for the period.
Telephone equipment provided to customers with postpaid mobile telephony services without transfer of ownership is depreciated for the average estimated length
of the relationship with these customers.
152
Report 2011
h) Financial Leasing
Leasing contracts in which the risks and returns of a property or asset are substantially transferred to the Group’s companies are recorded as leased assets.
Under such circumstances consideration is given to factors such as the transfer of the asset at the end of the contract, the value of the final purchase option, the
proportion of the economic life of the asset covered by the term of the contract, and the degree of equivalence between the present value of the minimum contract
payments and the fair value of the asset. The valuation is given by the present value of the agreed installments and the value to be paid to exercise the purchase
option. Depreciation of these assets is carried out in line with the general regulations for property, plant and equipment.
Assets are only legally acquired upon exercising the purchase option and thus cannot be freely disposed of in the meantime.
Assets leased under contracts with the aforementioned properties are considered as sold for accounting purposes, with the consequent reduction in inventory.
Income from these transactions is determined based on the present value of the receivable installments with respect to the acquisition or construction value of the
assets sold.
i) Intangible Assets
This category includes usage rights for fiber optic cable capacity (IRUs), the costs of obtaining licenses and operating concessions, in addition to easements and
other usage rights in favor of Group companies.
IRUs are linearly amortized and allocated against costs during the period of the respective agreements.
Licenses and concessions are amortized according to the lower of the estimated period of operation and the period of the award, which can range from 4 to 10 years,
with easements for the period in which the contract remains in force being granted for a maximum of 20 years.
Costs for the acquisition of software are represented as assets and amortized every 4 years.
j) Goodwill
In the case of the complete or partial acquisition of company rights, the acquisition method is applied, establishing the fair value of the assets and liabilities identified for the acquired company, registering any increases values for the acquisition as goodwill. This value is subject to testing for impairment in value at the close
of each financial year to record possible losses of this nature.
k) Income Tax and Deferred Taxes
The cost of income tax is determined based on the financial statements.
Temporary tax differences between the financial and tax bases are recorded as noncurrent assets or liabilities as applicable. Independent of the estimated recovery
period, these values are recorded at current value without being discounted to present value.
Deferred tax assets and liabilities are recorded in line with the tax rates effective during the periods that they are expected to be realized or settled.
l) Employee Benefits
This covers compensation for years of service payable to employees with a permanent contract with Entel–Chile S.A. and who are members of the mutual corporation with eight years of continuous membership.
153
These obligations are accounted for at present value, discounting long-term interest rates and using actuarial forecasts of staff turnover, life expectancy, and salary
projections for prospective beneficiaries.
Report 2011
_Defined Benefits Plan (Post-Employment Benefits)
To determine the net value of the liability recorded, the fair value of the cumulative salaries of employees is calculated in line with payments that must be made to
certain funds according to current agreements.
Changes in the obligation due to accruals associated with increases in the number of attributable periods, new or leaving employees, and earnings or losses due to
actuarial effects are allocated against remuneration costs, whereas those for the accrual of implied interest are allocated against financial income.
_Severance Benefits
Severance pay, in contrast to post-employment benefits, is recognized as a cost when the Group has a clear commitment, without the possibility to withdraw the
offer, to a formal and detailed plan upon termination of employment before the normal date of retirement or to pay compensation for termination as part of an offer
to encourage voluntary retirements. Where benefits are due more than 12 months after the date of reporting, they are adjusted to present value.
_Short-Term Benefits
The values of obligations for short-term employee benefits are not discounted and are recorded as costs when the corresponding services are provided. A liability is
recorded for the value expected to be paid in short-term cash bonuses or share plans for benefits where the Group has a current legal or implied obligation to pay
out the sum as a result of past services provided by the employee and the obligation can be reliably estimated.
The cost of employees vacations are accounted for in the financial year in which the right is accrued, independent of the year in which it is exercised.
m) Revenue
Revenue is recorded based on the criteria of accrual, that is to say, upon the right to receive values or the obligation to make a payment. As such, the date of the
delivery or receipt of goods or services is considered, regardless of when the corresponding cash flow will be received (in advance, simultaneously, or within a given
term).
With respect to revenue, the following specific policies are observed for the cases set out:
_Aggregate supplies The components of supplies are bundled as part of commercial packages that determine the properties of each package.
Based on this information, revenue for the bundle is distributed to each component, applying the corresponding individual revenue recognition regulations.
Bundled sales that cannot be broken down are treated as a single transaction.
In the event that only one or some of the elements can be confidently assigned a value, the residual value is attributed to the remaining elements.
The value assigned to a given component is limited to the price of the transaction for its sale not subject to the delivery of other items.
_Equipment sales In line with the general regulations, revenue is recorded when the equipment is passed to the customer.
154
Revenue received for equipment directly received and which, technically or contractually, can be used only for services provided by the company, is deferred and
recorded when the contract is expected to come to an end.
Report 2011
Where the sale includes a complementary activity (installation, configuration, set-up, etc.) the sale is recorded upon satisfactory receipt by the customer.
For equipment provided without transfer of ownership (free loan, loan, lease etc.), no sales revenue is recorded. Equipment meeting this condition remains included
as inventory assets in use and is subject to the corresponding depreciation.
_Access charges revenue Revenue from access charges is deferred and recorded as revenue throughout the period for which the contract is valid, or the
expected customer retention period, whichever of the two is smaller.
The customer retention period is estimated based on historical experience, churn, or an understanding of market behavior.
Connections where the direct cost of carrying out work is greater than or equal to the charge made to the customer are exempt from the previous procedure. In
such cases, revenues received for connection charges are recorded when the customer is connected in order to maintain symmetry between revenue and costs.
Connection costs take into account the following: installation work and the management of orders placed with third parties, commissions made to distributors, and
the cost of SIM cards.
Connections that represent an independent transaction that cannot be rescinded and is not subject to the obligatory provision of other assets and services are
excluded from the general procedure.
_Customer Loyalty Programs The award of future benefits, with respect to service usage levels or current and past purchases. Any revenue received
should be distributed based on the fair value of the services already provided and those to be provided in the future; revenue assigned to the latter should be handled as projected revenue for future sales. In addition to this, provision is made for marginal costs associated with the goods and services to be provided fully or
partially free of charge.
Isolated campaigns for the introduction of new products or the relaunch of existing ones are excluded when their duration is less than three months and they do not
represent more than 1% of total sales in the last 12 months.
Such programs include: calling credit, product discounts, benefits for meeting targets, and the accumulation of redeemable points for goods or services provided
both by the company and third parties.
In cases where expiry or cancellation clauses come into effect, the respective unused balances are transferred to revenue.
These procedures are only applied when it is possible to make reliable estimates of benefits obtained by customers.
_Sales discounts Revenues are recorded net of any discounts provided to customers.
_Third Party Sales Where the company acts as a representative, agent, or dealer for the sale of goods and services produced by other agents, the net revenue
from the activities is recorded, i.e. the company only records the margin received for these services that represents the commission or share received.
To be classed as a representative, consideration is given to: if the product is explicitly sold under the supplier’s name; if the risks and responsibilities associated with
the product are assumed; and setting the price.
_Prepayment of Mobile Services Revenue received from customers for the prepayment of mobile services through cards or other means is recorded
under income in the month in which the users make use of the services for which the payment is destined or in which the prepayment expires, whichever occurs first.
_Services Spanning Accounting Periods The provision of services whose activity spans more than one accounting period is recorded as a percen-
155
n) Financing Expenses
The initial costs for commissioning, consultancy, and taxes for contracting credit are handled using the amortized cost method. Using this method, these costs form
part of the effective interest rate and amortization is consequently determined in line with the contractual interest applicable to the credit.
o) Provisions
Liabilities are recognized for all legal obligations for third parties, derivative transactions made, or future events with a high probability of generating payment flows.
These provisions are recorded insofar as their values can be determined in line with the risks identified, and based upon best estimates. The value is discounted
where it is estimated the effect of the time value of money is significant.
p) Dividends
Dividends to be paid to third parties are reported as a change in net equity for the year the obligation for their distribution arises, either because they are declared
at the shareholders meeting or because they correspond to a legal obligation for minimum dividend payments.
Report 2011
tage at the close of the period. This value is determined in line with the percentage of consumables supplied with respect to the budget.
q) Financial Information by Segment
An operating segment is a component of the Group that conducts business activities for which it may receive ordinary revenue and incur costs, including revenue
and costs for transactions with any other components of the Group. All income from operating segments is periodically reviewed by Group executive management
to determine the resources to assign to the segment and evaluate its performance.
Reported income for segments includes elements directly attributable to the segment, in addition to those which can be fairly allocated to it.
Capital expenditure for a segment (capex.) is the total expenditure incurred during the year for the acquisition of property, plant and equipment, and intangible
assets.
r) State Subsidies
State subsidies for financing investments are allocated at the lower of the cost of acquisition or construction for the associated assets.
s) Revenue and Access charge
Report 2011
156
Values accrued for or against Group companies are recorded based on the agreements and measurements for traffic switched with other operators, both nationally
and internationally.
4. FINANCIAL ASSETS AND LIABILITIES
a) Determination of Fair Values
Certain of the Group’s accounting policies and disclosures require the calculation of fair values for both financial and non-financial assets and liabilities. Fair values
are calculated for measurement and/or disclosure based on the following methods.
Derivatives Financial Instruments
The fair value of derivatives contracts not quoted on an active market is obtained from the difference between cash flows from rights and obligations arising from
the contracts, adjusted according to the corresponding interest rate.
The rates used for discounting are risk free and zero coupon, with the Libor rate used for dollars.
For a currency forward contract, this corresponds to the difference between the value of the currency to be purchased according to the contract, discounted at the
rate of the dollar for the remaining period and expressed in pesos according to the exchange rate at the close of the accounting period, minus the debt in pesos
agreed in the contract discounted at the valid rate for pesos for the remaining period of the contract.
For contracts to hedge against exchange and interest rates (CCS), it is determined by the difference in flows, including notional capital, discounted from each contract component.
Non-Derivatives Financial Instruments
The fair value used for the purposes of disclosures is calculated based on the present value of future capital and cash flows from interest, discounted at market
interest rates at the close of the accounting period.
For financial leasing, both as leasing party and lease holder, the interest rate is determined by referring to the current market rates for leasing agreements of a
similar nature.
In terms of current corporate assets and liabilities, their fair value is deemed to be the same as their present value, and they are thus are handled as short-term
flows.
Non-Derivatives Financial Liabilities
The fair value calculated for the purposes of disclosure is calculated based on the present value of future capital and cash flows from interest, discounted at the
market interest rate on the date of reporting. For financial leasing, the market interest rate is calculated by referring to similar leasing agreements.
b) Fair Value Hierarchies
_Level 2: Inputs that differ to the quoted prices included in level 1 and are observable for assets or liabilities, either directly (i.e. as a price) or indirectly (i.e. derived
from a price).
_Level 3: Inputs for assets or liabilities not based on observable market information (non-observable inputs).
The following table shows the total values of assets and liabilities for financial instruments, measured and reported at fair value:
HIERARCHY OF FAIR VALUES
12/31/2011
Level 2
Th.CLP$
12/31/2010
Level 2
Th.CLP$
4,509,615
8,139
Non-hedge derivatives
15,799,808
14,116,323
Hedge derivatives
33,994,498
56,994,899
Assets
Liabilities
Report 2011
157
The different levels are defined as follows:
_Level 1: Quoted (without adjustment) prices in active markets for identical assets or liabilities.
c) Categories of Financial Assets and Liabilities
The following table shows the different categories of financial assets and liabilities, comparing the values recorded in the accounts at the close of each accounting
period to their respective fair values
CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
12/31/2011 in Th.CLP$
At fair value
Note
with change
in income
- negotiable
Hedge
derivatives
Loans and
accounts
receivable
Other
financial
liabilities
Currency or
Adjustment
Unit
Total
at accounting
value
Total
at fair
value
-
-
23,064,067
-
CLP/USD/PEN
23,064,067
23,064,067
Assets
5
Other financial assets
6
Debtors for financial leasing
Derivatives
Other
4,824,425
-
UF
4,824,425
4,714,429
-
-
-
USD
4,509,615
4,509,615
-
-
1,873,733
-
CLP
1,873,733
1,873,733
251,229,640
Commercial debtors and others
8
-
-
251,229,640
-
CLP/USD/PEN
251,229,640
9
-
-
722,752
-
CLP
722,752
722,752
286,224,232
286,114,236
312,409,700
312,172,486
10,831,165
4,509,615
281,714,617
Liabilities
Other financial liabilities
15
Interest accruing loans
Report 2011
-
Total assets
158
4,509,615
-
Creditors for financial leasing
Derivatives
Commercial accounts payable and other
Total liabilities
16
-
-
312,409,700
-
-
-
9,884,049
9,884,049
15,799,808
33,994,498
-
-
49,794,306
49,794,306
-
-
-
326,224,772
326,224,772
326,224,772
15,799,808
33,994,498
648,518,521
698,312,827
699,022,729
CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
12/31/2010 in Th.CLP$
At fair value
Note
with change
in income
- negotiable
Assets
Hedge
derivatives
Loans and
accounts
receivable
Other
financial
liabilities
Currency or
Adjustment
Unit
Total
at accounting
value
Total
at fair
value
CLP/USD/PEN
75,272,215
75,272,215
-
UF
5,134,028
5,797,623
- negotiable
5
6
-
Derivatives
8,139
8
9
Total assets
75,272,215
-
5,134,028
-
-
-
USD
8,139
8,139
-
1,786,148
-
CLP
1,786,148
1,786,148
-
-
236,011,842
-
CLP/USD/PEN
236,011,842
236,011,842
-
-
469,192
-
CLP
Other
Commercial debtors and others
-
8,139
318,673,425
469,192
469,196
318,681,564
319,345,163
159
Liabilities
15
-
-
-
282,814,590
282,814,590
279,076,263
-
-
-
10,975,916
10,975,916
12,437,442
14,116,323
56,994,899
-
-
71,111,222
71,111,222
-
-
-
319,275,469
319,275,469
319,275,469
14,116,323
56,994,899
613,065,975
684,177,197
681,900,396
Derivatives
Total liabilities
16
Report 2011
Other financial liabilities
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents is composed of the following:
12/31/2011
Th.CLP$
Residual cash
12/31/2010
Th.CLP$
72,757
440,447
Bank account balances
6,423,113
4,723,985
Short-term deposits
8,419,033
65,236,149
Central bank placements
7,752,676
4,870,306
396,488
1,328
23,064,067
75,272,215
CLP
21,245,742
73,377,594
USD
1,023,299
1,045,108
Other cash and cash equivalents
Total
Total by Currency
PEN
785,715
836,143
EUR
9,311
13,370
Total
23,064,067
75,272,215
Report 2011
160
Short-term deposits originally valid for less than three months are registered at their amortized cost. The breakdown as of December 31, 2011 and 2010, is as
follows:
Institution
Currency
Date
placement
Date
expiry
Days
Value
Th.CLP$
Days
accrued
Interest
accrued
Th.CLP$
Total
12/31/2011
Th.CLP$
Banco BBVA
CLP
12/27/11
01/09/12
13
2,000,000
4
1,307
2,001,307
Banco Corpbanca
CLP
12/27/11
01/03/12
7
2,000,000
4
1,200
2,001,200
Banco HSBA
CLP
12/30/11
01/06/12
7
2,334,000
1
366
2,334,366
Banco Santander
CLP
12/30/11
01/06/12
7
1,438,000
1
220
1,438,220
Banco Santander
CLP
12/03/11
01/02/12
30
52,759
28
212
52,971
Banco de Credito del Perú (BCP)
PEN
12/27/11
01/03/12
7
75,375
4
33
75,408
Interbank
PEN
12/27/11
01/03/12
7
38,655
4
16
38,671
PEN
12/29/11
01/03/12
5
38,654
2
8
38,662
PEN
12/29/11
01/05/12
7
342,088
2
75
342,163
PEN
12/30/11
01/09/12
10
96,055
1
Total
8,415,586
10
96,065
3,447
8,419,033
Currency
Date
placement
Date
expiry
Days
Value
Th.CLP$
Days
accrued
Interest
accrued
Th.CLP$
Total
12/31/2010
Th.CLP$
Banco de Chile
CLP
11/18/10
01/11/11
54
3,180,000
43
13,674
3,193,674
Banco de Chile
CLP
12/06/10
02/01/11
57
4,479,103
25
11,571
4,490,674
Banco de Crédito Inversiones
CLP
12/15/10
02/21/11
68
2,400,000
16
4,224
2,404,224
CLP
12/27/10
03/01/11
64
2,420,605
4
1,130
2,421,735
CLP
12/27/10
03/01/11
64
2,000,000
4
933
2,000,933
CLP
12/28/10
03/24/11
86
4,216,856
3
1,560
4,218,416
CLP
12/28/10
03/28/11
90
4,200,000
3
1,554
4,201,554
Banco Santander
CLP
12/01/10
01/24/11
54
2,000,000
30
6,200
2,006,200
Banco Santander
CLP
12/14/10
02/15/11
63
4,300,000
17
8,041
4,308,041
Banco Santander
CLP
12/28/10
03/28/11
90
3,333,000
3
1,200
3,334,200
Banco Santander
CLP
12/30/10
01/29/11
30
50,000
1
574
50,574
Banco Security
CLP
12/09/10
01/24/11
46
1,876,000
22
4,265
1,880,265
Banco Security
CLP
12/10/10
02/08/11
60
3,500,000
21
8,085
3,508,085
Banco Security
CLP
12/27/10
03/08/11
71
4,000,000
4
1,813
4,001,813
Corpbanca
CLP
11/16/10
01/04/11
49
2,567,651
45
11,940
2,579,591
Corpbanca
CLP
11/24/10
01/18/11
55
2,265,000
37
8,381
2,273,381
Corpbanca
CLP
12/02/10
01/25/11
54
2,000,153
29
5,800
2,005,953
Corpbanca
CLP
12/15/10
02/24/11
71
3,000,000
16
5,600
3,005,600
Corpbanca
CLP
12/17/10
02/22/11
67
2,240,172
14
3,554
2,243,726
Corpbanca
CLP
12/27/10
03/21/11
84
4,000,000
4
1,867
4,001,867
Scotiabank
CLP
11/29/10
01/20/11
52
2,300,529
32
7,362
2,307,891
Scotiabank
CLP
12/27/10
03/15/11
78
4,000,000
4
1,813
4,001,813
PEN
12/20/10
01/05/11
16
78,128
11
59
78,187
PEN
12/22/10
01/11/11
20
20,015
9
12
20,027
PEN
12/23/10
01/04/11
12
100,074
8
54
100,128
PEN
12/23/10
01/11/11
19
84,396
8
46
84,442
PEN
12/27/10
01/04/11
8
33,358
4
10
33,368
PEN
12/28/10
01/07/11
10
130,096
3
27
130,123
PEN
12/29/10
01/12/11
14
40,030
2
5
40,035
PEN
12/30/10
01/14/11
15
30,022
1
2
30,024
PEN
12/30/10
01/03/11
4
25,019
1
2
25,021
Interbank
PEN
12/28/10
01/12/11
15
22,350
3
5
22,355
Scotiabank
PEN
12/23/10
01/07/11
15
31,690
8
15
31,705
Scotiabank
PEN
12/27/10
01/11/11
15
16,679
4
5
16,684
Scotiabank
PEN
12/28/10
01/11/11
14
46,201
3
8
46,209
Scotiabank
PEN
12/29/10
01/07/11
9
58,377
2
8
58,385
Scotiabank
PEN
12/30/10
01/07/11
8
42,698
1
3
42,701
Scotiabank
USD
12/28/10
01/07/11
10
36,543
2
Total
65,124,745
2
36,545
111,404
65,236,149
161
Report 2011
Institution
Financial placements in Central Bank instruments correspond to financial placements with rights receivable for commitments to the sale of financial instruments
on the balance sheets, recorded at their amortized cost. The breakdown is as follows:
On 12/31/2011
Code
Dates
Counterpart
Currency
Origin
Subscribed value
Th.CLP$
Rate
Period
Final value
Th.CLP$
Identification of
Instrument
Value
Accounting
Th.CLP$
01/03/2012
Scotia C. de Bolsa
CLP
1,800,000
0,45%
1,801,548
PACTO
1,800,774
01/03/2012
Scotiabank
CLP
1,700,000
0,42%
1,701,428
PACTO
1,700,714
12/28/2011
01/03/2012
Banco de Chile
CLP
1,624,000
0,41%
1,625,332
PACTO
1,624,666
12/28/2011
01/03/2012
Banco de Chile
CLP
1,194,000
0,34%
1,194,816
PACTO
1,194,326
12/30/2011
01/04/2011
Banco de Chile
CLP
1,432,000
0,34%
1,432,979
PACTO
1,432,196
Start
End
CRV
12/28/2011
CRV
12/28/2011
CRV
CRV
CRV
Total
7,750,000
7,756,103
7,752,676
On 12/31/2010
Code
162
Dates
Counterpart
Currency
Origin
Subscribed value
Th.CLP$
Rate
Period
Final value
Th.CLP$
Identification of
Instrument
Value
Accounting
Th.CLP$
01/03/2011
Banco BBVA
CLP
3,400.000
0,29%
3,400,306
PACTO
3,400,306
01/05/2011
Bancoestado S.A. Corredores de Bolsa
CLP
734,000
0,04%
734,306
PACTO
734,000
01/05/2011
Bancoestado S.A. Corredores de Bolsa
CLP
736,000
0,04%
736,319
PACTO
Start
End
CRV
12/30/2010
CRV
12/30/2010
CRV
12/30/2010
Report 2011
Total
4,870,000
4,870,931
736,000
4,870,306
In line with working capital policies, the maturity date of all deposits in financial markets does not exceed 90 days and they have been contracted from reputable
banks and financial institutions with a high rating, primarily based in Chile.
6. OTHER FINANCIAL ASSETS
The breakdown of this item as of December 31, 2011 and 2010, is as follows:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
4,509,615
8,139
Current
Current subtotal
897,605
862,659
5,407,220
870,798
3,926,820
4,271,369
Non current
Term deposits
1,873,733
1,786,148
Noncurrent subtotal
5,800,553
6,057,517
11,207,773
6,928,315
Total other financial liabilities
The derivatives category applies to all contracts with positive balances for the Group companies. Those representing credits of balances against the Group, as well
as the notional values of contracts, are included under Other Financial Liabilities (Note 15).
