Again in 2018, the Panamanian authorities rubber-stamped long-gestating plans to cut back the cellular market from 4 gamers to a few, searching for to make higher use of the nation’s spectrum assets.
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 attempting to draw a brand new operator to fill the void.
In the present day, we observe the important thing occasions that led up to now.
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 cellular sector from 4 operators to a few—in an effort to maximise the nation’s radiofrequency assets.
The following yr, 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 This repealed sure articles included inside Regulation No. 5 from February 1995, in addition to extra laws from 1996, thus paving the way in which for consolidation between native cellular 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 prepared to stop the market, any consolidation chatter pale into the background.
Certainly, relatively 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 amass all the 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 belongings.
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 amass 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 strain or market situations. Nevertheless, it’s value noting that the Panamanian authorities holds a 49% stake in CWP, suggesting the telco was all the time prone to be concerned in government-led consolidation. (Word: the remaining 2% stake is held by an worker belief, administered by Banco Normal.)
The CWP-Claro tie-up finally closed on July 1, 2022.
2022: Doomed Digicel in Dire Straits
Working in parallel, in April 2022, Digicel Panama introduced its intention to apply for voluntary liquidation and withdraw from the Panamanian telecom market. This resolution resulted from the merger between CWP and Claro, which—in line with Digicel—represented an “unlawful financial focus.”
As Digicel defined on the time, “In the present day’s announcement is not going to come as a shock to the Panamanian authorities and regulator. For the reason that announcement of the merger, Digicel Panama has repeatedly conveyed in writing to the authorities that approval of the merger with out applicable treatments would end in our exit as we can’t proceed to fund the illusion of a three-player market. Along with the preliminary licence price, the continual requirement to purchase extra spectrum by means of auctions, along with the exorbitant renewal prices contribute to a high-cost regulatory surroundings.”
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 cellular 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 belongings.
The 20-year cellular license will embrace 2×15MHz within the 1900MHz band (1850MHz-1865MHz/1930MHz-1945MHz) and a couple of×10MHz within the 700MHz band (738MHz-748MHz/793MHz-803MHz).
The regulator emphasised that it’s searching for a licensee with robust credentials, relatively than an untried participant. It additionally stipulated that the profitable applicant will need to have at the very least 5 years’ expertise as a cellular operator in one other market and serve no fewer than 500,000 cellular subscriptions.
The profitable applicant will need to have at the very least 5 years’ expertise as a cellular operator in one other market and serve no fewer than 500,000 cellular 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 any apparent candidate for the brand new concession.
Additional, the stringent utility situations will rule out speculative bids from the form of enigmatic entrepreneurs who can usually be discovered circling new licenses in creating markets.
With the ink barely dry on the general public tender doc, there was nothing in the way in which of media hypothesis up to now, leaving us to attract our personal conclusions.
One of many few firms that has actively pursued cellular alternatives in Latin America lately is Novator Companions, an Icelandic-owned, London-based personal fairness agency. The group presently operates beneath 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 initiatives,” suggesting additional cellular rollouts are on the horizon.
The final time cellular belongings 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 amass numerous Telefonica items—U.S.-based AT&T and Chilean telco Entel had been named as events. Nevertheless, 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 extra Central American markets, though it’s unclear if regional enlargement continues to be on the corporate’s agenda.
No matter occurs—and whichever firms emerge—Latin American telecom observers are set for an attention-grabbing few months of exercise.
No matter occurs—and whichever firms emerge—Latin American telecom observers are set for an attention-grabbing few months of exercise.
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