Monitoring 5 Years of Telecom Upheaval

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Again in 2018, the Panamanian authorities rubber-stamped long-gestating plans to cut back the cell market from 4 gamers to 3, searching for to make higher use of the nation’s spectrum sources.

Regardless of a number of conferences, no breakthroughs had been achieved, and all 4 operators had been unwilling to concede floor.

5 years later, a number of worldwide telecom teams have exited Panama and the authorities discover themselves within the uncommon place of making an attempt to draw a brand new operator to fill the void.

Right now, we observe the important thing occasions that led thus far.

2018: Three’s Firm, 4’s a Crowd

In April 2017, the federal government tabled Regulation No. 479—which sought to cut back the Panamanian cell sector from 4 operators to 3—in an effort to maximise the nation’s radiofrequency sources.

The subsequent 12 months, after three debates on the subject, the Plenary of the Nationwide Meeting lastly accepted Regulation No. 479 in April 2018. This repealed sure articles included inside Regulation No. 5 from February 1995, in addition to further laws from 1996, thus paving the way in which for consolidation between native cell operators.

Regardless of all 4 incumbent operators—Movistar Panama, Cable & Wi-fi Panama (CWP), Digicel Panama, and Claro Panama—partaking in dialogue with the authorities, a breakthrough proved elusive, and the established order remained intact.

2019: Millicom’s M&A Merry-Go-Spherical

With little in the way in which of significant progress and no operator keen to stop the market, any consolidation chatter light into the background.

Certainly, somewhat than exiting the sector, the latter months of 2018 noticed one other worldwide participant arrive in Panama. This new participant, Millicom Worldwide Mobile, agreed to pay $1 billion for 80% of native cableco Cable Onda.

After months of press hypothesis, Millicom struck once more. This time, Millicom entered into agreements with Spanish telecom group Telefonica and its associates to accumulate the complete share capital of Telefonica Moviles Panama (Movistar). This settlement was half of a bigger $1.65 billion deal additionally involving Telefonica’s Nicaraguan and Costa Rican property.  

The Panamanian part of the deal was valued at EUR573 million ($650.1 million) and closed in August 2019.

Whereas the deal did little to ease the federal government’s four-into-three quandary, it demonstrated that there have been positively offers to be achieved in Panama.

Whereas the deal did little to ease the federal government’s four-into-three quandary, it demonstrated that there have been positively offers to be achieved in Panama.

2021: Claro Climbs Into Mattress With CWP and Carlos Cashes Out

After a few years of pandemic-related inactivity, September 2021 noticed a shock announcement. Liberty Latin America’s 49%-owned CWP subsidiary agreed to accumulate Claro Panama from Carlos Slim’s America Movil group in an all-cash transaction valued at $200 million.

Lastly, it appeared that the federal government’s want had come true. It stays unclear whether or not the CWP-Claro deal was prompted by authorities stress or market situations. Nonetheless, it’s value noting that the Panamanian authorities holds a 49% stake in CWP, suggesting the telco was at all times more likely to be concerned in government-led consolidation. (Be aware: the remaining 2% stake is held by an worker belief, administered by Banco Basic.)

The CWP-Claro tie-up ultimately closed on July 1, 2022.

2022: Doomed Digicel in Dire Straits

Operating in parallel, in April 2022, Digicel Panama introduced its intention to apply for voluntary liquidation and withdraw from the Panamanian telecom market. This choice resulted from the merger between CWP and Claro, which—in keeping with Digicel—represented an “unlawful financial focus.”

As Digicel defined on the time, “Right now’s announcement is not going to come as a shock to the Panamanian authorities and regulator. Because the announcement of the merger, Digicel Panama has repeatedly conveyed in writing to the authorities that approval of the merger with out acceptable cures would end in our exit as we can not proceed to fund the appearance of a three-player market. Along with the preliminary licence value, the continual requirement to purchase further spectrum by auctions, along with the exorbitant renewal prices contribute to a high-cost regulatory setting.”

Digicel’s concession was duly transferred to the Nationwide Public Companies Authority (Autoridad Nacional de los Servicios Publicos, ASEP) on April 27, 2022. On August 2, ASEP’s “intervention interval” was prolonged by an extra 180 days; this is because of expire on the finish of January 2023.

2023: New Yr, New License

With no time to waste, ASEP opened pre-qualification for its public tender for a brand new cell licensee on January 12, 2023. Public tender No. 01-2023-Telco will search to fill the void created by Digicel’s exit by providing a brand new concession to function and exploit the vacated PCS license (No.106) and permitting for the acquisition of sure Digicel property.

The 20-year cell license will embody 2×15MHz within the 1900MHz band (1850MHz-1865MHz/1930MHz-1945MHz) and a pair of×10MHz within the 700MHz band (738MHz-748MHz/793MHz-803MHz).

The regulator emphasised that it’s searching for a licensee with robust credentials, somewhat than an untried participant. It additionally stipulated that the profitable applicant should have at the very least 5 years’ expertise as a cell operator in one other market and serve no fewer than 500,000 cell subscriptions.

The profitable applicant should have at the very least 5 years’ expertise as a cell operator in one other market and serve no fewer than 500,000 cell subscriptions.

The primary stage of the licensing course of is scheduled to attract to a detailed on March 16, 2023.

Potential License Winners?

With LatAm-focused teams Millicom Worldwide Mobile and Liberty Latin America already current in Panama—and Telefonica, America Movil, and Digicel Group having exited the sector lately—there isn’t a apparent candidate for the brand new concession.

Additional, the stringent software situations will rule out speculative bids from the sort of enigmatic entrepreneurs who can typically be discovered circling new licenses in growing markets.  

With the ink barely dry on the general public tender doc, there was nothing in the way in which of media hypothesis thus far, leaving us to attract our personal conclusions.

One of many few corporations that has actively pursued cell alternatives in Latin America lately is Novator Companions, an Icelandic-owned, London-based personal fairness agency. The group at present operates below the WOM model in Chile and Colombia, with each launches overseen by colourful telecom veteran Chris Bannister.

Intriguingly, when Bannister stepped down from WOM Colombia in April 2022, he acknowledged that he “will proceed to work hand in hand with the Novator household for extra tasks,” suggesting additional cell rollouts are on the horizon.

The final time cell property went on sale in Central America was when Telefonica exited the area. Alongside Millicom, America Movil, and Liberty Latin America—which all went on to accumulate numerous Telefonica items—U.S.-based AT&T and Chilean telco Entel had been named as events. Nonetheless, it stays to be seen whether or not Panama would pique the curiosity of both firm.

In years passed by, Costa Rica’s state-owned energy and telecom firm, Grupo Instituto Costarricense de Electricidad, expressed a need to develop into further Central American markets, though it’s unclear if regional enlargement remains to be on the corporate’s agenda.

No matter occurs—and whichever corporations emerge—Latin American telecom observers are set for an attention-grabbing few months of exercise.

No matter occurs—and whichever corporations emerge—Latin American telecom observers are set for an attention-grabbing few months of exercise.

You should definitely subscribe to CommsUpdate to maintain up with all of the breaking developments in Panama and elsewhere on this planet.

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