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In the national long-distance business, the number of primarygeographical areas defined for national communications wasreduced from 24 to 13 in October 2011. It is estimated that thislegal modification will have no significant effects, however, theregulations stipulate that 37 months after the law has comeinto force (i.e. the second half of 2014), and subject to a favorablereport from the Tribunal for the Defense of Free Competition,the national long -distance category will be eliminated. Assuch, from this date, fixed local telephone services will operatein the same way as mobile telephone services, without a requirementto use a carrier for calls between different geographicalareas within the country.In addition to this, the company has continued to pay attentionto the telecommunications convergence process promoted bythe new government through initiatives seeking to increase thediversity of uses of the radio electric spectrum for telecommunicationsservices. This is in addition to communications fromthe industry regulator regarding new spectrum to be tenderedin the medium term. This is of fundamental importance for theexpansion of the company’s operations and in December 2011,the Ministry of Transport and Telecommunications publishedthe call to tender for spectrum on the 2,600 MHz band, used inthe majority of countries for the development of LTE technology(Long Term Evolution or 4G).In addition to this, in line with legal modifications made atthe end of 2010, in 2011, the first steps were taken in the implementationof number portability, taking effect throughoutthe country from January 16, 2012, and allowing subscribersfrom different fixed and mobile telephone companies toswitch supplier while keeping the same number. In the firstphase, changes are only possible between companies operatingwithin an equivalent network (e.g. from one mobile line toanother). This new competitive scenario was initially launchedin Arica’s primary fixed telephony zone in December 2011. Itwas then followed by mobile telephone services (national) onJanuary 16, 2012, and fixed telephone services for the MetropolitanRegion in March, after which point it will be progressivelyrolled-out to incorporate new primary zones. The intentionis that the gradual implementation of the system for thewireline network will be complete on a national scale duringthe second quarter of 2012.Similarly, during 2011, and following a number of years ofprocessing, the legislative debate in congress to regulate theinstallation of antennae for the emission and transmissionof telecommunications services was completed. In its legislativeprocess, the mixed commission approved a bill of lawwith favorable votes in both chambers at the start of Januaryfor subsequent enactment and publication in the official gazette,subject to procedures by the constitutional court for itsconstitutional organic regulations. This initiative regulates theinstallation of antennas in order to tackle the impact of developmentson the urban environment through stricter requirementsat a municipal level, as well as the regulation of otheraspects relating to the installation of antennas, such as colocation,and compensation for those living nearby in certainareas, something which may have an impact on the developmentof telecommunications networks and imply additionalinvestments.There is also currently an investigation under taken by the Tribunalfor the Defense of Free Competition to review telephoneservices tariffs for on-net calls, the provision of telecommunicationsservices in bundles products is also being analyzed.In this process, presentations are already being made by allstakeholders, and the tribunal is considering the informationin order to issue a resolution with respect to the material.All these regulatory changes being introduced by the authorityprovide new business opportunities. Additionally, the diversityand relative size of Entel cushion it from the effects of adverseor inadequate regulation, reducing the risk created for itsoperations, cash flows, wealth creation for shareholders, andcontribution to the community. However, within a regulatedindustry such as that in which Entel operates, changes in regulationsor in the policies of legal and regulatory authoritiescannot be ruled out and have the potential to impact negativelyupon the results of the company or restrict its possibility forgrowth.Exchange Rate RisksEntel’s financing is largely in foreign currency. Furthermore, aproportion of Entel’s suppliers permanently generate obligationsfor foreign currency payments. Both represent liabilitieswhose value changes on a daily basis as a result of exchangerate fluctuations. As a result of this, Entel takes out short- andlong-term contracts in foreign currency assets (hedge derivatives)to protect against such variations and thus eliminate riskfrom exchange rate fluctuations.123Report 2011