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 with 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 local populations and businesses. Governments in the region are eyeing 5G as an opportunity to demonstrate their commitment to economic development as well as providing necessary services to remote and underserved regions.
In the second part of this series on Central America, TowerXchange considers the most important trends and key developments in the telecommunications markets of Nicaragua and Panama.
Nicaragua
Nicaragua has been dealing with plenty of internal issues over the last few years, from the effects of the pandemic on the market, to devastating hurricanes, an encompassing a financial crisis and political unrest. 2021 was a particularly challenging year for the country, with the hurricanes that hit Nicaragua and others Central American areas said to have caused US$750mn of damage. The Inter-American Development Bank (IADB) has already promised US$1.8bn in aid for Nicaragua and the rest of the region, and the provision of critical infrastructure will be a priority issues for re-development.
On the regulatory front, Nicaragua is yet another market in Central America where the authorities have been attempting to initiate a transition to 5G. In December 2022, the Nicaraguan regulator Telcor announced its plans to utilise the 3.5GHz band for the country’s future 5G ambitions, with a possible reorganisation of any current allocations (held by Claro), before any new concessions are distributed. The introduction of 5G connectivity is a part of the government’s national plan to fight poverty and stimulate the economy, which covers the next few years to 2026. The date for the possible auction hasn’t been announced yet, but it is likely that the government will be pushing for it at the earliest feasible opportunity.
In the telco segment, Millicom finalised the takeover of Movistar in May 2019. Since then, Claro and Tigo Nicaragua have been competing in the mobile sector alongside Xinwei’s Cootel. Prior to the acquisition, Tigo Nicaragua focused on B2B services and residential HFC connectivity in the country’s capital of Managua.
In terms of towercos, Torrecom and SBA Communications operate just over 50% of the country’s tower inventory. While the current situation isn’t favourable, both companies have in the past reported positive working conditions across Nicaragua. América Móvil has now completed the formation of its tower carve-out Sites and transferred 774 of its sites into the new company’s ownership.
Panama
In January 2023, Panama’s telecom regulator, the National Public Services Authority ASEP, announced the first stage of their new licensing process. Following the exit of mobile operator Digicel from the country, the regulator will seek to fill the void by awarding a new mobile licence. However, the award will require a pre-qualification. The public tender will licence spectrum in the 1900MHz and 700MHz bands for 20 years. The new licence will also allow for the purchase of certain Digicel assets. The regulator has emphasised that it is seeking a licensee with strong credentials, at least five years’ experience as a mobile licensee in another market, serving no fewer than 500,000 mobile subscriptions.
In recent years, Telefonica, America Movil and Digicel Group all exited this market, and the two other operators with large presence in Central America, Millicom (trading as Tigo) and Liberty already have presence in the country. This leaves no obvious candidate for the new concession.
The Panamanian government has sought to reduce the wireless market from four players to three since 2017, in order to make better use of the country’s spectrum resources. Following Digicel’s exit, Millicom made an announcement that it wasn’t going to acquire Digicel’s Panamanian assets, in order to focus on operational aspects of its existing portfolio in the country. Back in 2021, the company allocated US$250mn to invest in its Panamanian operations over the next two years, which included a commitment to build new sites and provide coverage in locations that are difficult to access, as a part of the government’s plan to prioritise investment and promote employment and agriculture in those areas. Prior to this investment announcement, Millicom built just over 110 sites in 2021, reaching more than 450,000 people. Following that, in June 2022, Millicom closed a transaction to acquire the remaining 20% interest in Tigo Panama. As a result, Millicom now owns 100% of Tigo Panama. The company acquired the initial 80% stake in the company, formerly Cable Onda, in October 2018, for just over US$1.0bn, and in 2019, Millicom acquired Telefonica Moviles Panama from Movistar, which it also later rebranded as Tigo.
In September 2021, Liberty Latin America announced the merger between Cable & Wireless Panama (trading as +Movil), in which it holds a 49% stake, and America Movil (trading as Claro) for US$200mn. In April 2022, Digicel Panama announced that it was to apply for voluntary liquidation and withdraw from the Panamanian telecoms market, arguing that the merger will create un-competitive conditions in the market that is already difficult to operate in because of the high-cost regulatory environment. Digicel’s concession has been subsequently transferred to the ASEP, and the company will continue to provide services to existing customers and fulfilling obligations to external partners and suppliers without interruptions, working with the auditor. The company will maintain its operations until the new operator enters the market and throughout the transition period.
