1. Telecom and BOT Business Opportunities in Chile Eliel Hasson www.prieto.cl / www.tlconsulting.cl www.prieto.clwww.tlconsulting.cl China-Latinamerica Summit 27, November 2007

2. Population16 MMLabor Force7 millions GDP 2006USD$ 141.800 billionsGrowth Rate 4,2% GDP per capita 2006 US$ 8,570 PPP US$ 12,737 Country RiskStandard & Poors “A”Fitch “A-” Corporate Tax17%V.A.T. 19% Custom Duty: 6% (Non trade agreement) FTA’s (95% items with 0%) External Debt46.5% GDP (mostly private debt) Foreign Direct Investment 2006USD$ 9,300 billions Chilean Investments Abroad 2005 USD$ 2,400 billions Chile in Figures

3. Economic Overview Steady growth since 1987 Only interrupted during 98-99 Crisis Current “subprime crisis” impact, controlled: Chilean economy in excellent shape, (strong reserves given high copper prices – good macroeconomic management)

4. Annual GDP Growth Rate ( 1986-2006) International Monetary Fund (www.imf.org), 2006 One of the highest growth rate in the last 20 years…

5. Chile has a highly competitive economy Economic Freedom Index (out of 157 countries) Brasil70 Costa Rica51 Hong Kong1 Argentina95 México49 Panamá47 Portugal43 Uruguay33 Republica Checa31 El Salvador29 España27 Chile11 Canadá10 Reino Unido6 Estados Unidos4 PaísRanking Heritage Foundation/Wall Street Journal (www.heritage.org), 2007

6. Fuente: Fitch Ratings, Standard & Poor´s, Moody´s, 2006 B- BB- BBB A- A AAA Standard & Poor’s B3 Ba3 Baa1 A2 Baa1 Aaa Moody’s DDDArgentina BB-Brasil BBB-México AChina AChile AAASingapore AAAReino Unido AAA Estados Unidos Fitch Ratings Country Chile has the lowest country risk in LAC

7. Chapter XIVD.L. 600 Any operation above US$ 10.000It is voluntary for operations above USD$ 5 millions No contractContract with the Chilean State No obligation to sell the foreign exchange into Chilean pesos The foreign exchange must be sold into Chilean pesos Normal access to money marketNormal access to the formal exchange market No minimum time to do the operationCapital remittance may be affected only 1 year after the brought in. No time limit for profit remittance No restriction3/8 years (8/12 mining) to bring in the capital Common Tax RegimeSpecial Tax Regime Foreign Investment Environment

8. EUA Canadá México UE Corea del Sur Centroamérica (El Salvador-Costa Rica-Panamá ) EFTA (European Free Trade Association) (Islandia-Noruega-Suiza-Liechtenstein) Singapur Malasia India China Japón New Zealand Vietnam Brunei Turquía  Chilean FTA´s get free access to 90% of World GDP (18 FTAs with 54 countries) In Forced Being Negotiated

9. BOLIVIA 93 VENEZUELA 93 COLOMBIA 94 ECUADOR 95 MERCOSUR 96 BRASIL PARAGUAY URUGUAY ARGENTINA CANADA 97 PERU 98 MEXICO 99 COSTA RICA 02 EL SALVADOR 02 UNION EUROPEA 03 ALEMANIA AUSTRIA BELGICA DINAMARCA ESPAÑA FINLANDIA FRANCIA GRECIA IRLANDA ITALIA LUXENBURGO PAISES BAJOS PORTUGAL REINO UNIDO SUECIA UNION EUROPEA 04 BULGARIA CHIPRE HUNGRIA ESLOVAQUIA ESLOVENIA ESTONIA LETONIA LITUANIA POLONIA REP. CHECA RUMANIA MALTA ESTADOS UNIDOS 04 COREA 04 EFTA 04 ISLANDIA LIECHTENSTEIN NORUEGA SUIZA CHINA 06 BRUNEI 06 NUEVA ZELANDIA 06 SINGAPUR 06 GUATEMALA HONDURAS NICARAGUA JAPON PANAMA CUBA INDIA

10. CHILE: Growth of trade in countries with trade agreements vis á vis third countries

11. Worlwide Chilean BITs (43): ( 1974 - 2004: FDI US$ 74,600 millions (88.5% post 1990). Canadá EUA Argentina Brasil Ecuador Uruguay México CentroAmerica Cuba Polonia Croacia Suiza Noruega Dinamarca Suecia Finlandia Islandia Perú Venezuela Paraguay Malasia China Filipinas Japan European Union Corea del Sur Australia Nueva Zelanda Fuente: General Directorate for International Economic Affairs (www.direcon.cl) 2006www.direcon.cl

12. Double Taxation Treaties with 16 Countries Canadá EUA Argentina Brasil Ecuador México Cuba Polonia Croacia Francia Hungría Italia Republica Checa Suiza Noruega Dinamarca Suecia Holanda Finlandia Perú Venezuela Paraguay Malasia China Sudáfrica España Reino Unido Irlanda Corea del Sur Rusia Nueva Zelanda In Forced Signed Being Negotiated Fuente: General Directorate for International Economic Affairs (www.direcon.cl) 2006www.direcon.cl

13. Telecom Market

14. Telecommunications Market Total Sales (net income): US$ 4.300.000.000 (dec. 2006) Major Competitors: –Mobile: Entel PCS - local investors / Movistar: Telefonica de España / Claro: Telmex (Slim Group) –Local / Cable: Telefonica de España / VTR: Liberty Media / Entel: local investors / Telmex (Slim Group) / GTD Manquehue : Local Investors