Debtors for Financial Leasing reflects balances related to the current contract with Telmex S.A. and corresponds to capital installments to be received in more than
one year’s time for the long term lease of telecommunications infrastructure.
The contract comprises 19 equal annual payments of UF 40,262.12 each, the last of which is due on January 10, 2017, and a final installment (the purchase option)
of UF 30,196.59 due on January 10, 2018.
This value is shown net of non-accrued interest determined on the basis of the interest rate included in the contract, equivalent to an annual rate of 8.7%.
The expiry profile of this contract is as follows:
Minimum leasing payments
Less than one year
Between one and five years
More than five years
Total
12/31/2011
12/31/2010
Gross
Interest
Present value
Gross
Interest
Present value
897,605
-
897,605
862,659
-
862,659
4,301,024
( 1,028,674 )
3,272,350
4,164,971
( 1,113,993 )
3,050,978
860,205
( 205,735 )
654,470
1,665,988
( 445,597 )
1,220,391
6,058,834
( 1,234,409 )
4,824,425
6,693,618
( 1,559,590 )
5,134,028
163
Report 2011
7. OTHER NON-FINANCIAL ASSETS
This item principally corresponds to prepaid expenses, detailed in the table below.
Other non-financial assets
Current
Non current
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
9,910,532
9,196,422
1,844,952
2,031,806
484,867
759,537
926,686
1,425,177
Insurance
1,921,027
563,591
-
-
Marketing
1,045,807
370,603
1,836,256
-
Other services
3,240,495
1,573,851
66,182
397,094
151,669
500,318
35,337
72,422
-
180,703
9,265
9,279
16,754,397
13,145,025
4,718,678
3,935,778
Prepaid Expenses
Leasing, land, property
Leasing, capacity
Deferred costs for customer installations
Other
Total
8. COMMERCIAL DEBTORS AND OTHER ACCOUNTS RECEIVABLE
The breakdown of these balances is as follows:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
246,720,094
230,816,266
Accounts receivable for personnel, net, current
1,156.766
1,146,455
Other accounts receivable, net, current
3,352,780
4,049,121
Accounts receivable for personnel, net, noncurrent
3,987,177
918,670
Commercial debtors and other accounts receivable, net
Commercial debtors, net, current
Other accounts receivable, net, noncurrent
1,337,057
1,888,719
256,553,874
238,819,231
319,406,050
296,686,885
Accounts receivable for personnel, gross, current
1,156,766
1,146,455
Other accounts receivable, gross, current
3,417,428
4,113,769
Accounts receivable for personnel, gross, noncurrent
3,987,177
918,670
Other accounts receivable, gross, noncurrent
1,337,057
1,888,719
329,304,478
304,754,498
Total
Commercial debtors and other accounts receivable, gross
Commercial debtors, gross, current
Report 2011
164
Total
These balances include values with an expiry date greater than one year (noncurrent), the net value of which corresponds to Th.CLP $5,324,234 and Th.CLP $2,807,389
for each period, included under Rights Receivable for Noncurrent Assets.
The breakdown of commercial debtors for current and expired debts, including impairment, is as follows:
12/31/2011
Debt
Gross
Th.CLP$
Not expired
Not expired - Renegotiated
Impairment
Th.CLP$
198,251,370
Debt
Net
Th.CLP$
Hedge
Risk
198,251,370
2,599,116
1,059,449
1,539,667
40.8%
Less then three months
50,271,213
9,643,286
40,627,927
19.2%
Between three and six months
13,976,949
10,344,959
3,631,990
74.0%
Between six and twelve months
24,251,785
22,128,098
2,123,687
91.2%
Expired
Over twelve months
30,055,617
29,510,164
545,453
98.2%
Subtotal expired
118,555,564
71,626,507
46,929,057
60.4%
Total commercial debtors
319,406,050
72,685,956
246,720,094
22.8%
Debt
Gross
Th.CLP$
Impairment
Th.CLP$
Debt
Net
Th.CLP$
Hedge
Risk
12/31/2010
Not expired - Renegotiated
202,094,959
202,094,959
5,003,363
5,003,363
Expired
Less then three months
30,928,459
10,587,004
20,341,455
34.2%
Between three and six months
8,745,345
6,726,235
2,019,110
76.9%
Between six and twelve months
16,922,204
15,705,288
1,216,916
92.8%
Over twelve months
32,992,555
32,852,092
140,463
99.6%
89,588,563
65,870,619
23,717,944
73.5%
296,686,885
65,870,619
230,816,266
22.2%
Subtotal expired
Total commercial debtors
165
Report 2011
Not expired
Variation in impairment provision.
Correction account for credit losses
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Initial balance
65,935,267
63,406,868
Increase for impairment recorded under income
31,630,145
24,670,091
(25,078,979)
(22,141,692)
264,171
-
72,750,604
65,935,267
Decrease in impaired financial assets
Increase (decrease) in foreign currency translation
Total
The value of services provided but not invoiced is included under Commercial Debtors for Th.CLP $73,677,483 and Th.CLP $75,513,057 for the periods in question.
Guarantees. Real guarantees are requested or credit insurance is contracted for customers or segments where there is a high risk of having to write off debt. At
present, in the case of intermediaries for electronic charges of mobile service usage rights (indirect channel), these risks are mitigated using guarantee letters and
credit insurance contracts with accredited insurance companies.
Report 2011
166
Compliance Incentive (Improving Credit) – In the Corporate & SME segments, customers’ motivation to meet payment terms is influenced by whether they will appear on public or private registers for poor payment practices (DICOM, Transunion – formerly Databusiness, and SIISA). Additionally, for all segments (People and
Corporate & SME), differentiated service cut-offs are made, and telephone and in-person collection activities are undertaken before the company prohibits renewal
of the contract.
9. ACCOUNTS RECEIVABLE WITH RELATED ENTITIES
The transactions and balances with persons and legal entities related to the aforementioned controlling companies, together with benefits received by directors and
key members of the Entel Group are detailed below.
a) Accounts receivable
Company
Country of origin
Nature of relationship
Currency
Current
12/31/2011
12/31/2010
Th.CLP$
Th.CLP$
21,561
6,420
78.549.280-3
Envases Roble Alto S.A.
Chile
Shared director
CLP
79.818.600-0
CMPC Papeles S.A.
Chile
Shared director
CLP
-
88
79.943.600-0
Propa S.A.
Chile
Shared director
CLP
3,175
2,003
84.552.500-5
Portuaria CMPC S.A.
Chile
Shared director
CLP
4,597
3,914
86.359.300-K
Sociedad Recuperadora de Papel S.A.
Chile
Shared director
CLP
9,175
4,633
86.457.100-K
Sociedad Estacionamientos Américo Vespucio Ltda
Chile
Shared director
CLP
51
-
88.566.900-K
Empresa Distribuidora de Papeles y Cartones S.A.
Chile
Shared director
CLP
2,911
1,618
89.201.400-0
Envases Impresos S.A.
Chile
Shared director
CLP
3,965
4,243
89.696.400-3
Empresa de Residuos Resiter S.A.
Chile
Shared director
CLP
9,257
80
90.940.000-7
Inmobiliaria e Inversiones Varco S.A.
Chile
Shared director
CLP
59
-
91.440.000-7
Forestal Mininco S.A.
Chile
Shared director
CLP
100,811
79,395
91.656.000-1
Industrias Forestales S.A.
Chile
Shared director
CLP
10,669
7,805
92.177.000-6
Le Grand Chic S.A.
Chile
Shared director
CLP
1,340
90
93.658.000-9
Chilena de Moldeados S.A.
Chile
Shared director
CLP
1,159
825
95.304.000-K
CMPC Maderas S.A.
Chile
Shared director
CLP
63,578
71,520
96.500.110-7
Forestal y Agrícola Monte Aguila S.A.
Chile
Shared director
CLP
-
1,090
96.529.310-8
CMPC Tissue S.A.
Chile
Shared director
CLP
40,467
32,121
96.532.330-9
CMPC Celulosa S.A.
Chile
Shared director
CLP
71,294
59,833
96.656.410-5
BICE Vida Compañía de Seguros S.A.
Chile
Shared director
CLP
7,867
4,606
96.757.710-3
CMPC Productos de Papel S.A.
Chile
Shared director
CLP
107
240
96.768.750-2
Servicios Compartidos CMPC S.A.
Chile
Shared director
CLP
259,033
156,019
96.778.980-1
Soc. Administradora Plaza Central S.A.
Chile
Shared director
CLP
2,880
286
96.853.150-6
Papeles Cordillera S.A.
Chile
Shared director
CLP
10,047
4,863
96.889.540-0
Dorin Ltda.
Chile
Shared director
CLP
599
-
97.080.000-K
Banco BICE
Chile
Shared director
CLP
46,268
20,497
96.731.890-6
Cartulinas CMPC S.A.
Chile
Shared director
CLP
50,911
7,003
99.513.410-1
SMB Factoring S.A.
Chile
Shared director
CLP
19
-
99.544.240-K
Inmobiliaria Suecia S.A.
Chile
Shared director
CLP
10
-
99.563.840-1
Las Garzas S.A.
Chile
Shared director
CLP
Total
942
-
722,752
469,192
167
Report 2011
Tax ID
b) Transactions
Companies for which transactions have been made with Chile as country of origin.
Tax ID
Report 2011
168
Company
Nature of
relationship
Description of
transaction
12/31/2011
31/12/2010
Value
Th.CLP$
Effect on income
(charge/credit)
Value
Th.CLP$
Effect on income
(charge/credit)
78.549.280-3
Envases Roble Alto S.A.
Shared director
Services provided
52,101
52,101
47,220
47,220
79.818.600-0
CMPC Papeles S.A.
Shared director
Services provided
892
892
1,093
1,093
79.943.600-0
PROPA S.A.
Shared director
Services provided
19,410
19,410
30,165
30,165
84.552.500-5
Portuaria CMPC S.A.
Shared director
Services provided
20,808
20,808
23,021
23,021
86.359.300-K
SOREPA S.A.
Shared director
Services provided
54,281
54,281
62,893
62,893
88.566.900-K
EDIPAC S.A.
Shared director
Services provided
17,601
17,601
20,309
20,309
89.201.400-0
Envases Impresos S.A.
Shared director
Services provided
34,076
34,076
40,151
40,151
89.696.400-3
Empresa de Residuos Resiter S.A.
Shared director
Services provided
100,461
100,461
106,298
106,298
91.440.000-7
Forestal Mininco S.A.
Shared director
Services provided
229,372
229,372
245,472
245,472
91.656.000-1
Industrias Forestales S.A.
Shared director
Services provided
16,764
16,764
26,805
26,805
92.177.000-6
Le Grand Chic S.A.
Shared director
Services provided
16,605
16,605
17,821
17,821
93.658.000-9
Chilena de Moldeados S.A. Chimolsa
Shared director
Services provided
9,115
9,115
13,469
13,469
95.304.000-K
CMPC Maderas S.A.
Shared director
Services provided
213,342
213,342
251,376
251,376
96.529.310-8
CMPC Tissue S.A.
Shared director
Services provided
222,790
222,790
302,640
302,640
96.532.330-9
CMPC Celulosa S.A.
Shared director
Services provided
294,478
294,478
341,315
341,315
96.656.410-5
BICE Vida Compañia de Seguros
Shared director
Services provided
38,419
38,419
86,581
86,581
96.731.890-6
Cartulinas CMPC S.A.
Shared director
Services provided
118,496
118,496
130,772
130,772
96.757.710-3
CMPC Productos de Papel S.A.
Shared director
Services provided
3,041
3,041
3,393
3,393
96.768.750-2
Servicios Compartidos CMPC S.A.
Shared director
Services provided
1,098,524
1,098,524
1,017,998
1,017,998
96.778.980-1
Soc. Administradora Plaza Central S.A.
Shared director
Services provided
8,795
8,795
9,184
9,184
96.853.150-6
Papeles Cordillera S.A.
Shared director
Services provided
44,395
44,395
55,341
55,341
96.889.540-0
Dorin Ltda.
Shared director
Services provided
5,894
5,894
4,706
4,706
97.080.000-K
Banco Bice
Shared director
Services provided
188,218
188,218
198,644
198,644
97.080.000-K
Banco Bice
Shared director
Services received
-
-
72,495
( 72,495 )
99.513.410-1
SMB Factoring S.A.
Shared director
Services received
201
(201)
226
( 226 )
99.563.840-1
Las Garzas S.A.
Shared director
Services received
6,644
( 6,644 )
2,806
( 2,806 )
c) Remuneration and Benefits Received by Directors and Group Executives:
The parent company is managed by a board of directors of nine members whose remunerations for 2011 and 2010 were Th.CLP $400,759 and Th.CLP $362,982,
respectively.
For the same period, remuneration of key members was Th.CLP $7,297,889 and Th.CLP $6,339,410, respectively.
The periods account for 23 and 37 executives, respectively.
10. INVENTORY
Inventory is primarily composed of mobile telephone handsets and their accessories. These are valued according to the accounting criteria described in note 3d.
The breakdown is as follows:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Merchandise
308,000
744,920
Work in progress
583,440
206,145
62,166,064
35,831,167
Equipment and accessories for mobile telephone services
Other Inventory
Total
34,296
16,964
63,091,800
36,799,196
At the close of each period there were no duties on any of the items that make up the stock.
During the periods covered by these financial statements, allocations were made to income for the cost of sales or the consumption of materials for Th.CLP $101,624,554
and Th.CLP $73,643,311, respectively.
During the course of these periods, there have been no allocations against stock for adjustments to sale value.
11. INTANGIBLE ASSETS
169
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Total intangible assets, net
31,118,433
32,665,098
Intangible assets with finite life, Net
31,118,433
32,665,098
Identifiable intangible assets, net
31,118,433
32,665,098
Patents trademarks and other rights, net
13,141,890
9,837,016
Other identifiable intangible assets, net
17,976,543
22,828,082
Total intangible assets, gross
60,546,713
57,825,211
Identifiable intangible assets, gross
60,546,713
57,825,211
Patents trademarks and other rights, gross
39,148,124
31,809,365
Other identifiable intangible assets, gross
21,398,589
26,015,846
( 29,428,280 )
( 25,160,113 )
Cumulative amortization and impairment, identifiable intangible assets
(29,428,280)
( 25,160,113 )
Cumulative amortization and impairment, patents trademarks and other rights
(26,006,234)
( 21,972,349 )
(3,422,046)
( 3,187,764 )
Total cumulative amortization and impairment, intangible assets
Cumulative amortization and impairment, other identifiable intangible assets
Cumulative losses for impairment included in the above table mainly affect assets for usage rights for fiber optic cable capacities. For this item, cumulative losses
were Th.CLP $2,507,281 as of December 31, 2011. These losses originated in previous years and were a product of adjustments to the recoverable value of these
assets affected by a decrease in market demand.
No fully-amortized intangible assets are kept in use.
Report 2011
Assets represented by licenses, easements, and others items, detailed in the following tables:
11. INTANGIBLE ASSETS (Continued)
There are no intangible assets with a restriction on ownership and for which full or partial guarantees have been made.
As of December 31, 2011 there are no commitments for acquisitions of intangible assets.
Changes in the values of intangible assets for 2011 and 2010 are as follows:
Changes 2011
Patents trademarks and other
rights, net
Other identifiable intangible
assets, net
Total Identifiable intangible
assets, Net
Initial balance
9,837,016
22,828,082
32,665,098
Additions
Amortization
Other increases (decreases)
2,057,201
(4,272,324)
-
647,140
647,140
6,428,576
(6,407,258)
21,318
13,141,890
17,976,543
31,118,433
Changes 2010
Patents trademarks and other
rights, net
Other identifiable intangible
assets, net
Total Identifiable intangible
assets, Net
Initial balance
6,692,984
12,294,339
18,987,323
Additions
5,640,390
252,721
5,893,111
989,158
11,873,271
12,862,429
Amortization
( 2,192,351 )
( 875,186 )
( 3,067,537 )
Loss for impairment recorded on income statement
( 1,218,000 )
( 507,390 )
( 1,725,390 )
Report 2011
1,919,527
(1,010,948)
Final balance
Acquisitions through business mergers
170
137,674
(3,261,376)
Final balance
-
( 193,193 )
( 193,193 )
( 75,165 )
( 16,480 )
( 91,645 )
9,837,016
22,828,082
32,665,098
Losses allocated against costs for the 2010 financial year for the impairment of intangible assets refer to adjustments to book values that have their origins in
lower market prices and insufficient recovery flows with respect to certain usage rights for fiber optic cables (Th.CLP $1,218,000) and operating licenses (Th.
CLP $507,390). For these purposes, the current market values and/or recovery values have been taken into account in line with the expected generation of flows.
Impairment has not been allocated against income for the current year.
Intangible assets are amortized in accordance with the following time scales:
Assets
Min rate or life (years)
Max rate or life (years)
4
20
Patents trademarks and other rights
IT Programs
4
4
Other identifiable intangible assets
10
10
Usage rights for fiber optic cables
15
15
12. GOODWILL
Changes to balances for goodwill are as follows:
Entel PCS Telecomunicaciones S.A.
Segment
Initial balance
01/01/2011
Th.CLP$
Additions
Final balance
12/31/2011
Th.CLP$
Mobile Network
43,384,200
-
43,384,200
2,402,281
Cientec Computación S.A.
Wireline network
2,402,281
-
Will S.A.
Wireline network
156
-
156
Transam Comunicación S.A.
Wireline network
34,837
73,809
108,646
45,821,474
-
45,895,283
Segment
Initial balance
01/01/2010
Th.CLP$
Other
Increases
Final balance
12/31/2010
Th.CLP$
Mobile Network
43,384,200
-
43,384,200
Wireline network
2,402,281
-
2,402,281
Final balance, net
Company
Cientec Computación S.A.
Will S.A.
Wireline network
-
156
156
Transam Comunicación S.A.
Wireline network
-
34,837
34,837
45,786,481
34,993
45,821,474
Final balance, net
Goodwill balances are subject to testing for impairment at the close of each accounting period, although no such signs have been observed since the date on which
they were acquired.
171
Report 2011
Company
13. PROPERTY, PLANT AND EQUIPMENT
The breakdown of the gross values, depreciation, and net values of the items which made up this category at each close of period are as follows:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
1,056,555,054
978,457,143
184,179,818
89,515,774
9,110,466
9,222,010
95,373,297
101,723,566
735,495,111
736,360,830
15,862,972
22,618,177
6,241,078
7,872,004
281,591
375,868
Improvements to leased assets, net
3,629,586
5,222,790
Other property, plant and equipment, net
6,381,135
5,546,124
2,723,582,450
2,585,265,799
184,179,818
89,515,774
Total property, plant and equipment, net
Current construction, net
Land, net
Property, net
Plant and equipment, net
IT equipment, net
Fixed installations and accessories, net
Motor vehicles, net
Total property, plant and equipment, gross
Current construction, gross
Land, gross
172
Property, gross
Plant and equipment, gross
Report 2011
IT equipment, gross
Fixed installations and accessories, gross
Motor vehicles, gross
Improvements to leased assets, gross
Other property, plant and equipment, gross
Total cumulative depreciation and impairment, property, plant and equipment
Cumulative depreciation and impairment, property
Cumulative depreciation and impairment, plant and equipment
Cumulative depreciation and impairment, IT equipment
9,110,466
9,222,010
209,991,460
211,767,053
2,072,673,714
2,018,914,771
78,358,535
87,737,647
133,543,606
133,751,057
837,744
1,044,590
16,181,942
15,950,435
18,705,165
17,362,462
( 1,667,027,396 )
( 1,606,808,656 )
(114,618,163)
( 110,043,487 )
(1,337,178,603)
( 1,282,553,941 )
(62,495,563)
( 65,119,470 )
(127,302,528)
( 125,879,053 )
(556,153)
( 668,722 )
Cumulative depreciation and impairment, improvements to leased assets
(12,552,356)
( 10,727,645 )
Cumulative depreciation and impairment, other
(12,324,030)
( 11,816,338 )
Cumulative depreciation and impairment, fixed installations and accessories
Cumulative depreciation and impairment, motor vehicles
Transactions in 2011 for property, plant and equipment items are as follows:
Initial balance
Transactions
Additions
Current Construction
Land
Property, net
Plant and
equipment,
net
IT equipment,
net
Fixed installations and
accessories, net
Motor
vehicles,
net
Improvements
to leased
assets, net
Other
property,
plant and
equipment,
net
Property, plant
and equipment,
net
89,515,774
9,222,010
101,723,566
736,360,830
22,618,177
7,872,004
375,868
5,222.790
5,546,124
978,457,143
126,818,750
-
308,641
231,668,740
2,923,206
378,404
19,985
6,744
1,687,725
363,812,195
Removals
-
-
-
( 13,900,090)
( 85)
-
(95,291)
-
( 4,572)
( 14,000,038)
Depreciation Costs
-
-
( 5,449,281)
(244,803,492)
( 9,866,679)
(1,776,949)
(126,356)
(2,293,898)
(1,209,695)
(265,526,350)
-
-
-
( 6,416,111)
( 624)
-
-
-
-
( 6,416,735)
Increase (decrease) in foreign
currency exchange
-
60,831
80,012
730,922
40,603
102,951
730
-
(453,761)
562,288
Transactions, total
Final balance
(32,154,706)
(172,375)
(1,289,641)
31,854,312
148,374
(335,332)
106,655
693,950
815,314
( 333,449)
94,664,044
(111,544)
(6,350,269)
( 865,719)
(6,755,205)
(1,630,926)
(94,277)
(1,593,204)
835,011
-
Transactions, total
9,110,466
95,373,297
735,495,111
15,862,972
6,241,078
281,591
3,629,586
6,381,135
1,056,555,054
Property, net
Plant and
equipment,
net
IT equipment,
net
Fixed installations and
accessories, net
Motor
vehicles,
net
Improvements
to leased
assets, net
Other
property,
plant and
equipment,
net
Property, plant
and equipment,
net
Transactions in 2010 for property, plant and equipment items are as follows:
Additions
Acquisitions through
business mergers
Removals
67,580,935
9,284,444
105,869,420
708,618,878
21,927,706
9,583,832
354,936
4,100,303
4,772,011
932,092,465
72,173,877
-
-
211,597,341
10,119,389
186,304
137,855
1,914,771
1,440,910
297,570,447
509,238
-
-
77,509
-
-
-
-
484,921
1,071,668
(155,948)
-
-
( 8,340,035)
( 17,404)
-
(6,667)
-
( 22,429)
(8,542,483)
Depreciation Costs
-
-
( 5,619,161)
(206,671,025)
(10,416,188)
(4,369,121)
(123,396)
(1,895,019)
(1,038,025)
(230,131,935)
-
-
-
(3,072,736)
( 2,956)
-
-
-
112,450
(2,963,242)
Increase (decrease) in foreign
currency exchange
-
(20,353)
( 26,924)
(180,821)
( 6,635)
(26,493)
523
-
( 77,689)
(338,392)
(50,592,328)
(42,081)
1,500,231
34,331,719
1,014,265
2,497,482
12,617
1,102,735
(126,025)
(10,301,385)
21,934,839
(62,434)
(4,145,854)
27,741,952
690,471
(1,711,828)
20,932
1,122,487
774,113
-
89,515,774
9,222,010
101,723,566
736,360,830
22,618,177
7,872,004
375,868
5,222,790
5,546,124
978,457,143
Transactions, total
Final balance
Land
173
Report 2011
Initial balance
Transactions
Current Construction
During 2011 and 2010, no interest to be charged for work in progress and associated materials has been generated, in line with the policy described in note 3f.
