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 eying 5G as an opportunity to both demonstrate commitment to developing economy and providing necessary services to remote and underserved regions.
In the third part in the series, TowerXchange examines telecom market conditions in two of the biggest countries in Central America by population – Guatemala and Honduras.
Guatemala
Guatemala’s telecom market has witnessed considerable growth in recent years. In September 2022, Guatemala’s telecommunications regulator SIT (Superintendencia de Telecomunicaciones) announced plans to auction unused frequencies in the 2.5GHz-2.6GHz range; 120MHz of spectrum in total. This follows an earlier request from local mobile operators Claro and Tigo. Subsequently, Claro applied for 34 of the available 48 regional spectrum blocks, while Tigo applied for just five blocks, with a focus on larger spectrum allocations. SIT expects to generate between US$30mn and US$50mn as a result of the auction. In the meantime, the regulator has been working on the reorganisation of the 700MHz band, which was initially announced in January 2021, when the necessary legal provisions were made to auction of a 60MHz block of spectrum in the 700MHz band.
Earlier in the year, in July 2022, America Movil-backed Claro became the second Guatemalan telco to launch 5G technology in quick succession. The new network is now live in all 22 of the country’s departments. Claro’s sole mobile rival Tigo switched on its own 3.5GHz 5G network at 100 cell sites in Guatemala City earlier in the same month, with plans to expand to the rest of the country, without disclosing the rollout schedule. Claro’s 5G spectrum band has not been officially disclosed, but it is likely to be in the 12MHz block of spectrum in the 900MHz band, 120MHz in the 1900MHz band or the 175MHz block of spectrum in the 3.5GHz band that Claro holds a licence for until 2033.
Tigo is Guatemala’s leading mobile player with 11.57mn subscriptions, the country’s leading fixed broadband provider with 392,000 subscriptions, and the second-largest pay-TV provider with 567,000 customers. In November 2021, Millicom, an international mobile and broadband service operator, that operates in Latin America via the Tigo brand, acquired the 45% stake in Tigo Guatemala, which it didn’t previously own. The company paid US2.2bn to Panama-based Miffin Associates Corp, and as a result, Millicom now owns a 100% equity interest in Tigo Guatemala. Tigo Guatemala is the most profitable business within the Millicom Group, with an EBITDA margin above 51%. The company is in the process of carving out its infrastructure assets into a separate company across all of its international operations, which is likely to improve the bottom line further in the coming years.
Guatemala is an active market for a new generation of satellite connectivity companies. In the spring of 2022, a Guatemala-based service provider COMNET extended its long-running partnership with SES to secure access to SES-17 Ka-band satellite capacity. The company is targeting enterprises - organisations in agriculture, trade, tourism, energy, financial, health and education sectors. In addition, the company will be targeting underserved areas in the country. However, whether the demand for such services will be justified remains to be seen.
And a little earlier, in late 2021, a US-based satellite giant Viasat announced a partnership with Intercorp Peru, to bring satellite-enabled connectivity services to previously underserved communities across the region to promote greater digital and social inclusion. Initial coverage areas will include Jamaica, Guatemala and Honduras, with parts of South America expected to join the list shortly after. Both companies will work with a multinational beverage company CBC as a regional distribution partner, tapping into the firm’s existing logistics networks to enable swift access to the service. Whether or not such deals will grow out into scalable commercial enterprises that could rival the traditional tower company business model remains to be seen.
In terms of the current towerco landscape, SBA Communications entered the market as early as 2011. In 2012, SBA Communications added Mobilitie’s sites in both Guatemala and Nicaragua. The company currently owns 613 towers in the market. In 2018, Phoenix Tower International acquired a small portfolio of sites in a private deal and has been expanding its footprint since, with a portfolio of just over 100 towers. An independent Latin American tower company Torrecom owns 266 towers in the country. América Móvil has now completed the formation of its tower carve-out Sites, which operates nearly 3,300 sites in Guatemala. Similarly, another Latin American heavyweight Millicom, is due to finalise its own infrastructure care-out, Lati, by the end of 2023, and is likely to transfer its entire portfolio of 4,300 towers in Guatemala to the new entity. The deal may also include the operator’s two Tier 3 data centres and more than 21,000km of fibre.
Honduras
Mobile operators Tigo and Claro lead the mobile services segment in Honduras, accounting for a combined subscription market share of over 99%. Honduras's telecom industry is in a need for a major expansion of its network infrastructure in the next decade to satisfy the demand. It is now up to the newly formed Sites, Continental Towers and Millicom’s Lati, to keep up the pace of new site construction. And while the towerco market is now busier and more competitive than ever before, the pace of the new build, due to some other business practices that may affect the telco ability to invest into expanding its infrastructure networks in the country.
In October 2022, the national telecommunications commission of Honduras, Comision Nacional de Telecomunicaciones or Conatel, initiated a consultation into telecom tariffs and costs in the country. The regulator is seeking to pave the way to renewing and expanding the existing policy so that it is compatible with current business practices. According to the agency, it is seeking to promote investment, improve efficiency, promote fair competition, while ensuring greater transparency in regulatory processes. These developments would certainly be of great benefit to the telecom service provision in the country, however the scope of the new measures is yet to be revealed. This follows the regulator’s earlier move to free up the 3.3GHz-3.7GHz range for mobile use, and frequencies in the 3.7GHz-3.8GHz range for fixed-wireless broadband use. The spectrum will be auctioned via a public tender, although no date has been disclosed.
In August 2021, the Honduran government initiated a financial rescue package for state-backed telco Hondutel, which has accumulated significant debt, exceeding HNL298.9 million (US$12.4 million), following three consecutive years of net loss. The government ruled our privatisation, and instead has invited significantly in developing infrastructure to increase broadband capacity and re-structure the organisation.