15. Telecommunications Market General Market Data –Sucribers per service –Average ARPU –Total Income Where Most Profits Are Most growth opportunity

16. Telecommunications Market Market Shares in each sector

17. Broadband Market Chile: The Opportunity 1,200,000 broadband connections at June 2007 33% growth since dec 2006 7.9% penetration (each 100 pop) 23% houses connected 36.2% 512 kbps or more 7.3% 1 Mbps or more National target for the Bicentennial (2010): 2,000,000 connections (40% of the houses connected – 13% total penetration)

18. Broadband Market Forecast

19. Broadband Penetration: by Regions of Chile Highest penetration observed in Metropolitan Region (Santiago), and regions I and II Interesting opportunities in other regions, with very low penetration

20. Broadband Price Comparison Chile – Argentina – Colombia - Peru Broadband prices are relatively high, in comparison with Argentina and Colombia Also Chilean prices are relatively high, in comparison with European and other OECD countries There is an interesting opportunity for high velocity / low prices services (if possible)

21. Comparison with OECD Countries Source: www.oecd.org Chile June 2007 Compared with OECD countries, there is an interesting growth potential

22. Business Opportunities The most interesting business opportunity is in the Broadband market, although there is an attractive mobile market, specially with the 3G tender coming soon. Expected to grow strongly in the next 5 years –Broadband in Chile is still expensive (compared with many OECD countries) –Mass markets (mid – low income families) will enter the market –A combination of an efficient access technology plus a strong commercial base is the key With a combination of attractive prices for higher speed plans, also there is an opportunity in the high income segments (actually served by ADSL / HFC-CATV operators) Chilean regulator will bid new 3G and WiMax bands during 2008

23. Technological & Regulatory Scenarios During 2008 Subtel will bid two WiMax bands and one mobile 3G band –2.3 and 2.5 GHz for Wimax –3 to 6 operators max each bid –3 nation wide bands, 3 regional base bands –1.7 Ghz for 3G mobile operators In Chile, spectrum bids follow the “beauty contest” model –Participants are scored according to the velocity which their project proposals cover territory & population, (more territory & population covered in less time, means higher score) The process is strictly regulated

24. Possible Entry Strategies Buying existing companies Starting a new company – alone Starting a new company – with a strategic partner

25. PUBLIC WORKS MARKET

26.  16 years of Experience and Trajectory.  A Consolidated Concessions Industry.  Business Designs Appropriate to Projects.  A Solid and Secure Financial System.  A Public-Private Partnership that has allowed the country to grow and experiences to be transferred: Solid and flexible regulations. Stable conditions for foreign investment. Appropriate risk distribution. Transparency of tender processes. Technological quality and innovation. PUBLIC WORKS CONCESSIONS PROGRAM

27. Impacts on Chilean Infrastructure A total of 51 Projects Awarded USD$ 8 Billions Invested

28. Main Elements for Defining Business Models  Legal Framework. Public Works Ministry Charter Law. Public Works Concessions Law and Regulations. Tender Ground rules and Explanatory Fliers. Technical and Economic Offer by the Concessionaire. Supreme Decree Awarding Project.  Analysis of Risks Involved.  Financing Framework.

29. BOT Process: Main Legal Aspects The MOP is the Chilean governmental entity responsible for supervising, implementing and awarding the Concessions and executing the corresponding public works concessions agreements (the “Concession Agreements”). The project concerned may have been proposed by an interested party (the Concessions Act and the Concessions Regulation set forth the procedure for interested parties to propose a project) or prepared by the MOP. In both instances, the Concessions Act and the Concessions Regulation require that the award of the Concession be carried out through a transparent tender process. The Concession is awarded by means of a Supreme Decree. Once awarded, the successful bidder enters into the Concession Agreement with the State of Chile, represented by the MOP. The successful bidder is then required, within the term specified in the Bidding Terms, to execute copies of the Supreme Decree as acceptance of the award, and to incorporate a Chilean sociedad anónima, or register a foreign agency in Chile, as the Bidding Terms so require, with whom the Concession Agreement shall be deemed to be executed (the “Concessionaire”). Any controversies arising from the interpretation or performance of the Concession Agreement shall be known by a Conciliation Commission.

30. Project Diversification Typology : Urban Highways (2.15 Billion US$) North-South System 61 Km. 600 Million US$. 1,4 Million inhabitants. Vespucio North Express 29 Km. 450 Million US$. 1,5 Million inhabitants. Vespucio South Highway 25 Km. 550 Million US$. 1,8 Million inhabitants. East-West System 43 Km. 550 Million US$. 1,4 Million inhabitants.

31. Project Design Drafting of Concession Contract Legal Aspects Engineering Aspects Demand AspectsTerritorial and Environmental Aspects Expropriation Aspects Business Model and Financial Issues Pre-Project Studies. Study of Demand. Expropriation Study. Environmental Impact Assessment. Technological Studies. Financial and Business Studies. Legal Studies. Analysis of Risks Involved

32. Project Portfolio 2007 - 2009 Total Portfolio Amount 2007-2009 Approximately US$ 5.0 billion

33. Global Government Procurement Creation of a market niche for any government providers Interested in internationalizing their operations by way of prerogatives and opportunities arising from chapters regarding government procurement in treaties with other countries such as the United States, Korea, México, Canada, Central America and the European Union The GP market, on a annual basis, demands upwards of 10% of the world’s GDP, or approximately the equivalent of 80% of global commerce This market is expected to bring about important tax savings; create both greater competition as well as transparency, and increase the flow commerce for all players.

34. To Summarize… From an investment point of view, from Asia to South America, Chile can give interesting business opportunities at very competitive prices in an stable and friendly investor environment.... If everybody else is doing it, why not you?