This report provides information on Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama. Each country has its own chapter and covers the following subjects.
Fixed Network Operators
Mobile Market Overview
Central America is a tropical isthmus that connects North and South America, and separates the Caribbean from the Pacific. It comprises the seven republics of Belize, Costa Rica, El Salvador, Guatemala, Honduras Nicaragua Panama. The region is relatively small, extending for about 524,000km². The land is fertile and rugged, and dominated by a string of volcanic mountain ranges.
Belize: The second smallest and most sparsely populated country in Central America, Belize officially opened all fixed-line and wireless telecom services to competition at the end of 2002. Yet, despite theoretical liberalisation, the incumbent, Belize Telecommunications Ltd (BTL), still holds a de facto monopoly. International Telecommunications (Intelco) became BTL’s first competitor in October 2003, but was bankrupt by November 2004, and its subscriber base was taken over by BTL. A third company now has the task of breaking BTL’s monopoly: SpeedNet Communications (SpeedNet), which launched mobile telephony over a CDMA 2000 1X network in March 2005, under the brand name Smart. SpeedNet plans to offer Internet access, wireless broadband and various corporate services as well as mobile telephony.
Costa Rica: Served by a relatively modern and sophisticated telecom infrastructure, Costa Rica has the second highest Internet penetration rate in Latin America, excluding the Caribbean islands, after Chile. Yet, Costa Rica is the least liberalised market in the region. State-owned Instituto Costarricense de Electricidad (ICE) and its subsidiary RACSA are the only providers of both fixed-line and mobile telephony, Internet and data communications - in fact, of virtually all telecom services except for pay TV. Although this situation worked in the past, it is now leading to considerable problems, such as long waiting lists for phones; stifling of new technologies such as VoIP (which threatens ICE’s hegemony); and difficulties in implementing new convergence strategies. January 2004, however, marked a significant step for Costa Rica with the signing of the Central American Free Trade Agreement (CAFTA), which calls for a gradual liberalization of the telecom sector.
El Salvador: The country’s telecom market is among the most open in Central America. The government’s liberal approach has allowed new technologies to flourish. Since the sector was privatised and opened to competition in 1998, foreign operators and local companies have invested millions in infrastructure improvements. However, fixed-line teledensity remains relatively low, the network having been devastated by Hurricane Mitch in 1998 and by earthquakes of 2001. Mobile telcos have capitalised on the underdeveloped fixed-line network by emphasising their ability to offer a fast, high-quality service with nationwide coverage. The mobile sector has enjoyed sustained growth and mobile phones overtook fixed lines in service in 2002. With a budding VoIP market, and cable TV companies permitted to provide telephone and Internet services, El Salvador is also a promising country for convergence strategies.
Guatemala: While telecom infrastructure in Guatemala is fairly modern in the main urban centres, rural telephony remains inadequate and antiquated, though much improved since the 1996 telecom liberalisation. With a high percentage of the population living in rural areas, the country’s fixed-line teledensity is at the low end of the scale for Latin America. Mobile telephony, on the other hand, has been the fastest growing telecom sector, helped along by one of the most liberal regulatory models in the world. Mobile phones overtook fixed lines in 2001 and there are now more than twice as many mobile phones as lines in service. Guatemala is the most populated country in Central America; with its liberalised market, low teledensity, and growing demand, Guatemala offers promising opportunities for telecom investors.
Honduras: One of the poorest countries in the Latin America, Honduras has one of the least developed telecom infrastructures and the fourth lowest teledensity in the region. But promising changes are on the horizon since the opening of the telecom market to full competition in December 2005. Less than two weeks after the state-owned incumbent Hondutel lost its monopoly over the international long-distance market, Millicom’s mobile operator, Tigo, halved international calling rates. Mobile telephony received a boost in 2004, following the November 2003 launch of a second mobile provider, Aló, and the arrival of América Móvil on the scene, when it acquired Aló in June 2004. Unsatisfied demand for basic telephony has driven a veritable boom in the mobile market, with annual growth rates of over 80%.
Nicaragua: Nicaragua has the second lowest fixed-line teledensity in Latin America, after Haiti. The year 2004, however, brought a few major and promising changes to the telecom market. In January 2004, América Móvil acquired Enitel, previously the state-owned monopoly operator of fixed-line services. In August 2004, América Móvil applied for authorization to merge its mobile subsidiary Aló PCS with Enitel Movil, the mobile arm of Enitel. In October 2004, BellSouth completed the sale of its Nicaraguan unit TCN BellSouth to Telefónica Móviles. As a result, the telecom market in Nicaragua has become a duopoly between Telefónica Móviles and América Móvil. The much awaited telecom liberalisation took place, officially, in April 2005 - proper implementation, however, has been delayed by political and legal wrangles.
Panama: With significant telecom infrastructure, a liberalised market, and serviced by five global fibre optic cables, Panama has become an attractive country for telecom investments. Competition is slow to develop in basic telephony, where the incumbent Cable & Wireless Panamá is reluctant to unbundle its local network, but the long distance sector has attracted several players, leading to huge price drops, especially in international calls. Mobile telephony overtook fixed lines in 2001 and has been steadily growing. In the Internet market, although penetration is still low, dial-up and ADSL connections are developing at a fast pace; growth potential in this sector is excellent. The leading cable TV company, Cable Onda, has started to offer Triple Play services (converged broadband, telephony and pay TV).