The net balances for property, plant and equipment acquired by financial leasing are set out below.
Property under financial leasing, net
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
14,903,504
15,531,560
31,846
534,973
14,935,350
16,066,533
IT equipment under financial leasing, net
Total property, plant and equipment under financial leasing, net
Leased real estate is represented by real estate lease contracts for the real estate covering the main Group offices.
The terms of lease agreements for leased assets are as follows:
Edificio Pacífico (Floors 9, 10, 12, 13, 14)
Stores
Edificio Costanera (Floor 15)
174
Edificio Costanera (Floors 12–14)
Start date
End date
May 1995
April 2015
February 1998
February 2018
September 1998
August 2018
December 1998
November 2018
Report 2011
The Group companies have procedures designed to detect possible impairment in the value of their property, plant and equipment assets.
Policies for determining impairment in the value of property, plant and equipment are based on a continuous analysis of impairment indexes. Where these are positive,
the recovery values of the affected assets are estimated.
The business makes use of asset control systems with varying degrees of component detail and integration with service technology platforms.
The values allocated as losses for this category throughout 2011 and 2010 originate from the removal of customer equipment with a very low probability of reuse or
of transfer, items damaged by the earthquake in February 2010, equipment whose remaining useful life is greater than the estimated periods of financial usage, and
equipment affected by technological change or decreases in recoverable value owing to decreases in the prices of certain services.
Impairment in the value of property, plant and equipment that has affected income is as follows:
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Losses from deterioration, property, plant and equipment
6,416,735
2,963,242
Total losses from deterioration
6,416,735
2,963,242
Components affected by impairment are detailed below:
Cumulative
Asset description
Customer installations
Assets in warehouse
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
973,000
1,226,446
5,019,000
1,025,840
Equipment
104,601
2,956
Network components
320,134
708,000
6,416,735
2,963,242
Total
Average depreciations applied are as follows:
Assets
Property
Min rate or life (years)
Max rate or life (years)
20
50
10
20
3
7
Plant and equipment
Subscriber equipment
IT equipment
3
4
Fixed installations and accessories
3
10
Motor vehicles
3
7
Improvements to leased assets
5
5
Other property, plant and equipment
5
10
In terms of assets that have reached the end of their useful accounting life, recovery or final return values for transfer have not been calculated as it is difficult to
predict the additional period of economic efficiency, primarily since technological risk has risen with their age.
There are no assets with restrictions on ownership, except for those normal for assets under financial leasing, nor have full or partial guarantees been made on
these.
Commitments for the acquisition of property, plant and equipment as of December 31, 2011 and 2010, including purchase orders with suppliers and contracts for
civil engineering works, were Th.CLP $20,792,266 and Th.CLP $30,709,321, respectively.
Within this category there are no elements of significant value that are out of service.
The gross value of inactive materials that, while being fully depreciated are still to some extent in use, is Th.CLP $556,077,830. In general, these correspond to assets with high technological obsolescence, whose withdrawal or replacement becomes economically feasible upon termination of the services for which they are
being used, increases in failure rates, the withdrawal of technological support from the manufacturer, or other circumstances. Valuations at use value have not been
undertaken for these assets due to the uncertainty surrounding the remaining periods of use.
At the end of 2009, the Telecommunications Development Fund, administered by the Ministry of Transport and Telecommunications, awarded the Digital Infrastructure Project for Competitiveness and Innovation to Entel, which will see mobile Internet delivered to 1,400 areas throughout Chile.
In the context of this project, at the close of the 2011 financial year, work had been carried out to the value of Th.CLP $63,582,694. In line with the agreement signed
with the state, subsidies of Th.CLP $20,414,280 had been received. Of this value, Th.CLP $16,459,928 has been allocated as the lowest value of the works carried out
and Th.CLP $3,920,940 has been retained as advance payments for work to be executed or currently being received.
175
Report 2011
External plant
14. INCOME TAX AND DEFERRED TAX
a) General Information
Income tax provisions by each Group company for income up to December 31, 2011 and 2010, are offset against the obligatory provisional monthly tax payments
(PPM) made by these companies.
The cumulative payments of these companies with credit balances are Th.CLP $596,566 and Th.CLP $11,884,354 as of December 2011 and 2010, respectively. These
values are listed under current assets and categorized as tax assets.
The total of negative balances was Th.CLP $7,951,010 and Th.CLP $201,105 at the end of each period and these are listed under current liabilities as tax liabilities.
Positive balances for the Group companies in their Taxable Profits ledger as of December 31, 2011, are detailed below alongside the tax credits to be awarded to
shareholders when the dividend is paid.
Companies
Empresa Nacional de Telecomuncaciones S.A.
Entel Inversiones S.A.
Profits (with credit)
20%
Profits (with credit)
17%
Profits (without credit)
Value of credit
35,385,061
130,630,521
9,546,252
35,601,889
582,498
11,799,398
126,332
1,662,459
39,431
1,798,397
275,280
378,135
165,656,101
152,688,874
41,778,835
72,687,656
1,770,225
1,224,957
442,556
693,450
881,685
1,045,614
176,777
426,608
-
2,520,907
294
451,174
204,315,001
301,708,668
52,346,326
111,901,371
Entel Servicios Telefónicos S.A.
176
Entel Comercial S.A.
Satel Telecomunicaciones S. A.
Report 2011
Transam S.A.
Totals
b) Deferred tax
Deferred taxes established in line with the policy described in note 3k are detailed in the following table.:
12/31/2011
Item
Depreciation property, plant and equipment
Intangible amortizations
Accumulations (or accruals)
Provisions
Impairment property, plant and equipment
Impairment accounts receivable (unrecoverable)
Adjustment of derivative contracts to market value
Assets/liabilities at amortized cost
12/31/2010
Asset
Th.CLP$
Liability
Th.CLP$
Asset
Th.CLP$
Liability
Th.CLP$
2,750,929
3,281,395
1,318,416
13,025,794
752,329
3,647,395
905,523
3,473,886
2,837,911
-
3,731,942
-
766,421
-
1,032,034
-
8,101,744
-
6,720,980
-
12,938,968
-
11,437,654
-
182,748
865,869
422,953
901,147
-
425,978
-
298,958
Deferred revenue
6,861,072
-
6,373,255
-
Assets acquired under financial leasing
1,610,623
2,539,010
1,796,579
2,686,236
417,293
841,956
460,818
921,695
Assets sold under financial leasing
Tax losses
989,424
-
1,283,008
-
Other
4,657,135
106,686
4,370,005
37,902
Totals
42,866,597
11,708,289
39,853,167
21,345,618
c) Unrecognized Deferred Tax Assets
For some subsidiaries, deferred tax assets associated with the application of tax losses that do not have a period of expiry have not been recorded. The unrecognized
tax assets for this concept are Th.CLP $4,809,577 and Th.CLP $1,075,571, as of 31 December for each year. d) Expenditure (Revenue) for Income Tax by Current and Deferred Parts
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
51,859,909
30,800,536
(679,713)
71,078
Current income tax expenditure
Expenditure for current tax
Adjustments to current tax from the previous period
Other current tax expenditure
Current tax expenditure, net, total
205,852
1,827,664
51,386,048
32,699,278
(11,682,825)
(7,045,565)
-
(1,955,526)
Deferred income tax expenditure
Expenditure (revenue) for taxes related to changes in the tax structure or new taxes
-
900,000
(1,143,367)
-
(12,826,192)
(8,101,091)
38,559,856
24,598,187
Expenditure for reductions in the value of assets during the evaluation of their use
Other expenditure (revenue) for deferred taxes
Deferred tax expenditure (revenue), net, total
Total expenditure (revenue) for income tax
e) Expenditure (Revenue) for Income Tax by Foreign and National Parts, Net
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Current tax expenditure by foreign and national parts, net
Current tax expenditure, net, foreign
323,159
(8,837)
Current tax expenditure, net, national
51,062,889
32,708,115
Current tax expenditure, net, total
51,386,048
32,699,278
(255,997)
(31,914)
Deferred income tax expenditure by foreign and national parts, net
Deferred tax expenditure, net, foreign
Deferred tax expenditure, net, national
(12,570,195)
(8,069,177)
Deferred tax expenditure, net, total
(12,826,192)
(8,101,091)
38,559,856
24,598,187
Total expenditure (revenue) for income tax
177
Report 2011
Deferred expenditure (revenue) for tax related to the creation and reversal of time differences
f) Reconciliation of Income Tax
As of December 31, 2011 and 2010, the expense reconciliation using the legal rate and the effective rate is as follows:
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
43,892,380
33,586,797
(26,225)
842,118
2,144,983
577,228
Own capital currency correction
(7,159,204)
(4,113,299)
Tax effects from subsidiary merger
(1,143,367)
(6,386,501)
Cost of tax using legal rate
Tax effect of rates in other jurisdictions
Tax effect of permanent differences
Adjustments/fluctuation of tax investments
Report 2011
178
Non tax deductible expenditure
-
1,904,134
Changes to tax structure for deferred taxes
-
(1,955,526)
Evaluation of assets for recorded deferred tax
-
900,000
Tax effect of excess tax paid in previous years
(226,552)
31,980
Tax contribution calculated with applicable rate
1,674,936
(218,431)
Other increases (decreases) in expenditure for legal taxes
(597,095)
(570,313)
Adjustments to cost of tax using legal rate, total
(5,332,524)
(8,988,610)
Cost of tax using effective rate
38,559,856
24,598,187
g) Reconciliation of Legal and Effective Tax Rates
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Legal tax rate
20.00%
17.00%
Tax effect of rates in other jurisdictions
-0.01%
0.53%
0.98%
0.29%
Own capital currency correction
-3.26%
-2.08%
Tax effects from subsidiary merger
Effect on tax rate of
Adjustments/fluctuation of tax investments
-0.52%
-3.23%
Non tax deductible expenditure
-
0.96%
Changes to tax structure for deferred taxes
-
-0.99%
Evaluation of assets for recorded deferred tax
-
0.46%
Tax effect of excess tax paid in previous years
-0.10%
0.02%
0.76%
-0.21%
Tax contribution calculated with applicable rate
Other increases (decreases) in expenditure for legal taxes
-0.26%
-0.30%
Adjustments to the legal tax rate, total
-2.42%
-4.55%
Effective tax rate
17.58%
12.45%
15. OTHER FINANCIAL LIABILITIES
The breakdown of this category for each period is given in the following table.
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
987,193
433,723
Current
Hedge derivatives
Current subtotal
1,644,813
1,494,233
15,799,808
12,427,560
152,227
215,170
18,584,041
14,570,686
311,422,507
282,380,867
8,239,236
9,481,683
Noncurrent
-
1,688,763
33,842,271
56,779,729
Noncurrent subtotal
353,504,014
350,331,042
Total other financial liabilities
372,088,055
364,901,728
Hedge derivatives
_a) Loans Accruing Interest – As of December 31, 2011, the current values of the following bank loans were:
179
_Credit provided by Scotiabank & Trust (Cayman) Ltd. and The Bank of Tokyo-Mitsubishi UFJ, Ltd. Joint loan for USD $200,000,000, at Libor USD 90 day + 0.95%
_b) Hedge Derivatives – Cash flow - This balance corresponds to the market value of derivative contracts classified as hedges against exchange and interest rate
risks, Cross Currency Swap (CCS), with respect to the syndicated loan administered by Citibank N.A. These CCS contracts include the substitution of obligations
for USD $173 million at a rate of Libor 90 day + 0.275% for UF 4,491,000, and obligations in Chilean pesos for Th.CLP $22,600,000, both rates fluctuating between
2.95% and 5.58%.
_c) Derivatives at Fair Value with Change in Income – This item includes foreign exchange futures contracts (FR), with a purchase obligation of USD $411 million
and EUR €3 million, in a total of Th.CLP $222,023,105.
It also includes CCS contracts due to expire in June 2012, with a purchase obligation of USD $67 million, in UF 2,246,000. The interest rate for these CCS contracts
is the Libor USD 90 day + 0.275% for components in dollars, with rates fluctuating between 2.95% and 3.05% for the UF component.
Report 2011
_Syndicated Loan administered by Citibank N.A. Balance of USD $400,000,000, at Libor USD 90 day + 0.275%.
In calculating the market value of derivative instruments flows are discounted considering variables quoted on active markets (interest rates). Consequently, the
market values determined are classified under the second level of the IFRS 7 hierarchy.
The expiry profile of the nominal flows for other financial liabilities is presented in the following table. For the purposes of calculating values, capital and interest
payment flows (without discounting values) have been considered for financial debts and the compensation value of financial derivatives with favorable balances,
according to the current exchange rates at the close of the period.
On 12/31/2011
Report 2011
180
Creditor
Class of
Liability
Banco de Crédito e Inversiones
Citibank N.A. (syndicated)
Current (term in days)
Total debt
Th.CLP$
0–90 days
Loans
448,197
448,197
-
Loans
211,306,353
506,934
1,360,268
The Bank of Tokyo-Mitsubishi UFJ, Ltd (deal)
Loans
53,293,443
136,209
340,067
Scotiabank & Trust (Cayman) Ltd (deal)
Loans
53,293,443
136,209
340,067
Loans
341,752
29,292
Claro Comunicaciones S.A. (Telmex S.A.)
Loans
3,305,099
472,157
Deutsche Bank (Chile)
Hedge derivatives
17,622,114
Banco Santander - Chile
Hedge derivatives
8,863,497
Banco de Chile
Hedge derivatives
91 days – 1
year
Total
Current
Th.CLP$
Noncurrent (term in years)
More
than 5
Total
Noncurrent
Th.CLP$
1-3
3–5
448,197
-
-
-
-
1,867,202
209,439,151
-
-
209,439,151
476,276
52,817,167
-
-
52,817,167
476,276
52,817,167
-
-
52,817,167
87,878
117,170
224,582
-
-
224,582
-
472,157
944,314
944,314
944,314
2,832,942
344,410
885,165
1,229,575
16,392,539
-
-
16,392,539
173,675
446,361
620,036
8,243,461
-
-
8,243,461
1,506,385
120,646
307,908
428,554
1,077,831
-
-
-
Scotiabank Chile
Hedge derivatives
8,910,091
181,357
433,424
614,781
8,295,310
-
-
-
Scotiabank Chile
Hedge derivatives
2,341,189
176,306
449,520
625,826
1,715,363
-
-
-
7,947,800
172,205
7,775,595
7,947,800
-
-
-
-
3,996,417
86,837
3,909,580
3,996,417
-
-
-
-
Scotiabank Chile
4,104,206
90,678
4,013,528
4,104,206
-
-
-
-
Banco Bice
49,000
-
49,000
49,000
-
-
-
-
1,059,480
184,000
875,480
1,059,480
-
-
-
-
Banco Bilbao Vizcaya Argentaria, Chile
244,250
76,050
168,200
244,250
-
-
-
-
Corpbanca
140,725
63,225
77,500
140,725
-
-
-
-
Banco de Chile
162,780
98,280
64,500
162,780
-
-
-
-
1,800
1,800
-
1,800
-
-
-
-
Banco del Estado de Chile
352,950
-
352,950
352,950
-
-
-
-
HSBC Bank (Chile)
190,700
-
190,700
190,700
-
-
-
-
JP Morgan Chase Bank, N.A.
89,400
7,500
81,900
89,400
-
-
-
-
1,140
1,140
-
1,140
-
-
-
-
4,600
4,600
-
4,600
-
-
-
-
Corpbanca
500
500
-
500
-
-
-
-
30,000
30,000
-
30,000
-
-
-
-
6,780
6,780
-
6,780
-
-
-
-
HSBC Bank (Chile)
21,150
21,150
-
21,150
-
-
-
-
Scotiabank Chile
11,240
11,240
-
11,240
-
-
-
-
Consorcio Nacional de Seguros S.A.
Financial Leasing
9,447,934
497,248
1,396,275
1,893,523
3,723,401
2,108,482
1,722,528
7,554,411
Chilena Consolidada Seguros de Vida S.A.
Financial Leasing
1,455,908
54,597
163,790
218,387
436,772
436,772
363,977
1,237,521
Banco Bice
Financial Leasing
1,023,873
41,508
124,525
166,033
332,067
332,067
193,706
857,840
Bice Vida Cía. de Seguros de Vida S.A.
Financial Leasing
454,968
23,533
70,598
94,131
188,263
172,574
-
360,837
Commercial credit
Total
326,224,772
326,224,772
-
326,224,772
-
-
-
-
718,253,936
330,423,035
23,964,779
354,387,814
356,647,388
3,994,209
3,224,525
363,866,122
On 12/31/2010
Noncurrent (term in years)
91 days – 1 year
Total
Current
Th.CLP$
1-3
475,490
1,239,429
1,714,919
28,191
84,574
112,765
454,399
-
454,399
3-5
More
than 5
Total
Noncurrent
Th.CLP$
189,476,381
93,874,601
-
283,350,982
225,530
103,370
-
328,900
908,798
908,798
1,363,197
3,180,793
307,497
345,797
-
653,294
19,286,529
8,704,715
-
27,991,244
9,693,773
4,373,936
-
14,067,709
1,482,487
826,890
-
2,309,377
1,077,822
9,938.706
4,477,192
-
14,415,898
486,775
703,867
2,324,392
1,358,820
-
3,683,212
933,145
1,040,485
1,302,985
-
-
1,302,985
746,460
1,880,430
2,626,890
857,385
-
-
857,385
-
485,100
485,100
404,700
-
-
404,700
1,605,955
528,260
825,845
1,354,105
251,850
-
-
251,850
2,607,630
728,885
1,800,160
2,529,045
78,585
-
-
78,585
1,981,535
575,630
1,405,905
1,981,535
-
-
-
-
Scotiabank Chile
1,789,720
133,920
960,845
1,094,765
694,955
-
-
694,955
Banco Security
735,540
-
735,540
735,540
-
-
-
-
Nbank of America N.A.
1,354,555
278,245
1,076,310
1,354,555
-
-
-
-
Rabobank Chile
283,200
283,200
-
283,200
-
-
-
-
843,930
205,920
638,010
843,930
-
-
-
-
109,160
109,160
-
109,160
-
-
-
-
Corpbanca
51,870
51,870
-
51,870
-
-
-
-
Banco de Chile
32,625
32,625
-
32,625
-
-
-
-
13.930
13,930
-
13,930
-
-
-
-
77,550
77,550
-
77,550
-
-
-
-
53,375
53,375
-
53,375
-
-
-
-
HSBC Bank (Chile)
389,120
389,120
-
389,120
-
-
-
-
Scotiabank Chile
103,555
103,555
-
103,555
-
-
-
-
Financial Leasing
10,853,655
447,920
1,343,762
1,791,682
3,583,364
2,958,542
2,520,067
9,061,973
Financial Leasing
1,611,322
52,543
157,629
210,172
420,345
420,345
560,460
1,401,150
Banco Bice
Financial Leasing
1,145,154
39,947
119,842
159,789
319,578
319,578
346,209
985,365
Financial Leasing
528,447
22,648
67,943
90,591
181,182
181,182
75,492
437,856
Financial Leasing
217,127
104,362
112,765
217,127
-
-
-
-
Banco Security
Financial Leasing
21
21
-
21
-
-
-
-
Scotiabank Chile
Financial Leasing
200,660
60,199
140,461
200,660
-
-
-
-
Accounts payable
Creditor
Class of
Liability
Total debt
Th.CLP$
0–90 days
Citibank N.A.
Loans
285,065,901
Loans
441,665
Claro Comunicaciones S.A. (ex Telmex S.A.)
Loans
3,635,192
Loans
730,165
25.625
51,246
76,871
Hedge derivatives
30,047,846
636,492
1,420,110
2,056,602
Hedge derivatives
15,103,963
320,676
715,578
1,036,254
Banco de Chile
Hedge derivatives
2,786,700
147,062
330,261
477,323
Scotiabank Chile
Hedge derivatives
15,493,720
333,378
744,444
Scotiabank Chile
Hedge derivatives
4,387,079
217,092
2,343,470
107,340
3,484,275
Corpbanca
889,800
Banco de Chile
HSBC Bank (Chile)
Total
319,275,469
319,275,469
-
319,275,469
-
-
-
-
710,274,881
327,060,559
17,756,109
344,816,668
241,739,022
118,853,766
4,865,425
365,458,213
181
Report 2011
Current (term in days)
Group companies with debts are listed below, together with the respective creditor, the countries of origin, and financial conditions of these liabilities:
On 12/31/2011
Report 2011
182
Debtor Tax ID
Debtor
Entity
Country
of debtor
Creditor Tax ID
92.580.000-7
Creditor
Entel S.A.
