Again in 2018, the Panamanian authorities rubber-stamped long-gestating plans to cut back the cellular market from 4 gamers to a few, looking for to make higher use of the nation’s spectrum sources.
Regardless of a number of conferences, no breakthroughs have been achieved, and all 4 operators have 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.
At present, we monitor 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 cellular sector from 4 operators to a few—in an effort to maximise the nation’s radiofrequency sources.
The following yr, after three debates on the subject, the Plenary of the Nationwide Meeting lastly permitted 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 This repealed sure articles included inside Regulation No. 5 from February 1995, in addition to extra laws from 1996, thus paving the way in which for consolidation between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—participating 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 give up the market, any consolidation chatter pale 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 amass the whole 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 element 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 completed 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 completed 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 stress or market circumstances. Nonetheless, it’s price noting that the Panamanian authorities holds a 49% stake in CWP, suggesting the telco was all the time more likely to be concerned in government-led consolidation. (Be aware: the remaining 2% stake is held by an worker belief, administered by Banco Common.)
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 determination resulted from the merger between CWP and Claro, which—in response to Digicel—represented an “unlawful financial focus.”
As Digicel defined on the time, “At present’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 applicable cures would lead to 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 extra spectrum via 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 12 months, 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 property.
The 20-year cellular license will embody 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 looking for a licensee with sturdy credentials, somewhat than an untried participant. It additionally stipulated that the profitable applicant will need to have at the 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 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 an in depth on March 16, 2023.
Doable 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 software circumstances will rule out speculative bids from the sort 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 so far, leaving us to attract our personal conclusions.
One of many few corporations that has actively pursued cellular alternatives in Latin America lately is Novator Companions, an Icelandic-owned, London-based personal fairness agency. The group at the moment 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 tasks,” suggesting additional cellular rollouts are on the horizon.
The final time cellular 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 amass varied Telefonica models—U.S.-based AT&T and Chilean telco Entel have 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 extra Central American markets, though it’s unclear if regional growth continues to be on the corporate’s agenda.
No matter occurs—and whichever corporations emerge—Latin American telecom observers are set for an fascinating few months of exercise.
No matter occurs—and whichever corporations emerge—Latin American telecom observers are set for an fascinating few months of exercise.
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