Despite the difficult few years during the global Covid-19 pandemic, and ongoing global economic difficulties, the telecommunications sector in Central America is projected to continue a steady growth. Similarly, to other developing regions in the world, this overall increase in investment into telecom infrastructure is driven by a significant demand for realisable and affordable communication services by the local populations and businesses. Governments in the region are eyeing 5G as an opportunity to both demonstrate commitment to developing economy and providing necessary services to remote and underserved regions.
In the first part of our analysis, TowerXchange looks at the latest developments in the three of the smallest markets in Central America - Belize, Costa Rica, El Salvador.
Belize
Belize a unique country in the region, because while geographically it belongs to mainland Central America, it is also one of the 15 Caribbean Community (CARICOM) member states. As a result, it is a subject to ongoing efforts to seek the reduction of pan-Caribbean roaming costs by up to 70%.
Also on the regulatory front, the Belize government is currently working on upgrading the existing licensing laws, which telecom operators operating in the country await eagerly. As of date, the details of proposed changes to commissioning process have not yet been published by the officials. Judging from the developments in the rest of the region, the industry can expect the costs of licencing fees to go up, although it is not known yet by what extent.
The majority of the market share in Belize belongs to a government-owned telecommunication company Belize Telemedia Limited (BTL), trading as Digi. The company, which operates over 150 own mobile sites as of Q4 2022, offers mobile, fixed, and broadband, services. Most it recently has been prioritising investment into expanding its FTTH services. There has been a wave of consolidation among ISPs in the country and BTL is now taking the lead in this segment in addition to the mobile services provision. The second operator in the country is company SMART is controlled by the Ashcroft Alliance, and trading as Speednet. As of yet, the regional giants America Movil, Telefonica, Millicom are yet to set foot in the country.
Costa Rica
Costa Rica is a small but exciting market for towercos, who consider it a friendly environment in terms of its infrastructure sharing policies, as well as its sustainable, eco-friendly approach. There are three MNOs in the Costa Rican market, market leaders Kölbi (the brand of the state-backed Grupo ICE), América Móvil’s Claro, and Liberty Costa Rica (formerly Movistar).
In November 2022, Costa Rica’s state-backed telco Grupo ICE, operating under a trade name Kolbi, announced that it’s been awarded a USD300 million line of credit by EXIM Bank, the official export credit agency of the US federal government. The credit line will be used to finance the operator’s future 5G network deployment.
Costa Rican government has been discussing preparations for a 5G spectrum auction for quite some time. 5G consultations began in Costa Rica in late 2020 and a spectrum auction was expected in 2021, to date no formal dates have been released. Since the summer of 2021, the country’s regulator, Sutel (Superintendencia de Telecomunicaciones), has been working to recover the unused and underused spectrum in the 2.6GHz and 3.5GHz bands, which it sees as for the development of 5G in the country. The state-backed Grupo ICE currently holds a licence for this spectrum band but hasn’t been deploying it sufficiently.
Now the government is seeking legal ways to return the spectrum, without compensation, claiming the necessity of the move prior to introduction of 5G services to the country. The case has been discussed at the highest level in Costa Rica, with the officials emphasising that the failure to recover the necessary spectrum will lead to the loss of competitiveness and investment in the country, limiting the types of services available to consumers and businesses – and the government’s budget, should the planned auction not attract the expected revenues.
As a result of Grupo ICE’s objections to the lack of reimbursement for the return of the unused spectrum frequencies, in May 2022, the new president ordered Grupo ICE to return all its 5G-suitable spectrum to the Ministry of Science, Technology and Telecommunications (MICITT) within six months. Despite this, the case is ongoing and Sutel now says that the country’s economy stands to lose up to US1.134 billion by 2024 if the frequencies are not made available for 5G use.
In the meantime, another of the country’s operators, Liberty Latin America, has been making preparations for the 5G era ahead of the much-anticipated auction. In 2018, Liberty purchased an 80% stake in Cabletica from Teletica for CRC143 billion (USD245.7 million), followed by an acquisition of a 100% stake in Telefonica Costa Rica (Movistar) for USD500 million in 2021.