Chile
97.006.000-6
92.580.000-7
Entel S.A.
Chile
0-E
Citibank N.A. (sindicado)
92.580.000-7
Entel S.A.
Chile
0-E
The Bank of Tokyo-Mitsubishi UFJ, Ltd
92.580.000-7
Entel S.A.
Chile
0-E
Scotiabank & Trust (Cayman) Ltd (deal)
Country
of creditor
Foreign
Type of
Amortization
Rate
Cash
Nominal rate
Chile
CLP
Monthly
6.37%
Corriente + 1.2%
USA
USD
Deferred annual
4.86%
Libor USD90 d + 0.275%
USA
USD
Deferred annual
1.70%
Cayman Islands
USD
Deferred annual
1.70%
92.580.000-7
Entel S.A.
Chile
97.006.000-6
Chile
UF
Monthly
5.41%
5.41%
92.580.000-7
Entel S.A.
Chile
88.381.200-K
Claro Infraestructura S.A. (Telmex S.A.)
Chile
UF
Annual
9.12%
8.70%
92.580.000-7
Entel S.A.
Chile
96.929.050-2
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.036.000-K
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.004.000-5
Banco de Chile
Chile
CLP
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
CLP
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
96.929.050-2
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.036.000-K
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.080.000-K
Banco Bice
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.006.000-6
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.032.000-8
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.023.000-9
Corpbanca
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.004.000-5
Banco de Chile
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.036.000-k
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.030.000-7
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.951.000-4
HSBC Bank (Chile)
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.043.000-8
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.006.000-6
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.032.000-8
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.023.000-9
Corpbanca
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
96.929.050-2
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.030.000-7
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.951.000-4
HSBC Bank (Chile)
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
99.012.000-5
Chile
UF
Monthly
8.03%
8.03%
92.580.000-7
Entel S.A.
Chile
99.185.000-7
Chile
UF
Monthly
8.43%
8.43%
92.580.000-7
Entel S.A.
Chile
97.080.000-K
Banco Bice
Chile
UF
Monthly
8.32%
8.32%
92.580.000-7
Entel S.A.
Chile
96.656.410-5
Chile
UF
Monthly
7.52%
7.52%
On 12/31/2010
Debtor
Entity
Country
of debtor
Creditor Tax ID
Creditor
Citibank N.A.
Country
of creditor
Foreign
Type of
Amortization
Rate
Cash
Nominal rate
92.580.000-7
Entel S.A.
Chile
0-E
USA
USD
Deferred annual
4.86%
96.682.830-7
Cientec S.A.
Chile
97.006.000-6
Chile
UF
Monthly
0.43%
0.43%
92.580.000-7
Entel S.A.
Chile
94.675.000-k
Claro Comunicaciones S.A. (Telmex S.A.)
Chile
UF
Annual
9.12%
8.70%
96.652.650-5
Transam S.A.
Chile
97.036.000-k
Chile
UF
Monthly
6.90%
6.90%
92.580.000-7
Entel S.A.
Chile
96.929.050-2
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.036.000-k
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.004.000-5
Banco de Chile
Chile
CLP
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.919.000-k
Scotiabank Chile
Chile
UF
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.919.000-k
Scotiabank Chile
Chile
CLP
Deferred annual
-
-
92.580.000-7
Entel S.A.
Chile
97.006.000-6
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.032.000-8
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.023.000-9
Corpbanca
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.004.000-5
Banco de Chile
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.036.000-k
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.951.000-4
HSBC Bank (Chile)
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.053.000-2
Banco Security
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
0-E
Nbank of America N.A.
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.949.000-3
Rabobank Chile
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
97.043.000-8
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.032.000-8
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.023.000-9
Corpbanca
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.004.000-5
Banco de Chile
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.036.000-k
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
96.929.050-2
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97..030.000-7
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.951.000-4
HSBC Bank (Chile)
Chile
CLP
-
-
-
96.806.980-2
Entel PCS S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
CLP
-
-
-
92.580.000-7
Entel S.A.
Chile
99.012.000-5
Chile
UF
Monthly
8.03%
8.03%
92.580.000-7
Entel S.A.
Chile
99.185.000-7
Chile
UF
Monthly
8.43%
8.43%
92.580.000-7
Entel S.A.
Chile
97.080.000-k
Banco Bice
Chile
UF
Monthly
8.32%
8.32%
92.580.000-7
Entel S.A.
Chile
96.656.410-5
Chile
UF
Monthly
7.52%
7.52%
96.682.830-7
Cientec S.A.
Chile
97.006.000-6
Chile
UF
Monthly
4.50%
4.50%
96.682.830-7
Cientec S.A.
Chile
97.053.000-2
Banco Security
Chile
UF
Monthly
5.30%
5.30%
96.682.830-7
Cientec S.A.
Chile
97.018.000-1
Scotiabank Chile
Chile
UF
Monthly
6.91%
6.91%
183
Report 2011
Debtor Tax ID
Liquidity risks are controlled by financial planning that takes into account debt policies and potential third party financing sources. The low level of debt held by the
Group’s companies and access to national and international finance through bank loans and placing debt securities secures allows it to reduce long term liquidity
risks, with the exception of systematic alterations in the financial markets.
In the previously included tables of expiry dates, a range of obligations for financial leasing contracts are included, whose specific expiry profiles are as follows:
Minimum leasing payments
12/31/2011
Gross
Interest
12/31/2010
Present Value
Th.CLP$
Gross
Interest
Present Value
Th.CLP$
Less than one year
2,372,074
( 727,261 )
1,644,813
2,318,955
( 824,722 )
1,494,233
7,730,398
( 1,600,915 )
6,129,483
8,384,115
( 2,023,573 )
6,360,542
2,280,211
( 170.458 )
2,109,753
3,502,229
( 381,088 )
3,121,141
12,382,683
( 2,498,634 )
9,884,049
14,205,299
( 3,229,383 )
10,975,916
Total
On June 24, 2011, the parent company signed two contracts to issue dematerialized bearer debt securities up to a maximum of UF 5,000,000 each, equivalent to
Th.CLP $111,470,150, with terms of 10 and 30 years. On this date, the complementary deeds were also issued for the contracts, destined to establish the individual
conditions of their placement.
184
These contracts for issuing securities represented a strong alternative to the refinancing of liabilities undertaken by the company during the last quarter of the
current year. Finally, due to the prevailing economic and market conditions at the time of carrying out the refinancing, another source was chosen.
Report 2011
16. COMMERCIAL CREDITORS AND OTHER ACCOUNTS PAYABLE
Covers the items set out in the table below:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Commercial accounts payable
Foreign correspondents
Telecommunications suppliers
2,759,304
4,190,709
36,753,378
42,336,029
Foreign suppliers
28,478,857
29,305,174
National suppliers
205,252,293
177,040,728
Other accounts payable
Personnel obligations
16,067,996
19,311,786
Dividends payable
19,375,846
28,393,006
Others (VAT debit, retained taxes)
Total
17,537,098
18,698,037
326,224,772
319,275,469
17. OTHER PROVISIONS
The breakdown of noncurrent provisions is as follows:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Legal claims
287,566
409,427
Decommissioning, restoration and renovation costs
239,008
239,008
51,688
40,835
578,262
689,270
Provisions, current
Other provisions
Total current provisions
Provisions, noncurrent
Decommissioning, restoration and renovation costs
5,123,356
4,001,616
Total noncurrent provisions
5,123,356
4,001,616
The changes in these provisions during the periods covered by the current financial statements are as follows:
Other provisions
Th.CLP$
Total
Th.CLP$
4,240,624
450,262
4,690,886
Increase (decrease) in existing provisions
413,626
4,370
417,996
Increase for time value of money adjustment
569,001
-
569,001
Total provisions, initial balance (01/01/2011)
12,654
6,483
19,137
126,459
(121,861)
4,598
Changes in provisions, total
1,121,740
( 111,008 )
1,010,732
Total provisions, final balance (12/31/2011)
5,362,364
339,254
5,701,618
Decommissioning and restoration
costs
Th.CLP$
Other provisions
Total
Th.CLP$
Th.CLP$
3,313,148
-
3,313,148
Increase (decrease) in existing provisions
627,253
450,262
1,077,515
Increase for business merger
239,008
-
239,008
Total provisions, initial balance (01/01/2010)
Increase for time value of money adjustment
Changes in provisions, total
Total provisions, final balance (12/31/2010)
61,215
-
61,215
927,476
450,262
1,377,738
4,240,624
450,262
4,690,886
In determining provisions for restoration and renovation costs, the estimated value of the construction, demolition, or any other required activity is considered.
These costs are discounted in line with the estimated terms of the contracts with the owners of the properties or sites on which installations are located, in line with
termination and renewal forecasts. These values are discounted using the cost of capital rates for each company.
185
Report 2011
Decommissioning and
restoration costs
Th.CLP$
18. OTHER NON-FINANCIAL LIABILITIES
Mainly corresponds to deferred revenue, detailed for each period in the table below.
Current
12/31/2011
Th.CLP$
Noncurrent
12/31/2010
Th.CLP$
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Deferred revenue
Prepaid cards
11,292,574
8,328,466
-
-
Access charges
23,640,939
21,383,249
717,068
653,939
Customer loyalty programs
-
-
6,526,611
2,197,340
176,650
165,047
937,885
1,046,851
Other
2,864,599
2,166,529
-
898,270
Advances of applicable state subsidies
2,948,603
9,591,468
972,337
-
Leasing of underwater cables
Other deferred liabilities
Total
-
-
3,467,831
2,795,849
40,923,365
41,634,759
12,621,732
7,592,249
19. STAFF BENEFITS AND EXPENSES
186
a) Workforce Costs
Report 2011
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Salaries
87,409,174
78,345,395
Short-term benefits for employees
12,444,218
13,990,210
643,884
( 2,093,086 )
Costs of post-employment benefit obligations
Severance benefits
Other staff costs
Total
7,401,724
5,488,944
17,379,220
16,388,360
125,278,220
112,119,823
b) Compensation for Years of Service (Post-Employment and Severance Benefits)
The Parent company retains the most significant agreements for compensation for years of service with employee and executive segments.
The right to receive this benefit and the determination of its value are regulated by the respective agreements, taking into account factors such as years of service,
permanency, and remuneration.
The benefit is provided to staff through the Entel–Chile Mutual Corporation, jointly financed by both employees through a monthly contribution of 2.66% of their base
salary, and by the company, which must contribute supplementary funds required on an annual basis as required to meet payment of compensation to a maximum
of 3% of the workforce.
Liabilities recorded as of December 31, 2011 and 2010, designated for post-employment benefits were Th.CLP $7,651,126 and Th.CLP $8,182,456, respectively,
representing the current value of severance pay accrued on those dates after deducting the values available from the Mutual Corporation.
In addition to agreements held by the parent company, the subsidiaries Entel Call Center S.A. and Cientec S.A. have agreements to cover severance pay for years
of service in the case of redundancy, which have been designated as Severance Benefits. The total accrued by these subsidiaries for each period is Th.CLP $66,948
and Th.CLP $75,356, respectively.
The change in balances of post-employment obligations for the parent company is as follows:
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
8,182,456
9,663,719
Cost of current service
643,884
480,264
Cost for obligation Interest
485,950
611,823
-
( 2,051,137 )
( 1,661,164 )
( 522,213 )
Present value of obligation, initial balance
Current losses (earnings) of obligation
Contributions paid to plan
Present value of obligation, final balance
7,651,126
8,182,456
12/31/2011
12/31/2010
Discount rate
6.90%
6.50%
Salary increment rate
1.00%
1.00%
Turnover rate
6.29%
6.29%
RV-2004
RV-2004
Death rate
20. EQUITY
Changes in equity throughout 2011 and 2010 are detailed in the Statement of Changes in Shareholder Equity
_Capital
The Company maintains a series of shares without nominal value in circulation which are fully paid-in. This number of shares corresponds to the capital authorized
by the Company.
Class
SINGLE
No. subscribed shares
Th.CLP$
No. paid-in shares
No. shares with voting rights
Subscribed capital
Th.CLP$
Paid-in capital
Th.CLP$
236,523,695
236,523,695
236,523,695
522,667,566
522,667,566
187
Report 2011
Transactions
Between January 1, 2010 and December 31, 2011, no changes were recorded for issuing, surrenders, reductions, or any other circumstances.
The portfolio does not contain shares in its own companies.
There are no reserves or commitments to issue shares to cover option and sale contracts.
_Cumulative Earnings (Losses)
As of December 31, 2011 and 2010, these suffered decreases of Th.CLP $54,229,998 and Th.CLP $51,625,565, respectively. These values correspond to the provisional dividends paid out for these years, plus the provision for the remaining distribution for compliance with the legal minimum dividend.
The remaining provisions to meet the legal minimum dividend are CLP $12.61 and CLP $100 per share for the respective years.
_Dividend Policy
In line with Act 18,046, and except when another agreement has been reached at the shareholders meeting by unanimity of shares issued, at least 30% of any profit
made by public limited companies must be paid as a dividend.
Report 2011
188
The company’s dividend distribution policy that is currently in force establishes dividends in excess of the legal minimums. However these limits set maximums
and as such any dividends paid in excess of the legal minimum are discretionary. With respect to the above, the company does not make dividend provisions in
excess of the legal minimum.
The policy communicated at the most recent ordinary shareholders meeting held on April 26, 2011, will consider proposing payments of up to 80% of profits for
each financial year, conditional on the company’s annual results, investment requirements, and the safeguards established in long term bank loan agreements to
which the Company is committed with respect to debt, liquidity and financing.
The Chilean Securities and Insurance Supervisor requires the parent company to define a policy for handling income originating from the adjustment of assets and
liabilities to fair value. As such, the company has established a policy of deducting the unrealized profits that would have been generated from the income to be
distributed.
In terms of profits for the 2010 financial year, this corresponded to a reduction of Th.CLP $885,992 for the adjustment of non-hedge financial derivative contracts to
fair value. With respect to the profits for 2011, no adjustments are required to be made in this respect.
Except for the conditions referred to in the previous paragraphs, the company is not subject to additional restrictions for the payment of dividends.
_Dividend payments
At the ordinary shareholders meeting, held on April 26, 2011, it was agreed to make a final dividend payment of CLP $445 per share, equivalent to Th.CLP $105,253,044.
The dividend was payable on May 24, 2011.
At the ordinary shareholders meeting, held on April 29, 2010, it was agreed to distribute a final dividend payment of CLP $350 per share, equivalent to
Th.CLP $82,783,293. The dividend was payable on May 25, 2010.
At the board meeting held on November 7, 2011, the board agreed to pay an interim dividend of CLP $150 per share, equivalent to a total of Th.CLP $35,478,554. The
dividend was payable on December 12, 2011.
At the board meeting held on November 9, 2010, the board agreed to pay an interim dividend of CLP $100 per share, equivalent to a total of Th.CLP $23,652,370. The
dividend was payable on December 13, 2010.
_Other reserves
The other reserves present in the Statement of Changes in Equity are of the following nature:
Reserves for Foreign Currency Translation – This value reflects the cumulative results of exchange rate fluctuations when converting the financial statements of
subsidiaries based outside of Chile from their working currency to the Group’s reporting currency (Chilean Pesos).
Cash Flow Hedge Reserve – Corresponds to the difference between the spot and fair values of cash flow hedge contracts (CCS) classified as effective. Net of deferred tax.
These values are transferred to income upon maturity of the contract.
Other Reserves – Charges and credits to equity for the adjustments to be made for the first-time application of the International Financial Reporting Standards
(IFRS), effective from January 1, 2008.
The main balances for controlled adjustments in this reserve correspond to deferred tax liabilities and prepaid revenue from customers not recorded on this date
for Th.CLP $10,866,212 and Th.CLP $8,215,281, respectively.
Additionally, in accordance with Act 18,046, Article 10, , and Circular 456 of the Chilean Securities and Insurance Supervisor, the revaluation of paid-in capital for
2008 must be listed under this item.
21. EARNINGS PER SHARE
189
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Earnings (losses) attributable to holders of stock instruments in controlling shareholder equity
180,766,659
172,971,209
Income available to ordinary shareholders, basic
180,766,659
172,971,209
Weighted average of no. of shares, basic
236,523,695
236,523,695
764,26
731,31
Basic earnings (losses) per share
The calculation of basic earnings per share for 2011 and 2010 is based on profit attributable to shareholders and the number of single class shares. The company
has not issued convertible debt or other equity instruments. Consequently there are no factors that could cause the dilution of the company’s earnings per share.
Report 2011
Earnings per share are as follows:
22. INCOME AND EXPENDITURE
a) Ordinary Revenue
The Group’s revenue is principally derived from services. Sales of goods are not significant and are viewed as accessories to services. Breakdown by type of service
is as follows:
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Provision of mobile services
966,400,498
839,622,831
Provision of wireline services
234,933,530
217,019,496
Other services
Total ordinary revenue
190
29,464,224
26,952,814
1,230,798,252
1,083,595,141
b) Other Revenue
The breakdown of this item for each year is as follows:
Report 2011
Cumulative
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
Revenue from commercial interests
1,263,873
998,853
Revenue from leasing
2,895,881
1,840,554
Net revenue from insurance settlement
6,920,792
-
492,396
1,463,752
11,572,942
4,303,159
Other revenue
Total other revenue
The item Net Revenue for Insurance Settlement records the net effect of charges and credits to income for the earthquake that affected the central zone of Chile at
the start of 2010.
For 2010, the charges for deterioration in value, write-offs, and the costs of repairing assets were Th.CLP $7,646,329. This value was offset by provisions made in
the estimation of insurance compensations to the same value.
The repair work to facilities and valuation of damages were completed in 2011. Similarly, the insurance loss adjuster issued the final settlement for damages
to assets and facilities, and losses for stoppage. The valuation of the damages was adjusted based on this information, with an allocation against income for
Th.CLP $1,085,315 and a credit for Th.CLP $8,006,107 was recorded to adjust the estimates of compensation provisions from the previous year to the value of the
final settlement.
c) Ordinary Expenditure
The breakdown of other expenses for each year is as follows:
Cumulative
Access charges and shares to correspondents
Outsourcing and materials
Marketing, commissions and sales costs
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
(182,665,119)
(170,820,924)
(26,321,220)
(25,596,064)
(180,048,248)
(139,265,121)
Leasing and maintenance
(90,090,676)
(81,161,819)
Other
(89,680,842)
(86,569,700)
(568,806,105)
(503,413,628)
Total other expenditure
d) Financial Revenue and Expenditure
The breakdown of financial revenue and expenditure for each year is as follows:
Cumulative
Interests on financial leases provided
01/01/2010
12/31/2010
Th.CLP$
2,673,162
970,282
386,131
411,006
3,059,293
1,381,288
(2,050,654)
(2,381,578)
(806,643)
(682,529)
(4,907,068)
(4,434,627)
(53,732)
(80,345)
Expenditure on interest, financial leasing
(837,835)
(986,016)
Expenditure on interest, post-employment benefit plans
(485,950)
(611,823)
Expenditure on Interest, other
(905,708)
(584,021)
Total financial revenue
Expenditure on interest, loans (liabilities at amortized cost)
Amortization of expenditure for the credit contracts
Rate hedges (CCS)
Non-hedge rate derivatives
Other financial costs
(268,073)
(139,872)
Total financial costs
(10,315,663)
(9,900,811)
(7,256,370)
(8,519,523)
Total financial income, net
The net financial income includes the following interest with respect to assets and liabilities not measured at fair value with change in income:
Total revenue for interest from financial assets
Total expenditure for interest from financial liabilities
3,059,293
1,381,288
(5,086,790)
(5,245,967)
191
Report 2011
Interest on term deposits (loans and accounts receivable)
01/01/2011
12/31/2011
Th.CLP$
23. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
The information regarding balances of assets and liabilities in foreign currencies is provided below.
Class of asset
Currency
Dollars
Peruvian Sol
Euro
Values not discounted according to expiries
1–90 days
91 days – 1 year
1–3 years
1,023,299
1,023,299
-
-
3–5 years
-
785,715
785,715
-
-
-
9,311
9,311
-
-
-
Dollars
250,068,924
64,108,792
185,960,132
-
-
Dollars
128,446
128,446
-
-
-
14,143
14,143
-
-
-
Peruvian Sol
Commercial debtors and other accounts receivable, current
192
12/31/2011
Th.CLP$
Dollars
6,865,546
6,865,546
-
-
-
Peruvian Sol
1,670,175
1,670,175
-
-
-
Euro
4,139,857
4,139,857
-
-
-
1,066,064
-
1,066,064
-
-
89,664,668
-
-
89,664,668
-
Peruvian Sol
476,023
-
-
476,023
-
Peruvian Sol
4,845,860
-
-
-
-
Peruvian Sol
10,192,789
-
-
-
-
Deferred tax assets
Peruvian Sol
1,267,102
-
-
-
-
Current tax assets
Peruvian Sol
Dollars
Intangible assets
Total assets in foreign currency
372,217,922
Dollars
347,750,883
Report 2011
Peruvian Sol
20,317,871
Euro
Class of liabilities
Currency
4,149,168
12/31/2011
Th.CLP$
1–3 years
3–5 years
Other financial liabilities, current
Dollars
730,964
179,752
551,212
-
-
-
Commercial accounts payable and other accounts payable
Dollars
40,008,963
40,008,963
-
-
-
-
6,566,918
6,566,918
-
-
-
-
767,997
767,997
-
-
-
-
309,312,292
-
-
309,312,292
-
-
Euro
Peruvian Sol
Other financial liabilities, noncurrent
Dollars
Provisions, noncurrent
Dollars
Peruvian Sol
Total liabilities in foreign currency
91 days – 1 year
More than 5 years
92,360
-
-
-
-
-
419,487
-
-
-
-
-
357,898,981
Dollars
1–90 days
350,144,579
Peruvian Sol
1,187,484
Euro
6,566,918
Class of asset
Currency
12/31/2011
Th.CLP$
1–90 days
91 days – 1 year
1–3 years
3–5 years
1,045,108
1,045,108
-
-
-
836,143
836,143
-
-
-
13,370
13,370
-
-
-
151,428,667
51,976,542
99,452,125
-
-
932,295
932,295
-
-
-
67,647
67,647
-
-
-
Dollars
Peruvian Sol
Euro
Dollars
Euro
Dollars
554,981
554,981
-
-
-
Dollars
6,514,665
6,514,665
-
-
-
Peruvian Sol
Commercial debtors and other accounts receivable, current
Peruvian Sol
3,243,623
3,243,623
-
-
-
Inventory
Peruvian Sol
2,251
-
-
-
-
Current tax assets
Peruvian Sol
Dollars
975,198
-
975,198
-
-
153,282,795
-
-
69,450,127
83,832,668
Peruvian Sol
1,140,802
-
-
1,140,802
-
Intangible assets
Peruvian Sol
4,336,547
-
-
-
-
Peruvian Sol
7,627,769
-
-
-
-
332,001,861
Dollars
312,338,882
Peruvian Sol
18,717,314
Euro
Class of liabilities
Moneda
Extranjera
Report 2011
Total assets in foreign currency
193
945,665
12/31/2010
Th.CLP$
1–90 days
91 days – 1 year
1–3 years
3–5 years
Other current financial liabilities
Dollars
68,580
68,580
-
-
-
-
Dollars
34,479,913
34,479,913
-
-
-
-
Euro
1,004,053
1,004,053
-
-
-
-
Peruvian Sol
1,757,041
1,453,728
303,313
-
-
-
Deg
Other noncurrent financial liabilities
Dollars
Peruvian Sol
Other noncurrent non-financial liabilities
Dollars
Total liabilities in foreign currency
133,652
133,652
-
-
-
-
279,337,934
-
-
93,112,645
186,225,289
-
339,769
-
-
-
-
-
11,456
-
-
11,456
-
-
317,132,398
Dollars
313,897,883
Peruvian Sol
2,096,810
Euro
1,004,053
Deg
133,652
At the end of each accounting period, the Group companies hold derivative contracts for exchange rate protection (foreign currency forwards) and the substitution
of obligations in dollars at variable interest rates for obligations in the national currency index at a fixed rate (Cross Currency Swap - CCS). In the previous tables,
only the foreign currency element of these contracts is included.
