Trends & Forecasts

Companies and Markets: Varied fortunes for Central American markets

A new report from Companies and Markets provides a detailed analysis of the Central American telecoms market, listing great successes as well as markets which the authors considered to be under-achievers...

Central America Telecommunications Report Q1 2010 is the new review by Companies and Markets of a region of highly varying fortunes. For example, Costa Rica is moving ever closer to a liberalised telecoms market as new fixed-line and broadband operators have been licensed and strategies from these new players are beginning to emerge; Millicom International Cellular’s Amnet unit looks set to be a major competitor to incumbent Instituto Costarricense de Electricidad (ICE).

 The report's writers look forward to the entrance of new mobile operators in Costa Rica as it believes this is the sector that will be most transformed by liberalisation. ICE has, in fact, returned spectrum in advance of new licences being auctioned and new operators may be present by the end of 2010. The market is expected to take off once new companies enter although further details of the winners and strategies which emerge from the process are required.

At the other end of the scale is Belize Telemedia (BTL) which was renationalised in 2009. As yet there has been little indication that the operator will be sold again to private investors. This will have “a negative effect on the market’s overall growth, especially with competition to the incumbent appearing to be weak.”

Meanwhile, Honduras has shown how new competition can drive a market with local news sources, stating the penetration rate had hit 103% by September 2009. While this figure may not be entirely accurate, ie, backed by regulatory data, the authors do estimate that the market hit almost 100% penetration at end09 with the entrance of Digicel having maintained a fast growth rate in the market.

Digicel’s presence in Panama also had a dramatic effect: leading operator +móvil, a unit of Cable & Wireless Panama, lost 549,000 subscribers between March and September 2009. The newcomer’s strategy of low cost services and aggressive marketing has served it well in other markets and “we believe the company has grown very quickly in Panama despite the market’s maturity.” Fellow new operator Claro has also seen good growth although at a much slower pace than Digicel.

There are extended forecasts for all sectors to 2014 which see most fixed-line markets stalling or even in decline. Broadband markets will show the strongest growth looking forwards but Guatemala, Honduras and Nicaragua will fail to generate penetration rates above 1% even by 2014.

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