Debunking myths about Nicaragua

Maria Scotti has shared with TowerXchange the pros and cons of the tower industry thanks to her substantial experience and outspoken personality. And this interview on Nicaragua was no exception. The CEO of BTS firm Torrecom discussed with TowerXchange the reality of building telecom towers in Nicaragua, the misconception that it is a dangerous country, and the relative ease with which Torrecom has been able to do business there.

TowerXchange: Maria, please share with us your views on Nicaragua, its telecom sector and the expansion of the tower industry.

First of all, it’s important to stress that the first thought often associated with Nicaragua is the danger related to doing business there. Well, this is a good occasion to debunk this assumption and highlight the good points of the country.

In reality, I have found Nicaragua to be one of the best markets for Torrecom and, ironically, one of the most progressive and safe to do business. We played a role in amending the regulation a couple of years ago and we’ve helped to put in place a system that is working pretty well for towercos. There are challenges just like everywhere else but we are pretty content with our business in Nicaragua so far.

TowerXchange: How is the carriers’ landscape in the country?

To date, there are “two and a half carriers” in the country. Claro and Telefónica have been sharing the market pretty equally over the past few years and now we are witnessing Xinwei gearing up to launch towards the end of the year.

Torrecom has been building for Telefónica and, on a smaller scale, for Claro. Xinwei, on the other hand, is purely focused on co-locating at the moment in order to speed up its launch. Xinwei has been moving at a reasonable pace over the past six months and looking at co-locating on all existing structures of interest to them. On the other hand, we are all still waiting to see them ramping up their marketing initiatives. Only when they start acquiring a considerable subscriber base we will be able to assess their performance.

TowerXchange: What are the specific challenges related to doing business in Nicaragua?

Nicaragua presents a variety of logistics challenges just like every other country in the region, especially when we look at remote areas. However, it is not a dangerous country in which to develop projects. It’s a country open to renewable energy solutions to overcome its off-grid problems and there are quite a few programmes in place right now to connect remote areas.

However, I am constantly surprised by Nicaragua. For example, sourcing reliable and capable staff throughout the region is tricky. There aren’t a lot of really skilled professionals out there, especially since the towerco model is relatively young. In Nicaragua we’ve been able to scout really good engineers and administrators to form critical parts of our local team.  Very dedicated and diligent team members.

The only real challenge we face in terms of the country’s legal system is related to property registration, which is still a bit complicated. Land and property ownership hasn’t always been straight-forward in the country but things are progressing and getting smoother. It’s a process that will still require some time to improve.

TowerXchange: How is the infrastructure sharing market going in the country?

Telefónica is very open to sharing in Nicaragua and beyond. I’d say the company is extremely progressive when it comes to infra-sharing and has embraced the co-location model throughout the region.  I will also add that Claro has ramped up its co-location appetite and this speaks to the importance of the regulation in place.  It is important for the environment and experience tells us that multiple towers within close proximity of each other will create an even more difficult permitting process in the future.

There isn’t much inventory left in Nicaragua. In fact, Telefónica does hold on to some major assets but not many, after their sale to SBA. Claro is retaining approximately 300 towers and there are questions as to whether they could be transferred to Telesites in the future. However, this is far from realistic at the moment as Telesites is still in the process of setting up its operations in Mexico, which will take some time. On the other hand, Claro did issue an RFQ for 300-350 new sites in Costa Rica and Telesites won it. So we will need to wait and see whether they start entering other markets in full force.

TowerXchange: What are your expectations for the entrance of Xinwei in the market as third operator? Are they likely to start building any sites?

I don’t foresee Xinwei becoming a large build-to-suit client. I know much depends on their network growth but for now, I see them focusing on co-locations as much as possible.

Their equipment is smaller if compared to that of traditional carriers, which allows them to co-locate quite comfortably. So that helps from a technical standpoint. On the other hand, much depends on how well they do on the subscriber front and how much they manage to grow in the near future. If you ask me, I don’t see them building a lot of new sites over the next three years.