24. FOREIGN CURRENCY TRANSLATION AND INCOME FROM INDEXES
The origins of effects on income from currency translation and the application of currency indexes throughout the indicated periods are as follows:
Cumulative
Foreign currency translation
Cash and equivalents
Commercial debtors and other accounts receivable
1,166,794
95,331
(24,352)
7,624
1,955,144
(31,876,000)
23,454,000
Derivative instruments, effect rates at close (FW)
21,230,796
( 16,606,292 )
Derivative instruments, effect rates at close (CCS)
12,285,600
( 9,102,500 )
Derivative instruments, effect rates at close (Call)
117,350
-
(7,520,400)
1,590,982
Report 2011
01/01/2010
12/31/2010
Th.CLP$
(2,243,298)
Commercial creditors and other accounts payable
194
01/01/2011
12/31/2011
Th.CLP$
Derivative instruments, effect fair value (FW)
Derivative instruments, effect fair value (CCS)
(31,056)
74,966
Derivative instruments, effect fair value (Call)
(174,050)
( 140,669 )
719,239
( 32,309 )
( 6,349,377 )
1,296,277
Other liabilities
Total foreign currency translation
Income from currency indexes
Other assets
367,061
213,628
(13,451)
( 22,871 )
(5,648,688)
( 3,526,819 )
Derivative instruments, effect rates at close (CCS)
Other liabilities
Results for currency indexes
-
( 1,013 )
( 5,295,078 )
( 3,337,075 )
25. OPERATIONAL LEASES
The main operational leasing agreements as lease holder refer to contracts for telecommunication signal transmission capacities, vehicle floats, the provision of
cables to third party carriers, leases, and usage rights for urban and rural real estate for the installation of technical nodes.
Minimum future payments
Up to one year
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
56,230,306
44,225,492
167,868,731
100,392,198
Total
224,099,037
144,617,690
Cumulative
01/01/2010
12/31/2010
Th.CLP$
51,549,703
46,177,214
Operational leases in the capacity of leasing party refer to contracts associated with the leasing of networks to other telecommunications operators and data center
services (housing, hosting, virtual servers, etc.).
Minimum future payments
12/31/2011
Th.CLP$
12/31/2010
Th.CLP$
Up to one year
176,650
174,384
706,600
648,395
231,284
398,456
1,114,534
1,221,235
Total
Cumulative
Leasing installations recognized in income
As of December 31, 2011, there are no contingent installments to be recorded as paid.
01/01/2011
12/31/2011
Th.CLP$
01/01/2010
12/31/2010
Th.CLP$
176,650
165,047
195
Report 2011
Leasing installations recognized in income
01/01/2011
12/31/2011
Th.CLP$
26. FINANCIAL INFORMATION BY SEGMENT
The Entel Group has developed management information systems that can provide financial information broken down into fine degrees of separation in order to
make decisions for the allocation of resources and performance evaluation.
The most relevant segmentation used for decision making purposes uses subgroups of operating companies which operate in the following business areas:
1. Telecommunications over Mobile Networks
This operating segment is represented by a group of subsidiaries that deploy and operate networks and licenses for the provision of mobile telecommunication
services.
These services include voice, value added services, data, broadband, and mobile Internet.
2. Telecommunications and Other Services over a Fixed Network
This segment is represented by a group of companies focused on the operation of fixed telecommunications service networks and concessions. It provides the
following services: data networks, local telephone services, Internet access, long distance public telephone services, integration of IT services (data center, BPO and
operational continuity), network leasing, and wholesale traffic services.
196
Report 2011
3. International Operations and Other Activities
This essentially corresponds to the company’s operations in Peru, which include the provision of business services, as well as long distance and wholesale traffic
services.
It also includes the operations of subsidiaries providing call center services to the corporate market and Group companies.
The information relative to each of these segments as of December 31, 2011 and 2010, is as follows:
Transactions between segments are recorded for the periods in which services were provided or assets were transferred, taking into account market prices.
International operations delivered through subsidiaries in Peru generated revenue of Th.CLP $22,179,440 for the 2011 financial year, equivalent to 1.8% of Group
revenue from ordinary activities.
Segment Description
Mobile network
Th.CLP$
Fixed network
Th.CLP$
Abroad Companies
and Other
Businesses
Th.CLP$
966,400,498
234,933,530
29,464,224
-
8,351,596
81,287,816
16,053,257
(105,692,669)
-
819,764
14,913,447
273,315
(12,947,233)
3,059,293
Costs from interest, segment
(12,527,494)
(10,560,714)
(174,688)
12,947,233
(10,315,663)
Revenue from interest, net, segment
(11,707,730)
4,352,733
98,627
-
(7,256,370)
Income from ordinary activities from external customers
Income from ordinary activities between segments
Revenue from interest, segment
Removals
Th.CLP$
Total
Th.CLP$
1,230,798,252
Depreciation and amortization, segment
( 202,689,865 )
(64,135,736)
(3,080,648)
107,575
(269,798,674)
Significant revenue and expenditure items
( 586,759,498 )
(212,963,805)
(40,278,484)
105,585,094
(734,416,693)
Segment earnings (loss) above that reported
173,595,001
43,474,538
2,256,976
-
219,326,515
( 33,595,452 )
(4,748,591)
(215,813)
-
(38,559,856)
Segment earnings (loss) above that reported, total
139,999,549
38,725,947
2,041,163
-
180,766,659
Assets for segments
964,428,805
935,200,783
66,579,911
(408,195,493)
1,558,014,006
Disbursements of non-monetary assets for segment
252,030,535
109,794,457
4,044,404
-
365,869,396
Liabilities for segments
559,619,404
602,545,329
26,322,938
(403,550,756)
784,936,915
Expenditure (revenue) for income tax
General information on income, assets and liabilities, 12/31/2010
Income from ordinary activities from external customers
Income from ordinary activities between segments
Revenue from interest, segment
Costs from interest, segment
Revenue from interest, net, segment
Segment Description
Mobile network
Th.CLP$
Fixed network
Th.CLP$
Abroad Companies
and Other
Businesses
Th.CLP$
839,622,831
217,019,496
11,904,019
73,168,843
197
Removals
Th.CLP$
Total
Th.CLP$
26,952,814
-
1,083,595,141
13,250,454
(98,323,316)
-
54,422
12,608,595
218,468
(11,500,197)
1,381,288
(11,628,968)
(9,556,678)
(207,508)
11,492,343
(9,900,811)
(11,574,546)
3,051,917
10,960
-
(8,519,523)
Depreciation and amortization, segment
(168,024,671)
(62,376,632)
(2,916,029)
117,860
(233,199,472)
Significant revenue and expenditure items
(523,026,621)
(181,965,747)
(37,527,692)
98,213,310
(644,306,750)
148,901,012
48,897,877
(229,493)
-
197,569,396
Segment earnings (loss) above that reported
Expenditure (revenue) for income tax
(22,022,265)
(1,983,179)
(592,743)
-
(24,598,187)
Segment earnings (loss) above that reported, total
126,878,747
46,914,698
(822,236)
-
172,971,209
Assets for segments
884,085,283
801,808,450
61,118,296
(257,737,880)
1,489,274,149
Disbursements of non-monetary assets for segment
206,107,116
109,051,639
2,238,900
-
317,397,655
Liabilities for segments
483,168,232
513,158,862
24,555,997
(252,983,465)
767,899,626
The charges against income for impairment to noncurrent assets during 2011 were Th.CLP $6,416,735, mainly affecting the wireline business segment. Charges for
this concept in the same period of the previous year were Th.CLP $4,688,632, with Th.CLP $3,924,840 charged against the wireline business and Th.CLP $763,792
against international companies.
Results for both 2011 and 2010 have not been affected by the discontinuation of any kind of operations.
Report 2011
General information on income, assets and liabilities, 12/31/2011
27. RISK MANAGEMENT
_The Risk of Technological Change
Changes in telecommunications technology make it necessary to continuously review investment plans to ensure they are aligned with our goal of responding to
changes in connectivity requirements adopted by markets. Changes in technology can be caused both by modifications to patterns of demand and the development
of new forms of communication associated with their applications and the speeds used. The periods of obsolescence for investments in new technology may be less
than those taken into account when the investment is made, meaning that the initial estimations of expected profitability may not be met.
This makes the risk of technological change an inherent part of the industry in which Entel operates and the company’s position at the cutting edge of technological
development means it is essential for it to actively manage technological risk for it to maintain this position and remain competitive.
Accordingly, Entel has an active and continuous policy of adopting cutting-edge technologies as a strategic part of its growth and development, although always
subject to a continuous review of their profitability. This has allowed Entel to position itself at the forefront of technology, adapting to the use of new technologies and
making the transition from offering a single product to becoming integrated connectivity provider and continuously offering new ways of doing business. The appearance and development of new technologies has enabled Entel to grow, integrate, and diversify, reducing its exposure to individual business areas and segments.
_Regulatory Risks
Report 2011
198
Regulation plays an important role in the telecommunications industry. Stable regulations and criteria allow for the adequate evaluation of projects and the reduction of the risk inherent in investments, making close monitoring of regulatory changes important. In this respect, 2011 saw the implementation of the various
regulatory directives published at the end of 2010.
However, in January 2011, the Entel Phone tariff restructuring process to fix access charges and other facilities provided to other telecommunications concession
holders should have been complete, having been planned to last for five years from this date. As of the end of 2011, the decree was still being processed, however
when it has been finalized and published, it will be applied retrospectively from January 2011.
The introduction of network neutrality into the General Telecommunications Act, the main function of which is to establish requirements to provide users with better
information, will affect the market by making it possible to carry out comparisons between different operators and make more informed decisions as a result of the
new information. In 2011, the initiative was complemented by a regulation requiring companies providing Internet access to make certain information available on
their websites and undertake quarterly measurements of technical indicators for services providing access to the Internet. The regulation is already in operation
and its first impact will be felt during the coming year with the publication of the figures for the technical indicators.
In the national long distance business the number of primary geographical areas defined for national communications was reduced from 24 to 13 in October 2011.
It is estimated that this legal modification will have no relevant effects on Entel’s revenue for the coming three years, however, the regulations stipulate that 37
months after the law has come into force (i.e. the start of 2015), and subject to a favorable report from the Tribunal for the Defense of Free Competition, the national
long distance category will be removed. As such, from this date, fixed local telephone services will operate in the same way as mobile telephone services, without
a requirement to make use of a carrier for calls between different geographical areas within the country.
In addition to this, in line with legal modifications made at the end of 2010, in 2011, the first steps will be taken in the implementation of number portability, taking
effect throughout the country from January 16, 2012 and allowing subscribers from different fixed and mobile telephone companies to switch supplier while keeping the same number. In the first phase, changes are only possible between companies operating within the same type of network (e.g. from one mobile to another).
This new competitive scenario was first rolled out in Arica’s primary fixed telephony zone during December 2011. It was then followed by mobile telephone services
(national) on January 16, then fixed telephone services for the Metropolitan Region in March, after which point it will be rolled-out progressively to incorporate
new primary zones. The intention is that the gradual implementation of the system for the wireline network will be complete on a national scale during the second
quarter of 2012.
Similarly, during 2011, and following a number of years of processing, the legislative debate in congress to regulate the installation of antennae for the emission and
transmission of telecommunications services was completed. In its third stage, the mixed commission approved a bill of law with favorable votes in both chambers
at the start of January for subsequent enactment and publication in the Official Gazette, subject to procedures by the Constitutional Court regarding its constitutional
organic regulations. This initiative regulates the installation of antennae in order to tackle the impact of development on the urban environment through stricter
requirements at a municipal level, as well as the regulation of other aspects relating to the installation of antennae, such as co-location, and compensation for
those living nearby in certain areas, something which may have an impact on the development of telecommunications networks and imply additional investments.
In addition to this, the company has continued to pay attention to the telecommunications convergence process driven by the new government through initiatives
seeking to increase the diversity of uses of the radio electric spectrum for telecommunications services. This is in addition to communications from the industry
regulator regarding new spectrum to be tendered in the medium term, something of fundamental importance to the expansion of the company’s operations. In this
respect, during December 2011, the Ministry of Transport and Telecommunications published the invitation for a new tender for spectrum on the 2600 MHz band,
used in the majority of countries for the development of LTE technology (Long Term Evolution or 4G).
There is also currently an investigation under way by the Tribunal for the Defense of Free Competition to review telephone services that have different tariffs for
calls to other networks; similarly, the provision of telecommunications services in product bundles is also being analyzed. In this process, presentations are already
being made by all stakeholders, and the tribunal is considering the information in order to issue a resolution with respect to the material.
All these regulatory changes being introduced by the authority provide new business opportunities. Additionally, the diversity and relative size of Entel cushion it
from the effects of adverse or inadequate regulation, reducing the risk created for its operations, cash flows, wealth creation for shareholders, and contribution to
the community. However, within a regulated industry such as the one in which Entel operates, changes in regulations or in the policies made by legal and regulatory
authorities cannot be ruled out and have the potential to impact negatively upon the results of the company or restrict its possibility for growth.
Entel’s financing is largely denominated in foreign currencies as a result of signing a syndicated loan and another credit agreement provided by two banks in December 2011 (Tokio-Mistubishi and Scotiabank). Furthermore, a proportion of Entel’s suppliers permanently generate obligations for foreign currency payments. Both
components represent liabilities whose value changes on a daily basis as a result of exchange rate fluctuations. As a result of this, Entel takes out short- and longterm contracts in foreign currency assets (hedge derivatives) to protected the value against these variations and thus eliminate risk from exchange rate fluctuations.
_Interest Rate Risks
The company’s policy establishes that the debt structure must be held with a maximum of 60% at variable interest rates. In the event that debts rise above this
limit, the company will structure the corresponding financial instruments to ensure compliance with this policy. The proportions of variable-rate debt exposed to
fluctuations in the estimated rate behave in a manner sufficiently similar to the assets of the business and reflects the EBITDA generated during each financial year.
As of December 31, 2011, the Group had credit in foreign currency to the value of USD $600 million, accruing interest based on the variable Libor rate and impacting
on the fluctuations of the financial expenditure in the Income Statements. In order to mitigate the effects of these variations, the management takes out financial
contracts for rate derivatives (Cross Currency Swap), hence fixing a significant proportion of the interest paid.
When there is a rise in the Libor base rate according to market forecasts, the Group’s annual financing costs increase, although they are still within the limits established by the management and the financial safeguards guaranteed to its creditors.
_Credit Risk
The credit risk related to the balances of accounts held with banks, financial instruments, negotiable stocks, and derivatives is managed by the finance area in line
with the policies devised to maintain the invested capital. These policies insure the diversification of risk through pre-established limits for duration of placement,
percentage by institution, and risk of the instruments in which cash surpluses are invested. The investment instruments approved for use are those issued by the
Chilean Central Bank or banking subsidiaries with high risk ratings. Investments may be denominated in the local currency or in main foreign currencies.
199
Report 2011
_Exchange Rate Risks
Risk exposure associated with the recovery of accounts receivable originating from commercial operations, is derived from the terms of payment that must be
offered, due to the nature of the telecommunications industry, to direct customers, intermediaries, and other national and international operators with whom reciprocal connection agreements are held. Risk management for accounts receivable is designed to minimize exposure, insofar as possible given market conditions. Risk management processes are differentiated according to debtors profiles, in line with segmented portfolio controls: these include people, businesses, corporations, telecommunications companies,
correspondence, distributors, large retailers, and other channels for the distribution of goods and services.
For each segment, there are prospective and predictive models that make it possible to devise policies depending on the origin of the debt. These range from the
prepaid services used for the highest risk customer/product combinations, all the way to the establishment of credit limits, with and without collateral guarantees,
credit insurance, and other alternatives, evaluated on a case-by-case basis.
_Liquidity Risk
In terms of providing the required liquidity to meet financial obligations in a timely manner, Entel pays future expiries in advance, seeking an option on the market
that can provide funds in a timely manner. During 2011, the amortization installment due in June 2012 was paid in advance, thus avoiding the potential risks of the
debt market.
For more detail, the expiry dates of financial liabilities are detailed in note 15.
200
28. CONTINGENCIES, LITIGATION AND FINANCIAL RESTRICTIONS
Report 2011
Contingencies for the direct commitments of the Group companies as of December 31, 2011 and 2010. are related to:
a. Contingencies for direct commitments from international purchase orders of Th.CLP $50,356,114 and Th.CLP $6,516,278 for each period.
The totality of these purchase orders are recorded in foreign currencies and have been converted according to the current exchange rates at each end of period.
b. Contingency for bank guarantee deposits provided to guarantee faithful contract compliance, the award of 900 MHz frequencies, and the replacement of public
usage assets for the construction and maintenance of networks. The values of current invoices for each period were Th.CLP $17,584,416 and Th.CLP $15,533,597,
respectively.
c.
As of December 31, 2011, lawsuits and legal action of a significant nature that may represent a contingency of loss for the Company are as follows:
_Bordachar v. Entel S.A.
Court: Civil Court No. 6, Santiago de Chile.
Case No.: 9088-2005.
Notification: September 6, 2005.
Matter: Ordinary large claims trial. Compensation for damages.
Claimant: Gerard Phillippe Bordachar Sotomayor.
Request: Payment of compensation for moral damages to the claimant and his daughters, as represented by the claimant, for a total of CLP $225,000,000.
Cause of action: Publication of information regarding an investigation by television channel Canal 13 into Universidad Católica on the Entel website.
Current procedural stage: Sentence dated June 3, 2010, rejects claim with costs. August 2, 2010, claimant files appeal. Pending review of case. Case No. 5293-2010.
On September 8, 2011 the claimant filed an Inapplicability Requirement with the Constitutional Court for Article 2,331 of the Civil Code, Case No. 2085-2011. Pending
examination of requirement.
Probable outcome: It is considered likely the case will be rejected on poor legal grounds.
_Grupo Consultor en Telecomunicaciones Ltda. v. Entel S.A. and Entelphone S.A.
Grupo Consultor en Telecomunicaciones Ltda. v. Entel S.A. and Entelphone S.A.
Court: Civil Court No. 7 Santiago de Chile.
Case No.: 7749-2010.
Notification: August 11, 2010.
Matter: Compliance with contract, including compensation for damages.
Claimant: Grupo Consultor en Telecomunicaciones Ltda.
Request: Compliance with contract, including compensation for damages of CLP $150,177,002.
Cause of action: Alleged non-compliance of accused.
Current procedural stage: On September 1, 2010, Entel and Entelphone raise objection of gross incompetence. On September 6, claimant complied with transfer
granted. Pending resolution of objection lodged. File No: 551-2010.
_Asistencia Electrónica v. Entel S.A.
_José Miguel Muñoz Díaz v. Entel.
Case No.: 12006-2005.
Matter: ordinary large claims trial. Indemnity for damages.
Claimant: José Miguel Muñoz Díaz.
Request: Damages, compensation for CLP $100,000,000.
Cause of action: The provision of incomplete and erroneous information regarding remunerations of the claimant. It is alleged this would have resulted in receiving
less benefits as an exonerated politician.
Current procedural stage: Sentence dated May 25, 2010 rejects case and acquits Entel S.A. Notification of sentence on October 14, 2010. Claimant files appeal. Case
no. 6661-2010. Pending review of case.
_Promotora Promout v. Entel y Entelphone S.A.
Court: Civil Court No.18, Santiago de Chile.
Case No.: 1250-2006. Notification: March 17, 2006.
Defendants: Entel S.A. and Entelphone.
Request: Compensation of UF 46,000 for consequential and moral damages.
Cause of action: Alleged damages due to non-compliance with telemarketing contract.
Current procedural stage: On May 11, 2009, the case entered the discovery stage. Pending notification.
_Agrícola El Carrizal v. Entel S.A.
Case No.: 36,055-2009.
Notification: January 22, 2010.
201
Report 2011
Case No.: 26,542-2009.
Notification: November 4, 2009.
Matter: Ordinary case for compensation of damages.
Claimant: Sociedad Asistencia Electrónica S.A. represented by Ismael Jara Gallardo.
Request: Damages of CLP $100,000,000.