Throughout 2022, the company has been busy consolidating its various subsidiaries in Costa Rica into a single entity. It has rebranded its Cabletica and Movistar subsidiaries as Liberty Costa Rica, consolidating the fixed and mobile operations under a shared commercial brand.
Going forward, the company is said to be focusing on solid growth in the market. As a part of this strategy, Liberty is planning to launch 5G mobile technology, as well as deploying a fibre-to-the-home (FTTH) network covering 50% of the country. The company has also launched a B2B unit, Liberty Empresas, with intention to look into opportunities for IoT segment development in the country.
Towercos operating in the country include SBA Communications, American Tower, Telesites, Phoenix Tower International, and Continental Towers. SBA Communications is an absolute market leader in the country, with just over 1,000 towers at the time of publishing. This is closely followed by American Tower’s count of just over 700. Phoenix Tower and Continental both have steadily growing portfolios of around 200 towers in Costa Rica.
América Móvil has now completed the formation of its tower carve-out Sites, which operates nearly 30 thousand sites across 15 markets in Latin America and is listed on the Mexican Stock Exchange. In Costa Rica, the operator’s 546 sites were transferred to the towerco’s hands. Separately, América Móvil’s Mexican towerco, Telesites has around 300 sites in Costa Rica, whether this portfolio will be eventually consolidated into Sitios Latinoamérica remains to be seen.
El Salvador
El Salvador is a relatively small and niche market but also a stable, U.S. denominated one – a characteristic highly regarded by tower companies and international investors alike.
Telefonica is one operator that has been mentioned rather frequently in the headlines over the last few years. In early 2022, El Salvador’s competition agency approved the sale of Telefónica’s operations to General International Telecoms. The price of the transaction is USD144 million.
This follows a few years of legal back and forth in relation to the takeover. Back in 2020, Telefonica first announced that it reached an agreement with América Móvil (operating under the Claro brand) for the purchase of the entire of the company’s stake. However, soon after, the regulator got involved in the proposed transaction.
Following an analysis of the USD315 million deal, El Salvador’s regulator Superintendencia de Competencia ruled that the acquisition would limit competition in the markets for mobile, fixed and business connectivity services. The agency then proceeded to impose a set of conditions to remedy the potential impact and protect consumers. Subsequently, the deal was cancelled.
According to the regulator, the entrance of a new buyer avoids consolidation in the market, leaving four mobile network operators active, with Tigo and Digicel operating alongside Movistar and Claro.
In parallel, in December 2022, El Salvador’s regulator SIGET (Superintendencia General de Electricidad y Telecom) launched a public tender for mobile spectrum in extended AWS frequency range, following a request from mobile network operators Telefonica (trading as Movistar). The auction has faced multiple delays, initially announced for late December 2022 and then moved to February 2023, with no public results as of yet. SIGET has set a minimum bid price of USD22.69 million for the frequencies.
Earlier in the autumn of 2022, Telefonica Moviles announced that it has begun deployment of a 5G-ready mobile network. The company committed around USD280 million to finance the initial deployment in 2023, which it claims will eventually cover more than 95% of the population. As the 5G auction in El Salvador is yet to take place, this is a preparatory move by Telefonica in anticipation of securing the necessary concessions in due course. Until then, none of the commercial 5G services will become available for company’s clients. The company is, however, actively promoting its efforts to position itself as the most forward-looking operator on the market.
Millicom’s Tigo, in the meantime, has over the last year been working to expand its LTE-A services to 85% of population. Initially, in late 2021, the company announced that it has completed work to increase mobile data speeds for more than three million people in 187 of the country’s municipalities. In addition, Tigo has been building additional fibre-optic infrastructure, albeit at a slower pace. This follows an earlier announcement, in mid-2019, of an USD500 million investment in digital infrastructure over the next five years, running up to 2025.
In the last five years, both Digicel and Tigo completed tower sales in El Salvador, Digicel selling just over 200 sites to Phoenix Tower International in 2017 and Tigo selling around 800 sites to SBA Communications in 2018. Phoenix Tower International now holds over 300 towers in El Salvador, while SBA Communications owns 768. Also present in the market are Torrecom and Continental Towers, with just over 210 sites each, as of Q1 2013. América Móvil has now completed the formation of its tower carve-out Sites, which operates nearly 1,200 sites in El Salvador. Torrecom.