That said, I don’t exclude the possibility of them building a few sites here and there but we aren’t talking about anything of scale. We need to keep in mind that Xinwei has a lot of network to build and an enormous quantity of equipment to bring in, just to get started. So for now, I don’t see them focusing on requiring new sites in a BTS program.

We have started working with Xinwei a few months ago and from a tenant perspective, they’ve been very good. They are a good customer and, since they’ve been around in Nicaragua for two years prior to starting any operations, they have a strong local team, supported by a few engineers that travel from overseas to assist them. Xinwei has been installing “clean and quietly” and we cannot complain. The critical missing piece is to see how well they will perform marketing their products and we, just like all the other local towercos, really hope they do well!

TowerXchange: Is Xinwei representing a real threat for Claro and Telefónica and how have the competition dynamics between the two been so far?

Claro and Telefónica are extremely comfortable in Nicaragua as the country presents a very stable market for them to do business. Both companies have been doing consistent network upgrades and BTS programmes and right now it is business as usual.  They aren’t in a rush to do any major work ahead of Xinwei’s launch. Their deployment pace has been slow but steady, nothing comparable to the rush we are now seeing in Mexico and Guatemala.

From a competition perspective, their way of competing is very similar to that of AT&T and Verizon in the U.S. They are fairly even at the moment with Claro being slighly ahead due to their longevity in the market and because of their other telecommunication asset holdings.

TowerXchange: The World Bank has been working on a Nicaragua Rural Telecom project for quite some time now and there are more projects being developed to connect remote areas. What are your thoughts on them and how likely are they to become reality?

There are a variety of projects being developed in Nicaragua to provide coverage in remote areas, to provide energy in off-grid locations as well as to improve the country’s logistics and connectivity. The World Bank has been developing some projects but in general, most plans have proven more expensive and technically challenging than originally thought, hence are progressing slower than anticipated.

That said, the local government is extremely committed to making these projects happen. They simply won’t let go because of financial or logistic challenges and this is what is contributing to the country’s development. At the beginning, we were skeptical about some projects being realised but now, I can tell you most of them will be developed one way or the other. It will just take time.

The government acknowledges that by empowering local communities, the results will be huge from an economic growth standpoint.  Nicaragua is quickly growing as a tourism attraction as well as being a retirement haven for those opting for remote locations to settle down. And so now there is much emphasis on bringing services to those areas such as new gated communities.  There is a strong dedication to bringing communications to the citizens of Nicaragua for educational, medical, banking and retail services by accessing wireless technologies.

All this is happening with considerable logistics and financial challenges but the government’s mantra so far has been to bring communication to the citizens wherever they are, and to deal with each issue, whatever they are.

TowerXchange: Being active in Nicaragua and Guatemala, could you compare the two and their respective regulatory, telecom and tower environments?

Nicaragua is a very stable country compared to Guatemala. In fact, Telcor, the telecom regulator, has done a very good job in structuring the permitting system in a way that actively involves municipalities and empowers them in a positive way. The system takes time, it can be complicated, but it works. You see, Telcor aims at providing some consistency across the board and keep things under control. And this is noticeable from a permitting and general business perspective.

On the other hand, the Stuperintendencia de Telecomunicaciones (SIT) in Guatemala has the power to release permits but this doesn’t mean municipalities accept them without protesting. Quite the contrary, municipalities are often opposed to greenfield projects in spite of their local communities literally begging for coverage. We face protests, sometimes violent ones, and building outside of the city is very dangerous. And keep in mind that moving around Guatemala City isn’t easy either.

Doing business in Guatemala isn’t easy and it’s such a pity. In fact, the country is technically richer than Nicaragua and right now there are a lot of plans to develop new sites and enhance coverage across the country. The problem is to get them done safely.

It’s a shame because Guatemala City has some greatness to it with its high-rise buildings, beautiful gated communities and marvelous scenery out in the countryside.  There are a lot of people that would want to progress and get things done! Bear in mind that it tends to be even more difficult during the pre-election phase.  Hopefully after the elections in September things may move faster during the regulatory process but it won’t get easier logistically and safety of our team members is in the forefront of our minds as well as the carriers’.