Cause of action: Publishing arrears in trade registers.
Current procedural stage: Entel objects, claiming incompetence in principal and subsequently contesting on January 22, 2010; notification of incompetence served
although still not resolved. File No: 278-2009.
Matter: Termination of easement contract with compensation for damages. Substitute claim for extracontractual liability.
Claimant: Agrícola El Carrizal S.A.
Defendant: Empresa Nacional de Telecommunicaciones S.A.
Request: Termination of easement contract and Entel to pay CLP $1,374,188,309 for consequential and moral damages, and loss of earnings.
Cause of action: Alleged damages caused by fire on premises of claimant’s property.
Current procedural stage: Case filed by insurance (Luís Sandoval Olivares). Discussion stage complete. Ordinary evidence stage closed. Pending review of evidence.
_Treasury v. Entel S.A.
Case No.: 23,740-2006.
Matter: Ordinary Treasury Lawsuit for payment of CLP $996,711,294 plus adjustments for inflation and interest.
Claimant: State Defense Council.
Request: Reimbursement of a sum paid by the Ministry of Public Works to move telecommunications cables.
Cause of action: Payment made in error by the Treasury in January, 2002.
Current procedural stage: On August 31, 2009 ruling made accepting lawsuit against Entel. Ruling confirmed by Appeal Court (Case No.: 7,445-2009). On October
29, 2010, Entel filed for cassation in form and content, which was granted on November 9. Pending review of resource in Supreme Court. Supreme Court Case No.:
286-2011. Inapplicability requirement presented May 30, 2011, Case No. 1993-2011. December 1 2011, proceeded to hear case, agreement reached for this date.
Probable outcome: It is believed that the Supreme Court should accept the motion, without affecting consideration of exercising of other actions.
_Ceballos v. Entel S.A.
Report 2011
202
Case No.: 9,893-2007.
Notification: July 13, 2007.
Matter: Ordinary case for termination of contract and compensation for damages.
Claimant: Doris Yanet Ceballos Pilcol.
Request: Contractual responsibility and compensation for damages of approx CLP $150,000,000.
Cause of action: Non-fulfillment of contract.
Current procedural stage: Discussion stage completed. Pending notification of parties to produce evidence. Archival of file at court, from August 6, 2010.
Case No.: 19,384-2008.
Notification: October 23, 2008.
Cause of action: Erroneous payment made by Autopista Central.
Current procedural stage: Conviction dated December 20, 2011. Pending notification.
_Treasury v. Entel S.A..
Case No.: 23,840-2008.
Matter: Ordinary Treasury lawsuit for payment of CLP $112,675,303 plus adjustments for inflation and interest.
Current procedural stage: Conviction dated November 28, 2011. Pending notification.
Case No.: 29,989-2008.
Current procedural stage: Discussion stage completed. Discovery stage closed. With summons from October 17, 2011.
_Chilean Treasury v. Entel S.A.
Case No.: 25,651-2009.
Notification: November 3, 2009.
Probable outcome: It is considered likely that the case will be rejected on poor legal grounds.
Case No.: 7756-2010.
Cause of action: Erroneous payment made by the company Autopista Vespucio Sur.
_Martínez Basoalto Florencia v. Ilustre Municipalidad de Estación Central and Entel S.A.
Case No.: 24,789-2008.
Notification: June 27, 2009.
Matter: Ordinary case for compensation of damages.
Claimant: Florencia Martínez Basoalto.
Request: Extracontractual responsibility and compensation for damages of approx. CLP $290,000,000.
Cause of action: Joint responsibility of Entel for an accident on the public highway.
Current procedural stage: Lawsuit presented by insurance (Marcelo Nasser Olea). Discussion stage completed. Discovery stage closed. Pending summons for parties
to hear sentence.
_Manufacturas Keylon S.A. v. Entelphone
Court: Local Police Courts, San Miguel, Santiago de Chile.
Case No.: 2741-2002.
Claimant: Manufacturas Keylon S.A.
Request: CLP $267,200,000.
Cause of action: Alleged non-compliance with Consumer Rights Act.
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Report 2011
_Chilean Treasury v. Entel S.A.
Current procedural stage: Ruling for sentence on February 11, 2005.
_IBM de Chile S.A.C v. Cientec Integración S.A.
Case No.: 4190-2010.
Matter: Notification of payment of invoice.
Claimant: IBM DE CHILE S.A.C.
Request: Preparation for enforcement. Notification of payment of invoices for CLP $145,297,453 ordered.
Cause of action: Alleged unpaid invoices.
Current procedural stage: On August 6, 2010 Cientec Computación S.A. lodges procedural annulment for having been erroneously notified of preparatory proceedings as Cientec Integración should have been notified instead. On August 24, 2010, court rules alleged annulment invalid since Cientec Computación is not part
of case. On March 11, 2011, the court ruling annuls the ruling requiring certification that defendant has not discredited the invoices as false and instead orders
claimant to accredit CEO of defendant company Cientec Integración. Case archived with date December 1, 2011. File No. 642-2011.
_Ferrand y Compañía v. Entel Telefonía Local
Report 2011
204
Court: Civil Court No. 23.
Case No.: 36,415-2009.
Notification: May 17, 2010.
Matter: Ordinary lawsuit Ordinary case for compensation of damages.
Claimant: Ferrand y Compañía Limitada.
Request: Damages of CLP $250,000,000.
Current procedural stage: Discussion stage closed, end of evidence stage. With summons from December 6, 2011. Pending notification of sentence.
_Manzano v. Empresa Nacional de Telecomunicaciones S.A.
Court: Civil Court No. 1, Puerto Montt.
Case No.: 6286-2010.
Notification: December 27, 2010.
Matter: Compensation for damages.
Claimant: Federico Isaías Manzano Vera
Request: Compensation of damages for CLP $100,808,000.
Cause of action: Legal non-compliance having falsely attributed a crime to the defendant.
Current procedural stage: Discussion stage completed. Court accepts objection of gross incompetence. Claimant lodges appeal. Case No. 384-2011. On July 25, 2011,
court revokes appealed ruling declaring it rejects exception. Enforcement ordered August 2.
_Reuquen v. Servicios Generales.
Court: Employment Tribunal, Valparaiso.
Internal Case No.: 0-766-2011.
Unique Case No.: 11-4-0035252-8.
Notification: September 30, 2011.
Matter: Compensation for workplace accident.
Claimant: Eduardo Andrés Reuquen Ortiz.
Request: Compensation of approximately CLP $272,850,000.
Cause of action: Compensation for workplace accident.
Current procedural stage: Pre-trial hearing takes place November 21, call for conciliation, although this did not occur. Court hearing fixed for March 30, 2012, 11.00
AM.
d. Tax Adjustment
_The Parent Company has been notified by the Inland Revenue Service of the following settlements:
1) Settlements 4 and 5, April 25, 2007. These settlements request the repayment of Th.CLP $2,641,281 plus adjustments for inflation, interest and fines, derived
from allocations and adjustments made by the company in calculating its profits for the 2004 and 2005 tax years and judged as improper by the service.
The final stage in this process corresponds to the filing of a claim against the tax court, dated November 7, 2007 which is currently awaiting judgment.
2) Adjustments 33 to 36, September 1, 2009. These adjustments request the payment of Th.CLP $4,657,018 of tax plus adjustments for inflation, interest and fines,
derived from allocations and adjustments made by the company in calculating its profit for the 2007 and 2008 tax years and judged as improper by the service.
The service issued resolution 59-2010, dated January 7, 2011, which only partially accepted the request for the revision of the tax audit presented on November 13,
2009. A claim was made against this resolution in the tax courts arguing it must be fully accepted given the arguments put forward.
_The subsidiary Call Center S.A. was notified on April 30, 2008 by the Inland Revenue Service as per summons No. 26, April 29, 2008. This summons challenges the
tax losses declared by the company for the 2005 tax year for a total of Th.CLP $11,599,818. If this challenge is successful, it will not be possible to present these
losses against future earnings.
205
_For the subsidiary Satel S.A., refunds of provisional tax payments have been accrued for Th.CLP $103,109 and Th.CLP $81,510 for the 2004 tax year. Currently
waiting for the court to receive evidence for case.
f.
Management Processes
During the final quarter of 2011, the Department for Telecommunications and Sernac, the Chilean consumer office, initiated processes for the inspection and investigation of events that affected service standards and/or their conditions of sale for services provided by Entel PCS. The results of these processes may lead to some
form of sanctions. While it is not possible to determine their effects at this moment in time, it is estimated that the effect on the company’s income will be minimal.
A summary of these events follows: i) In the second week of October, the supplier BlackBerry experienced an international problem with its network for certain
users in various countries, including Chile. The problem resulted in delays to its services and also affected our mobile subsidiary concession holder for around
three days. ii) Suppliers of complementary services operating in the mobile market and providing information services to customers through received messages
are under investigation. In this case, and given that the messaging service generated charges for each message received, it is being verified if the conditions under
which they were contracted complied with the basic information required to allow customers to make a correctly informed decision. An agreement has been reached through a mediation process with Sernac to reimburse certain sums to customers who received complementary services they did not contract within a period
of 90 days. Compliance will then be accredited by Sernac through a report prepared by an external auditing firm determined by the company. iii) The interruption
experienced in the provision of the messaging service provided through the mobile network during a general power cut that affected a large part of the country.
During this period backup equipment failed to function correctly, however the interruption did not affect public mobile telephone services and the mobile service
network for Internet access, and lasted for less than two hours. Charges have been prepared by the Ministry of Transport and Telecommunications and the company
has presented its defense claiming these should be rejected for a number of reasons.
For the first two events, the company has made provisions for the estimated compensation to be paid to customers (Th.CLP $450,000 and Th.CLP $115,000, respectively). For the third event, no provisions have been made since the duration of the interruption was less than the time established for sanctions to be applicable.
Report 2011
The service issued resolution 59-02, dated August 31, 2009, which only partially accepts the request for the revision of the tax audit presented on September 9, 2009.
A claim was made against this resolution in the tax courts arguing it must be fully accepted given the arguments put forward.
g. There are management restrictions and limits on financial indicators imposed by the syndicated loan contract led by Citibank Citibank, N.A., credit contracts with
Scotiabank & Trust (Cayman) Ltd. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., and the contracts for issuing the dematerialized debt certificates. The most significant
of these stipulate that:
_No merger or consolidation with another company is allowed unless the company survives and none of the restrictions established in debt covenants are exceeded.
_The company or its subsidiaries may not sell assets without considering:
i) The asset’s fair value.
ii) Sales or leasing operations for assets must not exceed 35% of assets in each year, except when dealing with obsolete or unnecessary inventory, cash or cash
equivalent operations, customer agreements, and other operations in the normal course of business.
iii)
206
_Assets must not be pledged, with the exception of existing pledges as of August 13, 2007 that do not exceed USD $60 million, for securing operations, leasing or
credit letters, deferred taxes, duties on new acquisitions, or projects in excess of certain amounts specified for each case.
Report 2011
Any sale of shares in the subsidiary Entel Telefonia Personal S.A. must guarantee retention of at least 50% of the shares and the possibility of having a majority
on the board of directors.
_The consolidated debt ratio must not exceed 4.0:1. In order to determine the ratio, only financial debt is taken into account (excluding debts arising from goods
and services in the line of business) in relation to total operating revenue for each period, plus depreciation, amortization, and other expenses that do not represent
cash flows (EBITDA).
_The consolidated interest hedge ratio must not be less than 3.0:1. For this purpose, the relationship between the EBITDA and net financial expenditure is considered, both being calculated for the twelve months preceding the end of each quarter.
In the event of non-compliance with any of these requirements, creditors may demand payment of all amounts owed, without the possibility of complaint, lawsuit,
or protest on the part of the debtor. As of December 31, 2011, the company has satisfied all these requirements.
29. THIRD PARTY GUARANTEES
The Group’s companies have not received any sureties from third parties for assets, loan operations, or to guarantee any other type of obligation.
30. ENVIRONMENT
The company has not made any disbursements for environmental regulations.
31. RESEARCH AND DEVELOPMENT
The Group companies have not undertaken any activities of this nature during the periods covered by the financial statements considered in this report.
However the parent company maintains a valid contract with the principal public agency responsible for the promotion of innovation (Corfo Innova Chile Committee)
to promote business innovation, innovative entrepreneurship, technology diffusion and transfer, and public innovation. The expenses incurred to this date in the
context of this initiative do not yet qualify as research and development expenditure as such.
In the context of this contract a modern Innovation Center was launched at the end of 2010, focusing on the creation of high-tech projects with the joint participation
of customers and technology partners.
32. SANCTIONS
207
33. SUBSEQUENT EVENTS
On January 9, 2012, the unilateral retraction of the controller of GTD Teleductos S.A. to merge the company with Entel S.A. was acknowledged in line with the Memorandum of Intent signed on November 28, 2011.
Between January 1, 2012 and the date on which these financial statements are published, no subsequent events have occurred that could significantly affect the
values contained therein.
Report 2011
The Group companies and their directors and managers have not been subject to sanctions of any nature by the Chilean Securities and Insurance Supervisor or any
other regulatory authorities.
Ratio analYsis of consOlidated
finAncial statemEnts_
December 31, 2011
FINANCING STRUCTURE, REVENUE GROWTH, COSTS, AND PROFITABILITY
FINANCIAL RATIOS
Report 2011
208
The changes in the most relevant financial indicators during the last twelve months are detailed below.
For the purposes of analysis, the reader should bear in mind that the information has not been adjusted in line with purchasing power parity since, the IFRS standards adopted by the company from 2008 do not require figures to be corrected from this date.
The change in the consumer price index between December 31, 2008 and 2011, was 13.6%.
12/31/2011
12/31/2010
Current liquidity (Current Assets / Current Liabilities)
0.93
1.01
Quick Ratio (Cash and Cash Equivalents / Current Liabilities)
0.06
0.20
LIQUIDITY RATIOS
DEBT RATIOS
101.53
106.45
Proportion of Short-Term Debt (%) (Current Liabilities / Total Debt)
Debt Ratio (Total Debt / Equity)
50.23
49.01
Proportion of Long-Term Debt (%) (Noncurrent Liabilities / Total Debt)
49.77
50.99
Hedging of Financial Expenditure (Income Before Taxes and Interest / Financial Expenditure)
22.26
20.95
Profit Margin (Profit over Revenue)
14.69
15.96
Return on Equity (%) (Profit from Period over Average Equity)
24.19
25.03
Return on Assets (%) (Net Profit from Period over Average Assets)
11.86
12.12
764.26
731.31
EFFICIENCY AND PROFITABILITY RATIOS
PROFITABILITY AND VALUE PER SHARE
Profit per Share (CLP$)
Dividend Yield (%) Dividend over Last Twelve Months / Share Price at Close )
6.12
5.47
Book Value (Equity / Number of Shares) (CLP$)
3,268.50
3,049.90
Market Value (According to Price) (CLP$)
9,719.30
8,232.90
Ebitda
(Income before taxes, interest, adjustments and exchange rate fluctuations, depreciations, amortizations, and extraordinary items).
Ebitda rose from CLP $466,018 million to CLP $515,200 million between 2010 and 2011. This represents an increase of 15.5%.
Evolution in Financial Ratios
Over the last two financial years, the financial ratios of the Entel Group have remained within ranges that indicate an extremely solid financial position.
The debt ratio at the end of 2011 was 101.53%, remaining within levels that tend to balance internal and external sources of finance. The improvement observed
with respect to the end of 2010 is a result of a 7.1% increase in equity while total debt has decreased by 2.2%.
Neither debt levels or financing costs have been affected by the volatility of the exchange rate during the last two years, this being neutralized by the Group’s exchange rate hedge policies. The policy is based on using derivative instruments to hedge exposure.
The value of the US Dollar has seen both positive and negative variations during each of the last 24 months, with an annual variation of -7.71% for 2010 and 10.94%
for 2011.
Liquidity ratios have also remained stable, with a one to one relationship between current assets and liabilities.
There have been no significant variations in the composition and level of debt, as well as the ratio for short-term and long-term debt at the end of the annual periods.
209
However there is a slight decrease in profitability between the 2010 and 2011 figures, essentially caused by market conditions that resulted in an increase in market
share for the mobile businesses within a highly dynamic industry.
Ebitda, as mentioned above, increased by 15.5% from one year to the other.
The ratio of financial expenditure hedging remained at a high level of solvency: hedges of this expenditure for income before taxes increased from 20.95 to 22.26
times in the last 12 months.
The performance of this ratio is even more significant when the net financial cost is taken into account (i.e. compensating revenue and financial expenditure), since
when measured in this way, it has risen from 24.19 to 31.23.
Similarly, if the calculation is carried out based on cash flows, considering income before depreciation, the value increases from 52.11 to 69.39.
The following are taken into account when calculating the ratios for the hedging of financial expenditure: interest from bank loans, differences in rates from the
application of interest rate hedge contracts, and interest from financial leasing contracts. The interest calculations are carried out based on effective rates, in line
with the procedures of the amortized cost method (IAS 39).
The Group’s total assets have increased by 4.6% between 2010 and 2011, equivalent to Th.CLP $69 million.
The largest change is in Property, Plant and Equipment, with a net increase of Th.CLP $79 million. This rise corresponds to an increase in investment over and above
depreciation for the period.
For the 2011 financial year, gross investment was Th.CLP $358 million, including postpaid customer handsets.
Report 2011
Efficiency and profitability ratios remained at satisfactory levels, both in terms of profitability and return on equity and assets.
Investments were mainly focused on more advanced services, such as mobile telephony, data center platforms, networks for wholesalers services provided over
the wireline network, operational continuity service platforms, and broadband Internet.
Of the total investment made, almost 70% was focused on subsidiaries providing mobile services. The subsidiaries invested Th.CLP $139 million in network infrastructure and Th.CLP $112 million in handsets provided to postpaid subscribers.
The investment over the last twelve months includes investments for the Digital Infrastructure for Competitiveness and Innovation project, designated for promotional initiatives such as Todo Chile Conectado. Almost Th.CLP $64 million was invested in this project, Th.CLP $16 million of which came from government subsidies.
Entel was awarded the project at the end of 2010 by the Telecommunications Development Fund Council and aims to provide Internet access in approximately
1,500 rural areas with state subsidies applicable to areas with low coverage. The 3.5G network will be used for these purposes since it is already in operation in the
majority of the areas to be covered.
Investments made during the last twelve months include Th.CLP $15 million in real estate for advanced payments for work on one of the Parque Titanium towers
that will house the Group’s headquarters.
In terms of current inventories, these are mainly made up of mobile handsets for prepaid customers. Their level, activity and rotation are determined based on
growth projections of the portfolio in addition to requirements for the renewal of equipment.
Market Analysis
210
The Entel Group operates in a highly competitive market for the various services it provides.
Report 2011
There have been no major changes in terms of the large number of active competitors in the telecommunications market during the last year.
The starting operations by VTR and Nextel, the two new mobile operators with frequencies for 3G telephone services in 2010, has yet to have no significant effect.
Once these new operators are fully active, in combination with the recent implementation of number portability, the range and depth of competition for services
will increase. Effects on the market and prices are difficult to predict, especially given the requirement that new operators ensure the profitability of any resources
deployed, both their own and subcontracted. Their networks will have to compete with current operators in terms of scale and coverage and they will need to undertake significant marketing activities to attract customers.
The Entel Group recently signed a domestic “roaming” agreement with Nextel, which it will provide with access to its mobile networks in regions where it has no
coverage.
The Group is favorably positioned to deal with the challenges that lie ahead. In terms of mobile services, which represented almost 78% of revenue in 2011 and have
a market share of almost 40% of active subscribers, the Entel brand maintains a strong position, with high levels of customer preference. To the present date, these
factors have been decisive in determining policies regarding market share and composition of the customer portfolio (postpaid and prepaid).
This was confirmed during the first nine days of number portability, which came into effect on January 16, 2012. The behavior observed among mobile users during
this period was highly positive. There was a positive balance of net movement, with Entel recording 60% more incoming customers than outgoing ones; the situation
was the opposite for the remainder of the industry.
It should be noted that in the mobile services area Entel has been ranked first for nine years in a row in the Mobile Services Customer Satisfaction index, organized
by the organization Procalidad and Capital magazine.
Entel has also been recognized by Cisco as Service Partner of the Year for the Southern Cone of Latin America for the leadership that has secured its position as
the leading supplier and system integrator in Chile.
The market policies employed have been successful in providing differentiated service to postpaid customers whose service level usage (MOU) and average revenue
(ARPU) are greater than those of prepaid customers.
Similarly, the policies employed have driven the increase in the number of subscribers to Mobile Broadband (MBB) services, which exceeded 945,000 contracts in
December 2011, including cards for business applications, an increase of 72% with respect to the same month of the previous year.
In general and in line with the market share analyses carried out by Group companies over the last twelve months, some variations have been observed in the
companies’ market share for both mobile and wireline services.
The most significant variation corresponds to the increase in the Group’s share of active mobile customers from 37% to 40% during 2011.
New business activities being developed by the Group have continued to see improvements in its position, especially with its focus on the business segment and the
provision of integrated voice, data and Internet solutions, and IT services.
The migration from national and international long distance services to mobile and IP services has continued although the reduction in the number of primary areas
from 24 to 13 in October had limited impact on volumes of traffic. These services represented 2.5% of the Group’s revenue for 2011.
In its international operations, the Group currently has presence in Peru, whose markets, resource requirements, and management activities are aligned with current strategic goals. In Peru, the Group’s business activities are focused on wireline services for enterprise customers in Lima, as well as domestic and international
Call Center services.
The most significant variations in volumes and prices will be discussed further on in reference to changes in sales revenue.
211
The market risks faced by the Group companies are discussed in note 27 to the consolidated financial statements.
The note comments on the technological, regulatory, exchange rate, credit, interest, and liquidity risks, in addition to the control and mitigation policies employed.
The permanent analysis of technological and market trends continued to benefit from a partnership with the UK-based operator Vodafone Group, a world leader in
mobile telecommunications. Through this partnership, the Group’s mobile subsidiaries are able to share best practices in customer services, access new voice and
data products with international access, are able to expand the coverage and quality of their roaming services, and maintain leadership in the development of value
added services for Advanced Digital Mobile Telephony, also known as 3G.
