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Central America Telecommunications Report Q3 2011
Business Monitor International, June 2011, Pages: 92
The Central America Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Central America's telecommunications industry.
BMI's Q3 2011 Central America Telecommunications report analyses and assesses the latest developments in the telecoms markets of seven countries: Belize, Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua and Panama. In addition to containing new mobile subscriber figures for the first quarter of 2011, the report contains revised five-year growth forecasts which chart how the country’s different telecommunications sectors are likely to develop.
Competition has been one of the main factors influencing the region's high telecoms sector growth rates. However, levels of competition vary from El Salvador, Guatemala, Honduras and Panama, which all have at least three operators present in the mobile market, to Belize, Costa Rica and Nicaragua, which continue to only have one or two operators. In Costa Rica at least, this situation is about to change, with new competition expected to arrive before the end of 2011 from Mexico’s América Móvil and Spain’s Telefónica. Both operators are already active in a number of countries across the region. Meanwhile, the imminent arrival of competition has led Costa Rica’s incumbent operator, Instituto Costarricense de Electricidad (ICE), to introduce a range of new services; these appear to have had a positive impact on the market's growth rate in 2010.
One development of note, with implications for the level of competition in Honduras and El Salvador, is the agreement between América Móvil and the Digicel Group in March 2011 for the former to buy 100% of Digicel’s operations in Honduras and El Salvador. As part of the transaction, América Móvil will sell Jamaican subsidiary Claro to Digicel. Although the completion of the transaction is subject to governmental and regulatory approvals in Honduras, El Salvador and Jamaica, it was expected to be finalised during the second quarter of 2011. The acquisition of Digicel Honduras and Digicel El Salvador will allow América Móvil to almost double its subscriber base in these two countries.
As mobile penetration rates continue to rise, resulting in increasingly saturated markets, one of the biggest challenges for the operators will involve squeezing further value from existing customers. Data from Millicom International Cellular, whose Tigo service operates in El Salvador, Guatemala and Honduras, show that about 7% of the company's subscribers in the region were using 3G services at the end of 2010. BMI believes this proportion will continue to grow, with mobile broadband boosting the rate of subscriber take up. Improving ARPU figures back this view and suggest mobile content will become an ever greater proportion of revenues in future.
In addition to revising our mobile subscriber forecasts for the majority of countries in the region, this quarter sees changes to several of the region’s broadband subscriber forecasts. Specifically, we expect stronger growth rates in the latter part of our forecast for Honduras, Nicaragua and Panama. Although BMI believes broadband will provide the strongest growth rates over our forecast period, the mobile market will remain the key driver of telecoms revenues and many operators will benefit from offering wireless broadband services that will attract more connections on their networks. Increasingly, we expect the spread of mobile broadband services to help push up broadband penetration rates across the region. However, this development will also have negative implications for the growth of fixed broadband technologies.
Our new Telecommunications report for Central America contains a revised set of Business Environment Ratings for Latin America. This quarter, nearly all of the Central American markets have seen changes to their overall scores and position. Although El Salvador and Guatemala swapped places in our table, both countries are in the upper half of the table. Honduras is at the bottom of our table. This is despite slight improvements to its Country Risk and Industry Rewards scores.
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