As has been previously observed, Entel’s market recognition is shown by it having come first in the Mobile Services Customer Satisfaction ranking organized by the
organization Procalidad and Capital magazine for nine years in a row, and having been recognized by Cisco as Service Provider Partner of the Year for the Southern
Cone of Latin America for the leadership that secured its position as the leading supplier and systems integrator in Chile.
In terms of regulatory material for the services the Group provides at a domestic level, a range of reforms that will affect competition, accelerate Internet penetration, and control the deployment of antennas in urban areas have been enacted or are in the advanced stages of the legislative process.
As noted in the notes to the financial statements, these reforms include the establishment of mechanisms to provide improved information to allow users to compare the market for Internet services, the elimination of the national long distance category, the uniformity of telephone numbers, number portability for mobile and
fixed services, the incorporation of infrastructure suppliers, and the stimulation of increased broadband access by means of demand subsidies.
In December 2011, the Ministry of Transport and Telecommunications published the invitation for a new tender for spectrum on the 2600 MHz band, used in the
majority of countries for the development of LTE technology (Long Term Evolution or 4G).
Report 2011
Analysis of Market Risk
In consideration of the aforementioned regulatory changes, the diversity and scale of the Entel Group allows it to mitigate against the consequences of potentially
adverse regulations as well as create new business opportunities. Overall however, in the context of a regulated industry, it is impossible to rule out changes that
may impact on income or limit possibilities for growth.
Evolution in Sales Revenue
In the Income Statement, The Group’s revenue is represented by Revenue from Ordinary Activities, Other Revenue, and Other Earnings (Losses). Revenue increased
by 14% between 2010 and 2011, as per the following breakdown:
Mobile telephony
212
2010
M.CLP$
Change
%
966,709
840,056
15
Private services (including IT services)
93,703
85,090
10
Local telephony (Includes NGN–IP)
41,705
39,677
5
Long distance
30,687
33,761
-9
Internet
16,585
15,885
4
Services to other operators
20,246
17,191
18
Traffic business
31,696
24,965
27
Americatel Perú
19,147
19,410
-1
Call center and other services
10,319
7,560
36
10,117
2,810
260
1,240,914
1,086,405
14
Other revenue
Total operational income
Report 2011
2011
M.CLP$
As can be observed, the growth of mobile services continues to represent the main source of increases in the Group’s revenue.
The above, together with the focus on services with increased margins caused Ebitda to increase by Th.CLP $49 million pesos (equivalent to 15.5%).
The increase in sales mobile services was in line with growth in the customer base, both in terms of voice services and innovative value added services (VAS), and
Mobile Broadband (MBB).
For mobile services, the Group maintained its strong position sustained by higher commercial activity and service quality that helped to secure the preference of
its users. As of December 31, 2011, the customer base had 9,347,434 users, an increase of 24% with respect to the same date for the previous year. The number of
mobile broadband customers grew to 945,429, an increase of 72% over the last twelve months.
Call Center services grew as a result of increased activity, both in Chile and Peru.
Revenue from integrated voice, Internet and data networks provided to the business segment, together with IT services, have shown strong growth driven by new
customer contracts.
The reduction in long distance services was due to drop in the level of traffic and the reduction in tariffs for national services.
Costs, Expenses and Profitability
The following information represents the most significant costs and expenses for 2011 and 2010:
Operating costs
2011
M.CLP$
2010
M.CLP$
Change
%
(1,002,687)
(878,275)
14
Operational earnings (EBIT)
238,227
208,130
14
– Net financing costs, adjustments and others
(18,901)
(10,560)
79
Net profit
180,767
172,971
5
The growth in operating costs is largely a result of growth in the customer base and higher operations volume.
The increase in charges for depreciation is particularly relevant to mobile customers and related to strong growth in postpaid customers, as well as increased
investment in the 3.5G mobile networks, sales costs for prepaid equipment (whose numbers also saw significant growth) access charges and correspondence services associated with the increase in the level of traffic for mobile services, and sales commissions. There was also higher expenses on staffing costs, particularly
in the context of severance payments arising from the integration of the mobile and wireline areas.
Pre-Tax Profit
COMMENTS ON CASH FLOW STATEMENT
Cash generation sources have exhibited the following trends during 2010 and 2011 for each of the financial activities examined:
Operating activities saw strong growth in net revenue cash flow, rising by Th.CLP $19 million from Th.CLP $491 million to Th.CLP $510 million.
Growth in operating activities was largely a result of the item Amount Charged to Customers, which grew by 14%. This was partially offset by the increase in payments to suppliers and employees.
Investments showed an increase of Th.CLP $87 million in net outward flows from Th.CLP $318 million to Th.CLP $405 million. This increase is concentrated on
purchases of Property, Plant, and Equipment, and largely stems from investments in infrastructure and handsets for mobile services.
Finally, in terms of financing activities, there was no significant change in the net outward flows, which remained around Th.CLP $160 million. These flows tended
to compensate for the increase of Th.CLP $34 million in Dividends Paid with the reduction in flows for Net Debt and Other Cash Outgoings.
As a consequence of these changes, the final available balance at the end of each of the periods for Cash and Cash Equivalents decreased from Th.CLP $75 million
to Th.CLP $23 million, remaining at a level that satisfactorily meets the Group’s cash flow forecast.
FULFILLMENT OF COMMITMENTS
The Group companies are up to date in terms of the fulfillment of all commitments to third parties.
213
Report 2011
The increase in pre-tax profits is the result of the previously discussed trends in revenue and costs.
consolidAted
materiAl evEnts
In compliance with the current legal and regulatory framework, during 2011 the Group Companies informed the Chilean Securities and Insurance Supervisor of the
following material events or relevant information:
I. Parent Company – Shareholders Meeting
Letter 3, dated April 4, 2011 communicated that at the board meeting held on April 4, 2011, agreement was reached to:
Schedule an Ordinary Shareholders Meeting for April 26, 2011 and send out the notification and supporting papers in a timely manner to shareholders and other
*bodies
as required by legal regulations.
at the Ordinary Shareholders Meeting the payment of a final dividend of CLP $545 per share from the profits made during the financial year, from which
*thePropose
sum of CLP $100 per share should be deducted for the interim dividend paid in December 2010, leaving a dividend of CLP $445 payable on a date to be agreed
at the Ordinary Shareholders Meeting.
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Report 2011
II. Parent Company – Approval of 2010 Report, Dividend Distribution, and Other Matters
Letter 4, dated April 26, 2011, communicated that at the Ordinary Shareholders Meeting held on the same date, agreement was reached to:
a.- Approve the Annual Report, Balance Sheet, and Income Statement for 2010.
b.- Pay a final dividend of CLP $545 per share, equivalent to 74.52% of net profits for the year. The sum of CLP $100 was paid in December 2010 as an interim
dividend, leaving a dividend of CLP $445 per share, payable on May 24, 2011.
c.- Approve the investment and financing policy and communicate the dividend policy.
d.- Maintain the remuneration of directors and the directors committee, as approved at the previous Ordinary Shareholders Meeting, and establish the committee’s
annual budget in line with the minimum legal requirement. Approve the appointment of KPMG as external auditors and retain the appointed and reserve accounts
inspectors, alongside the risk rating agencies Feller Rate (S&P) and Fitch Ratings, and retain the newspaper El Mercurio de Santiago for the publication of company
notices and related operations.
III. Parent Company – Management Changes
Letter 6, dated June 6, 2011, communicated that at the board meeting held on the same date, agreement was reached to::
* Acknowledge and accept the resignation tendered by Bernardo Matte Larraín as director of Empresa Nacional de Telecomunicaciones S.A.
* Appoint Andrés Echeverría Salas as replacement for the post of director of Empresa Nacional de Telecomunicaciones S.A.
IV. Entel PCS Telecomunicaciones S.A. – Management Changes
In a letter dated March 2, 2011, it was communicated that at the board meeting held on March 1, 2011, agreement was reached to:
Acknowledge and accept the resignation of Antonio Büchi Buc from the board of directors, appointing Alfredo Parot Donoso as replacement until the next Ordinary
*Shareholders
Meeting when the board would be fully re-elected.
* Acknowledge the resignation of CEO Hernán Marió Lores, appointing Antonio Büchi Buc as the new CEO.
V. TRANSAM Comunicaciones S.A. - Management Changes
In a letter dated March 2, 2011, it was communicated that at the board meeting held on March 1, 2011, agreement was reached to:
Acknowledge and accept the resignation of Hernán Marió Lores from the board of directors, appointing Alfredo Parot Donoso as his replacement until the next
*Ordinary
Shareholders Meeting, when the board would be fully re-elected.
VI. Parent Company – Distribution of Dividend
Letter 19, dated November 7, 2011, communicated that at the board meeting held on the same date, agreement was reached to:
Pay an interim dividend of CLP $150 per share, payable on December 12, 2011 and allocated against the profits for the third quarter of this year.
215
VII. Parent Company – Merger by Absorption of GTD
In a letter dated November 28, 2011, it was communicated that the board of directors, in extraordinary session 942/2011 held on the same date, acknowledged
on behalf of the representatives of the controller, the Memorandum of Intent signed on that date between the controller of Entel, Inversiones Altel Limitada (Altel),
subsidiary company of Almendral S.A. and Inmobiliaria e Inversiones El Coigüe Limitada (Coigüe), affecting Entel as follows (Memorandum of Intent).
1) Non-Binding Agreement for Merger by Absorption of GTD with Entel
The Memorandum of Intent reflects the willingness of Coigüe, in its capacity as controller of GTD Grupo Teleductos S.A. (GTD) and Altel to undertake the merger by
absorption of GTD (merged party) and Entel (acquiring party), through the absorption of the former (the Merger), however this does not constitute a legally binding
contract for either the parties or Entel.
For the purposes of the merger, GTD will be dissolved and its subsidiary companies, GTD Teleductos S.A., GTD Telesat S.A., GTD Internet S.A., GTD Larga Distancia
S.A. (reporting company with registration number 33 in the Special Register of Reporting Entities), GTD Imagen S.A., and GTD Manquehue S.A. (all private limited
companies), and Compañía Nacional de Teléfonos, Telefónica del Sur S.A. and Compañía de Teléfonos de Coyhaique S.A. (both public limited companies, with registration numbers 167 and 238, respectively, in the Trade Register of the Chilean Securities and Insurance Supervisor, will become subsidiaries of Entel and controlled
by it.
GTD and its subsidiaries (GTD Group) had a turnover of approximately Th.CLP $150,000,000 for the 2010 financial year. The business areas in which they operate
include the provision of business services such as Internet, data, and local telephony, in addition to the residential provision of Internet and paid television focusing
on specific geographic regions, all this delivered over a platform of fiber-optic and copper access networks.
Report 2011
The total payment for this interim dividend was to be Th.CLP $35,478,554, representing 23.65% of profits as of the third quarter 2011.
2) Shareholding of Coigüe in Entel Following the Merger
As a product of the Merger and subject to legally required expert reports and the agreements that must be passed by extraordinary shareholder meetings for Entel
and GTD in which the Merger will be approved, the direct and indirect shareholding of Coigüe in Entel stock will be 9.8% (Coigüe Shareholding Following the Merger).
The Coigüe Shareholding Following the Merger may only be altered: (i) as a result of a due diligence process by the GTD group and Entel and its subsidiaries (Entel
Group), whose scope and limitations will be established in the final contracts; or (ii) by any dividend payment or reduction in capital agreed after June 30, 2011, the
date of the financial information used to determine the Coigüe Shareholding Following the Merger.
The board agreed that the due diligence process for Entel should be carried out after adopting all the safeguards for access to information and confidentiality established by current legislation and the regulations of the Chilean Securities and Insurance Supervisor (SIS), authorizing the executive management and Entel attorney
to prepare the information and sign the contracts guaranteeing its provision.
3) Conditions of the Merger
The Memorandum of Intent stipulates that the Merger must meet the following conditions, in addition to any that may be present in the final contracts:
a)
All the licenses and authorizations required to complete the Merger are obtained in a timely manner, including approval from the boards of directors, shareholder meetings, creditors, inscriptions and registrations with SIS other and regulatory bodies, as well as any other requirements from laws, regulations, company
statutes, and contracts signed by the companies being merged.
216
b)
The merger satisfies the consultations, authorizations, or approvals of the bodies, which, in line with DL–211 of the Defense of Free Competition, must be declared for it, insofar as it is necessary to carry out or make such consultations or requests.
Report 2011
c)
An agreement will be signed by shareholders that will not represent a joint action agreement with respect to Entel and will govern matters covered by this type
of shareholder agreement, mainly related to the assignability of shares and other items regarding relationships between Altel y Coigüe in their capacity as parties
to the agreement (Agreement), which contains the following items relevant to Entel:
I.The right of Coigüe to choose one (1) director from the nine (9) directors of Entel with the support of Altel, provided it maintains a minimum percentage of stock
or meets a threshold granting it access to this right, this being established by mutual agreement in the Agreement.
II.For a period of two years, and in order to facilitate the execution of the Merger, the provision will be made for Coigüe to have the right to select, subject to thirdparty ratification and in line with the Agreement, two (2) directors of the seven (7) that make up the board of directors of Telsur and Telcoy, subsidiaries of GTD.
III.Other provisions that aim to facilitate the integration of the Entel Group and the GTD Group, product of the Merger.
4) Transitional Period
The Memorandum of Intent establishes that between its date and the shareholder meetings to decide on the Merger, Entel and GTD must make their best efforts to
ensure the GTD Group and the Entel Group carry on business as usual and abstain from undertaking or participating in any activity beyond the remit of their businesses and the ordinary course of business.
5) Merger Contract
Altel and Coigüe declare they will make their best efforts to execute the Merger as soon as possible and, for this purpose, in the Memorandum of Intent, they undertake to sign a definitive and legally binding ratification (Merger Contract), by December 23, 2011 at the latest, although this date may be postponed by mutual
agreement between Altel and Coigüe.
The board of directors agrees to begin to process the Memorandum of Intent insofar as it concerns Entel, especially regarding the provision of and handling of
information, reports, invitations to the board, and the next extraordinary shareholders meetings that must agree the Merger, and other steps and stages required,
without affecting this material being definitive and binding, for the effective signing of the announced Merger Contract.
Regarding the financial effects of the material event disclosed, with respect to the assets, liabilities, or income of Entel, the board of directors agrees that these will
be reported upon execution of the Merger, once the steps and activities in the Memorandum of Intent and the Merger Contract have been completed, permitting all
the information required to determine it appropriately.
Letter 26, dated December 23, 2011, communicates that it has been acknowledged by the representatives of the controller that on this date, Inversiones Altel Limitada (Altel), controller of Entel, and Inmobiliaria e Inversiones El Coigüe Limitada (Coigüe), have agreed to modify the Memorandum of Intent, signed between them
on November 28, 2011, and reported as a material event on the same date (Memorandum of Intent).
In light of its relevance, it is deemed the agreed modification constitutes a material event for Entel, as detailed below:
1) The Memorandum of Intent reflects the willingness of Coigüe in its capacity as controller of GTD Grupo Teleductos S.A. (GTD) and Altel, to undertake the merger
by absorption of GTD (being dissolved) with Entel (remaining) (the Merger) however it does not constitute a legally binding contract.
2) In the Memorandum of Intent, the parties are required to make their best efforts to execute the Merger as soon as possible, and to this effect, must sign a final
and binding agreement before December 23, 2011, although this deadline may be extended by mutual agreement.
3) The modification agreed by Altel and Coigüe consists of extending the deadline set out in the Memorandum of Intent for signing the final and binding contract
for the Merger to January 13, 2012.
With respect to the financial effects of the material event being disclosed on the assets, liabilities, or income for Entel, these were discussed in the material event
dated November 28, 2011.
217
Report 2011
VIII. Parent Company – Merger by Absorption of GTD
IX. Parent Company – Merger by Absorption of GTD
Letter 2, dated January 10, 2012, communicated that at the board meeting held on January 9, 2012, agreement was reached to:
1°.- Acknowledge the communication by the CEO of Almendral S.A., which, as a material event, will refer the company to the Chilean Securities and Insurance
Supervisor, reporting that Juan Manuel Casanueva Préndez, representative and controller of Inmobiliaria e Inversiones El Coigüe Limitada (Coigüe), which controls
GTD Grupo Teleductos S.A. (GTD), retracts its commitment to comply with the Memorandum of Intent signed between Inversiones Altel Limitada, subsidiary of Almendral Telecomunicaciones S.A. and controller of Entel S.A., and Coigüe, through a private instrument dated November 28, 2011, reported as a material event on
the same date, and its extension, reported as a material event on December 23, 2011.
2°.- Classify the information received from Almendral S.A. as a material event, authorizing the CEO to communicate it in this manner to the respective organizations without affecting the requirement to notify the National Economic Prosecutor and the Tribunal for the Defense of Free Competition, aware of the possible
merger in uncontested proceedings.
Report 2011
218
cErtificate of
accounts inspEctors
Dear Shareholders
Empresa Nacional de Telecomunicaciones S.A.
219
Report 2011
We have reviewed the Individual and Consolidated Financial Statements of Empresa Nacional de Telecomunicaciones S.A. for the twelve month period ending December 31, 2011. There are no remarks to be made following our review. Our examination and review as Account Inspectors included verification of the account balance
in the General Ledger and summary sheet of the Consolidated Financial Statements with the corresponding
accounts on the Balance Sheet and the Income Statement on this date.
MANUEL ONETO FAURE
GUSTAVO MATURANA RAMIREZ
Accounts Inspector
Accounts Inspector
Santiago, January 30, 2012.
sUbsidiaries
and associAte
cOmpanies_
CONSOLIDATED BALANACE SHEET OF SUBSIDIARIES
At December 31, 2011 and 2010
(Th.CLP$)
Entel Pcs Telecomunicaciones S.A. Y Filial
12/31/2011
Entel Telefonía Local S.A. Y Filiales
12/31/2010
12/31/2011
12/31/2010
12/31/2011
Satel Telecomunicaciones S.A.
12/31/2010
12/31/2011
Micarrier Telecomunicaciones S.A.
12/31/2010
12/31/2011
12/31/2010
ASSETS
Current assets
264,915,449
227,847,436
13,611,659
13,550,150
1,491,526
1,532,697
972,219
1,212,309
392,119
300,730
Non current assets
652,149,359
607,895,327
20,385,410
21,995,130
18,739
18,176
3,403,749
2,395,130
1,791,273
1,791,773
TOTAL ASSETS
917,064,808
835,742,763
33,997,069
35,545,280
1,510,265
1,550,873
4,375,968
3,607,439
2,183,392
2,092,503
Current liabilities
284,786,089
314,810,684
11,753,751
13,977,789
248,616
195,851
38,939
105,657
163,912
108,267
Non current liabilities
274,833,315
199,406,852
15,478,291
16,359,609
1,051,814
1,233,672
-
-
-
-
TOATAL LIABILITIES
559,619,404
514,217,536
27,232,042
30,337,398
1,300,430
1,429,523
38,939
105,657
163,912
108,267
4,141,580
LIABILITIES
STOCKHOLDER EQUITY
Report 2011
222
Paid-in capital
128,398,586
128,398,586
29,603,142
29,603,142
1,413,277
1,413,277
3,560,075
3,560,075
4,141,580
Other reserves
(10,526,899)
(47,773,888)
(2,419,357)
(2,419,357)
(115,502)
(115,502)
(290,952)
(290,952)
(338,476)
(338,476)
Accrued Income (Accumulated Losses)
239,554,326
240,892,578
(20,419,768)
(21,976,516)
(1,087,940)
(1,176,425)
1,067,906
232,659
(1,783,624)
(1,818,868)
Non controlling stock
19,391
7,951
1,010
613
-
-
-
-
-
-
Conversion reserves
-
-
-
-
-
-
-
-
-
-
917,064,808
835,742,763
33,997,069
35,545,280
1,510,265
1,550,873
4,375,968
3,607,439
2,183,392
2,092,503
Total Liabilities And Stockholder Equity
SUMMARIZED INCOME STATEMENTS FOR SUBSIDIARIES
(Th.CLP$)
Entel PCS Telecomunicaciones S.A. y Filial
12/31/2011
Operating Revenues
12/31/2010
Entel Telefonía Local S.A. y Fililaes
31/12/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
974,752,094
846,594,495
48,933,015
47,984,316
2,357,847
984,968
1,111,595
1,155,359
134,273
158,193
14,903,178
9,683,622
(125,444)
163,286
(22,103)
164,559
24,697
35,616
78,503
55,371
(45,862,733)
(44,251,501)
(2,546,085)
(3,262,626)
(1,181,855)
(85,934)
-
-
Depreciation and amortization
(202,689,865)
(168,020,594)
(3,965,635)
(2,962,692)
-
(100,273)
(100,273)
Other operating expenses
(567,507,673)
(498,434,448)
(40,385,382)
(39,241,780)
(1,055,086)
(1,326,853)
(24,675)
(96,977)
(199,565)
(239,871)
Other Revenues
Salaries and Expenses
-
Income (loss) before tax
173,595,001
145,571,574
1,910,469
2,680,504
98,803
(263,260)
1,011,344
993,725
13,211
(26,307)
Income tax
(33,595,452)
(21,412,557)
(353,325)
(770,113)
(10,318)
(353,892)
(176,097)
(159,700)
22,033
16,133
Income (Loss )
139,999,549
124,159,017
1,557,144
1,910,391
88,485
(617,152)
835,247
834,025
35,244
(10,174)
Income (loss) attributable to stockholders of controlling stockholder equity
139,981,504
124,156,632
1,556,747
1,910,451
88,485
(617,152)
835,247
834,025
35,244
(10,174)
18,045
2,385
397
(60)
-
-
-
-
-
-
139,999,549
124,159,017
1,557,144
1,910,391
88,485
(617,152)
835,247
834,025
35,244
(10,174)
1,745,79
1,548,43
89,66
110,01
27,310,18
(190,479)
835,247,00
834,025,00
3,524,40
(1,017,4)
Incomes attributable to non controlling stock
Income (Loss)
EARNINGS PER SHARE
Common shares
NOTE (1): The subsidiary Cientec Computación S.A. was taken over by Entel
Chile S.A. on July 31, 2011, by a merger through absorption as a product of
the company restructuring exercise undertaken by the Group, which concluded on December 31, 2011.
Entel Servicios Empresariales ( Ex - Red De
Entel Inversiones S.A. Y Filial
Entel Call Center S.A. Y Filial
Cientec Computación S.A. (1)
12/31/2011
12/31/2011
12/31/2011
Entel Internacional Bvi Corp. Y Filial
Empresa De Radiocomunicaciones Insta
Transacciones Electrónicas S.A.)
12/31/2011
Beep Ltda.
12/31/2010
12/31/2010
12/31/2010
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
3,132
350,967
5,451,393
7,627,091
9,061,829
6,448,904
-
3,447,855
42,100
42,110
3,574
3,437
560,708
8,095
40,057,356
36,213,434
12,361,538
11,193,428
-
13,101,328
210,381
189,851
-
-
563,840
359,062
45,508,749
43,840,525
21,423,367
17,642,332
-
16,549,183
252,481
231,961
3,574
3,437
193,981
85,020
4,686,666
7,310,110
5,954,494
3,637,527
-
1,199,306
36,383
34,220
708,006
680,292
-
90,551
4,547,742
2.923.138
11,249,073
10,851,155
-
3,823,775
-
-
-
-
193,981
175,571
9,234,408
10,233,248
17,203,567
14,488,682
-
5,023,081
36,383
34,220
708,006
680,292
737,071
737,071
2,870,848
2,870,848
13,867,175
13,867,175
-
3,756,870
25,211,353
25,211,353
2,969,432
2,969,432
125,983
-
55,556
(784,068)
(1,128.189)
(1,165,112)
-
8,980
4,949
4,865
(242,681)
(242,681)
(493,195)
(553,580)
28,050,829
26,929,723
(8,422,644)
(9,527,165)
-
7,760,252
(25,000,204)
(25,018,477)
(3,431,183)
(3,403,606)
-
5,297,108
4,590,774
20
6
-
-
-
-
-
-
-
-
-
(96,562)
(21,254)
-
-
-
-
-
-
359,062
45,508,749
43,840,525
21,423,367
17,642,332
-
16,549,183
252,481
231,961
3,574
3,437
223
Report 2011
563,840
Red de Transacciones Electrónicas S.A.
Entel Inversiones S.A. y filial
Entel Call Center S.A. y filial
12/31/2011
12/31/2011
12/31/2011
Entel Internacional BVI Corp. y filial
Empresa de Radiocomunicaciones Insta
Beep Ltda.
12/31/2011
12/31/2010
12/31/2010
12/31/2010
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
2,273,021
1,081,020
20,109,586
19,948.526
26,508,639
21,503.952
-
10,701,856
-
-
-
-
-
-
591,593
521,220
53,489
52,603
-
50,772
-
-
-
-
(2,074,856)
(956,597)
(3,427,839)
(3,328,504)
(11,050,662)
(8,775,584)
-
(1,811,845)
-
-
-
-
-
-
(2,045,975)
(1,947,428)
(1,034,673)
(968,601)
-
(4,530,196)
-
-
-
-
(23,434)
(17,209)
(14,065,637)
(16,038,616)
(13,217,463)
(11,138,101)
-
(5,089,616)
18,273
(83,622)
(27,577)
(16,203)
174,731
107,214
1,161,728
(844,802)
1,259,330
674,269
-
(679,029)
18,273
(83,622)
(27,577)
(16,203)
11,636
3,782
(61,039)
21,231
(154,774)
(613,974)
-
99,645
-
-
-
-
186,367
110,996
1,100,689
(823,571)
1,104,556
60,295
-
(579,384)
18,273
(83,622)
(27,577)
(16,203)
186,367
110,996
1,121,108
(87,049)
1,104,563
60,291
-
(579,384)
18,273
(83,622)
(27,577)
(16,203)
-
-
(20,419)
(736,522)
(7)
4
-
-
-
-
-
-
186,367
110,996
1,100,689
(823,571)
1,104,556
60,295
-
(579,384)
18,273
(83,622)
(27,577)
(16,203)
5,414,66
3,224,85
99,250,59
(74,262,49)
116,26
6,35
-
(1,866,76)
0,30
(1,38)
-
-
SUMMARIZED CASH FLOW STATEMENTS FOR SUBSIDIARIES
(Th.CLP$)
Entel PCS Telecomunicaciones S.A
y Filiales.
Entel Telefonía Local S.A. y Fililaes
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
Cash flows provided by operating activities
501,634,262
391,314,649
8,826,001
5,498,167
549,764
48,597
968,344
325,506
(58,812)
71,727
Cash flows provided by other operational activities
(45,682,600)
(44,052,615)
(447,725)
(90,117)
9,168
(39,859)
20,740
211
"
-
Net cash flows provided by operating activities
455,951,662
347,262,034
8,378,276
5,408,050
558,932
8,738
989,084
325,717
(58,812)
71,727
Net cash flows used in investment activities
(258,538,353)
(164,393,123)
(5,707,995)
(8,954,051)
"
"
(323)
(340)
57,697
(79,728)
Net cash flows used in financing activities
(199,903,282)
(181,500,971)
(2,647,239)
3,196,456
(546,904)
(11,594)
(988,125)
(325,718)
"
-
(2,489,973)
1,367,940
23,042
(349,545)
12,028
(2,856)
636
(341)
(1,115)
(8,001)
(7,557)
101,204
-
-
-
(290)
80
(101)
-
(30)
-
-
-
-
-
-
-
-
-
-
Cash and cash equivalents, cash flow statement, initial balance
3,796,548
2,327,404
565,159
914,704
495
3,641
334
776
3,247
11,278
Cash and cash equivalents, cash flow statement, final balance
1,299,018
3,796,548
588,201
565,159
12,523
495
1,050
334
2,132
3,247
Net increase (decrease) in cash and cash equivalents
Effect of exchange rate variations on cash and cash equivalents
Effects of changes in the scope of consolidation on cash and cash equivalents
224
STATEMENT OF CHANGE IN NET STOCKHOLDER EQUITY FOR SUBSIDIARIES
Report 2011
(Th.CLP$)
y Filiales
Entel Telefonía Local S.A.
Initial balance for current period 01/01/2011
321,525,227
5,207,270
121,350
3,501,782
Income from consolidated revenue and costs
139,999,549
1,556,747
88,485
835,247
Payment of dividends
(99,325,305.0)
-
-
-
Increase (decrease) for distribution to shareholders
(12,379,484.0)
-
-
-
7,625,417
1,010
-
-
Final balance for current period 12/31/2011
357,445,404
6,765,027
209,835
4,337,029
Initial balance for previous period 01/01/2010
296,114,885
3,296,817
738,502
2,667,757
Income from consolidated revenue and costs
124,159,016
1,910,451
(617,152)
834,025
(98,395,319.0)
-
-
-
13,799,528
-
-
-
Other increases (decreases) in stockholder equity
(14,152.883.0)
2
-
-
Final balance at 12/31/2010
321,525,227
5,207,270
121,350
3,501,782
Other increases (decreases) in stockholder equity
Payment of dividends
Increase (decrease) for distribution to shareholders
NOTE (1): The subsidiary Cientec Computación S.A. was taken over by Entel
Chile S.A. on July 31, 2011, by a merger through absorption as a product of
the company restructuring exercise undertaken by the Group, which concluded on December 31, 2011.
Entel Servicios Empresariales (Red de
Transacciones Electrónicas S.A.)
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
12/31/2011
12/31/2010
Empresa de Radiocomunicaciones Insta
Beep Ltda.
12/31/2011
12/31/2010
(3,161,651)
(85,499)
4,300,160
2,001,924
1,837,292
2,339,187
-
2,107,503
(3,773)
(67,302)
(1,087)
(2,317,772)
-
-
-
-
-
-
(81,143)
(493)
(530)
-
(37)
(5,479,423)
(85,499)
4,300,160
2,001.924
1,837,292
2,339,187
"
2,026,360
(4,266)
(67,832)
(1,087)
-
-
(4,436,341)
(1,172,274)
(1,820,825)
(741,892)
-
(1,126,604)
-
(2,626)
-
5,479,423
85,507
(39,863)
(339,865)
26,510
(1,568,720)
-
(887,292)
-
101,407
1,087
37
0
8
(176,044)
489,785
42,977
28,575
-
12,464
(4,266)
30,949
0
0
-
-
-
-
-
-
-
(2,568)
4,256
2,465
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
-
1,027,574
537,789
182,787
154,212
-
4,349
42,110
8,696
-
-
8
8
851,530
1,027,574
225,764
182,787
-
14,245
42,100
42,110
0
0
(37)
Entel Servicios Empresariales ( Ex Red de Transacciones Electrónicas
S.A.)
Empresa de Radiocomunicaciones
Insta Beep Ltda.
1,984,236
183,491
33,607,277
3,153,650
-
197,741
(676,855)
35,244
186,367
1,121,108
1,104,549
-
18,273
(27,577)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1,545,956
(38,399)
-
84
-
2,019,480
369,859
36,274,341
4,219,800
-
216,098
(704,432)
1,994,410
72,497
47,899,593
3,092,755
12,105,485
282,690
(660,652)
(10,174)
110,996
(87,049)
60,299
(579,384)
(83,622)
(16,203)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
(14,205,267)
596
1
(1,327)
-
1,984,236
183,491
33,607,277
3,153,650
11,526,102
197,741
(676,855)
Report 2011
225
Subsidiaries of Entel S.A.
Entel PCS Telecomunicaciones S.A. and Subsidiaries
Entel Telefonía Local S.A. o Entel Phone S.A. and Subsidiaries
Legal Status
Private limited company, registered in the Special Register of
Reporting Entities (No. 33.).
Private Corporation.
Constituting Documents
Entel PCS Telecomunicaciones S.A. was incorporated as
a limited company by public deed on October 3, 1996, in
accordance with the laws of the Republic of Chile.
EntelPhone S.A. was incorporated as a limited company by
public deed on April 29, 1994, in accordance with the laws
of the Republic of Chile. On December 20, 1994, by Supreme
Decree 450, the Ministry of Transport and Telecommunications
awarded a public telephone services concession to the
company to install, operate, and run a local telephone system.
Business Purpose
The purpose of the company is: the study, construction and
operation of a system to provide all types of transmission,
switching, communication, metering, billing and charging
services for mobile telecommunications; to import and
export, market, distribute, sell, lease, and provide in any other
manner, all types of equipment required for the provision of
mobile communications and complementary/supplementary
services; and in general, to undertake all types of activities,
agree, sign and execute all types of contracts required for the
provision of any type of mobile communications services.
The company meets the telephone communications,
multimedia and infrastructure needs of high-use consumers,
and provides marketing and dealership of equipment and
devices and undertakes all telecommunications related
business activities.
Subscribed and Paid-in Capital on December 31, 2011
The company’s subscribed
Th.CLP $128,398,586.
Th.CLP $29,603,142.
Direct and Indirect Stock Entel S.A.
Entel Chile S.A.: 99.999%
Entel Chile S.A. 99,000%
Entel Inversiones S.A. 1,000%
Percentage of Investment of Entel S.A. Assets
26.03%
0.49%
Income for 2011 Financial Year
Th.CLP $139,999,549
Th.CLP $1,557,144
Board of Directors
Richard Büchi B., Chairman
Juan Hurtado V., Vice-Chairman
Luis Felipe Gazitúa A., Director
Alfredo Parot D., Director
Felipe Ureta P., Director
Antonio Büchi B., Director
José Luis Poch P., Director
CEO
Antonio Büchi B.
Marío Nuñez P.
Positions Held at Entel S.A.
Richard Büchi B., Executive Vice-President
Alfredo Parot D., Vice-Chairman of Technology and Operations
Felipe Ureta P., Corporate Finance and Financial Planning
Antonio Büchi B., CEO
Richard Büchi B., Executive Vice-Chairman
Antonio Büchi B., CEO.
Alfredo Parot D., Vice-Chairman Technology and Operations
José Luis Poch P., Vice-Chairman Consumers Market
Mario Nuñez P., Vice-Chairman Enterprise Market
Commercial Relationship with Entel Chile S.A.
Entel Telefonía Personal provides Entel Chile S.A. network
infrastructure to broaden the coverage of its fixed
telecommunications services. Entel Chile S.A. provides Entel
Telefonía Personal with telecommunications services to
support its mobile communications operations.
EntelPhone S.A. provides Chile Entel S.A. with the services
required to complement its integrated communications and
operational continuity services. Entel Chile S.A. provides
EntelPhone S.A. with the operation and maintenance of
network platforms to support its business activities.
Agreements and Contracts
Entel PCS S.A. contracted national signal transport services
in dedicated and switched mode from Entel S.A. for
Th.CLP $71,114,574.
It also leased and-subleased physical space in buildings,
stores, and radio stations owned by Entel PCS S.A. or third
parties to Entel Chile S.A. Finally, it contracted marketing
consultancy services, telephone technical services, and
Data Center services for Th.CLP $7,072,225. Entel Chile
S.A. contracted leased infrastructure, telecommunications
services, and the payment of access charges from Entel PCS
S.A. for Th.CLP $7,208,407.
Entel Chile S.A. leases telecommunications infrastructure and
installation services, provides the operation and maintenance
of networks, the lease or sublease of physical space in
buildings and commercial branches, IT data processing
services, network administration and administration services
to EntelPhone S.A. for Th.CLP $22,303,153. EntelPhone S.A.
provided Entel Chile S.A. with telecommunications services
and access charges for Th.CLP $3,926,432.
Report 2011
226
Company Name
and
paid-in
capital
is
and
paid-in
capital
is
Company Name
Entel Servicios Telefónicos or Entelfónica S.A.
Satel Telecomunicaciones S.A. or Satel S.A.
Legal Status
Private limited company.
Private limited company.
Entelfónica S.A. was originally incorporated as a private
limited company by public deed on March 13, 1989, in
accordance with the laws of the Republic of Chile under the
name Global Telecomunicaciones S.A. On June 24, 1993, the
company statutes were modified to establish the current name
and nature of the company.
Satel was incorporated as a joint stock company by public deed
on March 13, 1989, in accordance with the laws of the Republic
of Chile.
Business Purpose
The company provides telecommunications services,
marketing, distribution and dealership of equipment, and any
other telecommunications related business activities.
The company provides high- and low-speed corporate
telephony and data transmission services using satellite
technology at a national and international level.
Th.CLP $1,413,277.
Th.CLP $3,560,075.
Direct and Indirect Stock of Entel Chile S.A.
Entel Inversiones S.A.: 8.580%
Percentage of Investment in Chile Entel S.A. Assets
0.01%
0.32%
Th.CLP $88,485
Th.CLP $835,247
Board of Directors
José Luis Poch P., Chairman
Juan Baraqui A., Director
Antonio Büchi B., Chairman
CEO
Pablo Pfingsthorn O.
Positions Held at Entel Chile S.A.
Juan Baraqui A., Administration Executive
Pablo Pfingsthorn O., Financial Planning & Control Support
Executive
Executive
Entelfónica S.A. provides administration services for the
service centers used by Entel Chile S.A. customers. Entel
Chile S.A. provides Entelfónica S.A. with the operation and
maintenance of the public telephone network.
Satel S.A. provides satellite transmission services to
complement the Entel Chile S.A. telecommunications
businesses. Entel Chile S.A. provides the company with the
operation and maintenance of its satellite network.
Entelfónica S.A. contracted national and international signal
transport services from Chile Entel S.A. It also received
administration and computing services, and leased and
subleased physical space in buildings and commercial branches
for Th.CLP $228,171. Entelfónica S.A. provided advertising and
services to Entel Chile S.A. for Th.CLP $1,691,993.
Satel S.A. contracted international signal transport,
administration services and installation, and service operation
and maintenance from Entel Chile S.A. for Th.CLP $99,931.
Satel S.A. provides Entel Chile S.A. with communications
services for Th.CLP $523,457.
paid-in
capital
is
and
paid-in
capital
is
227
Report 2011
and
Report 2011
228
Company Name
Micarrier Telecomunicaciones S.A. or Micarrier S.A.
Entel Servicios Empresariales S.A.
(Formerly Red de Transacciones Telefónicas S.A.)
Legal Status
Micarrier was incorporated as a limited company by public
deed on December 30, 1988, in accordance with the laws of the
Republic of Chile. The company initially traded under the name
Entel Servicios de Datos S.A. until March 26, 1996 when it was
agreed to amend the articles of incorporation to establish the
current name of the company.
Entel Servicios Empresariales S.A. was incorporated as a
limited company by public deed on June 9, 1993, in accordance
with the laws of the Republic of Chile.
Business Purpose
The company installs, operates, runs and provides public
and private telecommunications services at national and
international level, both directly and through third parties.
The company provides: software analysis, design,
development, operation and maintenance, consultancy
services and technical support; third-party administration
services for infrastructure, systems and business processes;
e-commerce, business and accounting transactions using all
electronic media; representation of national and international
suppliers for software, hardware, and other tools and
equipment related to IT, telephone support, and the continuity
of technology platforms.
The company’s subscribed and paid-in capital is
Th.CLP $4,141,581.
Th.CLP $737,071.
Direct and Indirect Stock of Entel S.A.
Percentage of Investment in Entel Chile S.A. Assets
0.15%
0,03%
Th.CLP $35,244
Th.CLP $186,367
Board of Directors
José Luis Poch P., Director
Felipe Ureta P., Chairman
Julian San Martín A., Director
Victor Hugo Muñoz A., Director
CEO
Executive
Julian San Martín A., Vice-Chairman Corporations Market
Victor Hugo Muñoz A., IT Services Executive
Executive
Micarrier S.A. provides long distance national and
international services to Entel Chile S.A. In return Entel Chile
S.A. provides Micarrier S.A. with the administration, operation
and maintenance of its networks.
Entel Servicios Empresariales S.A. provides technology
platform continuity services to Entel Chile S.A. to support
customers operations.
Micarrier S.A. contracted operation and maintenance
services for telephone exchanges and switching equipment,
administration and computer services and leases offices
from Entel for the value of Th.CLP $25,930. Entel Chile S.A.
contracted the leasing of telecommunications from Micarrier
S.A. for Th.CLP $31,316.
Entel Servicios Empresariales S.A. provides services in the
field of technology platform continuity to Entel S.A. to support
the customers operations for Th.CLP $2,271,303.
Company Name
Entel Inversiones S.A. and Subsidiaries
Entel Call Center S.A. and Subsidiaries
Legal Status
Entel Inversiones S.A. was incorporated as a limited company
by public deed on August 8, 1989, in accordance with the laws
of the Republic of Chile.
Entel Call Center S.A. (formerly Entel Internacional S.A.) was
incorporated as limited company by public deed on September
12, 1989, in accordance with the laws of the Republic of Chile.
Its initial purpose was to provide consultancy services for
the development of telecommunications and IT projects. Its
business purpose was amended on March 29, 2000.
Business Purpose
The company makes investments considered strategically
appropriate to corporate goals, regardless of whether these
are related to the telecommunications industry.
The company develops, installs, operates and runs both
its own and third-party telecommunications platforms in
Chile and abroad, and in general, undertakes any activity or
provides services through telecommunications equipment or
installations served by operators or automated operations.
Th.CLP $2,870,848.
Th.CLP $13,867,175.
Entel International Bvi Corp.: 0.010%
Entel Chile S.A. 90,000%
Entel Inversiones S.A. 10,000%
1.98%
0,28%
Th.CLP $1,100,689
Th.CLP $1,104,556
Board of Directors
Antonio Büchi B., Chairman
Richard Büchi B., Director
José Luis Poch., Director
Felipe Ureta P.
Álvaro García L.
Alfredo Parot D., Technology and Operations Executive
José Luis Poch P., Vice-Chairman of Consumers Market
None.
Entel Call Center S.A. currently provides the required
infrastructure for service via remote channels for customers
of subsidiaries of the Entel Group. Entel Chile S.A. provides the
company with telecommunications services to support its call
center business.
Entel Chile S.A. provided Entel Invesiones S.A. and Subsidiaries
international data transportation and traffic termination
services for Th.CLP $625,254. Entel Inversiones S.A. and
subsidiaries provide Entel Chile S.A. with international traffic
termination services for Th.CLP $803,487.
Entel Chile S.A. provided Entel Call Center S.A.
telecommunications, administration and IT services, and the
leasing of office space for Th.CLP $461,612. Entel Call Center
S.A. provided Entel with inbound and outbound call services
for the value of Th.CLP $6,137,222.
paid-in
capital
is
and
paid-in
capital
is
229
Report 2011
and
Company Name
Entel International B.V.I. Corp. and Subsidiary.
Legal Status
Foreign subsidiary
The company was incorporated as a limited company on
February 12, 1993, in Tortola, British Virgin Islands.
Business Purpose
Report 2011
230
Subscribed and Paid-in capital on December 31, 2011
Th.CLP $25,211,353.
and
paid-in
capital
is
Direct and Indirect Stock of Entel S.A.
0.02%
Th.CLP $18,273
Board of Directors
CEO
Felipe Ureta P.
None.
There were no agreements or contracts with significant effects
on operations and income.
Company Name
Sociedad de Telecomunicaciones Instabeep Ltda.
Legal Status
Limited company.
The company was incorporated as a limited liability company
by public deed on November 4, 1985, in accordance with the
laws of the Republic of Chile.
Business Purpose
The company undertakes business activities related to
electrical and electronics engineering, especially those relative
to the establishment, operation and running of communications
services and any other related activity agreed by the partners.
Th.CLP $2,969,432
Entel PCS Telecomunicaciones S.A.: 0.010%
0,00%
Th.CLP $(27,577)
Board of Directors
None.
CEO
José Luis Poch P.
Positions held at Entel S.A.
None.
There were no agreements or contracts with significant effects
on operations and income.
Report 2011
231
Printing
FYRMA GRÁFICA
Design
PAPER
MAGNOMATT / MAGNOSTAR
130 gr
onectado+Vivi
ado. Vivir_me
ejor Conectado
onectado”Vivir
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Report 2011
232
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Report 2011
233

Vivir mejor

Transcription

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