Hondutel looks for foreign investor to solve financial crisis

Among the poorest countries in Central America, Honduras has long been plagued by an unstable political framework which has rendered telecom reform difficult. Reform is critical if the country is to address some of the least impressive market statistics in the region.

Fixed-line teledensity at only 7% is significantly lower than the Latin American and Caribbean average. Poor fixed-line infrastructure has been exacerbated by low investment and difficulties in local terrain which have made investment in rural areas unattractive or uneconomical. As a consequence, the internet has been slow to develop in Honduras: DSL and cable modem technologies are available but relatively expensive, while higher speed services are largely restricted to the major urban centres. Nevertheless, the demand for broadband is steadily increasing and there are has been some investment in network upgrades to fibre-based infrastructure, though this is restricted to the main cities. Poor fixed-line connectivity has also inhibited the take-up of VoIP, which would otherwise be a preferred communications medium to expensive domestic calls.

On the positive side, these factors have encouraged consumer take-up of mobile services, a sector where there is lively competition supported by international investment and know-how. As a result, mobile penetration is about 20% above the regional average. Revenue from the mobile sector looks promising in coming years as operators invest in their networks, expanding their reach and upgrading their capabilities to accommodate mobile broadband services. Mobile data as a proportion of overall mobile revenue is likely to double in 2013, though low-end SMS services will continue to account for the bulk of data revenue for some years.

Political developments during the last few years have not facilitated the much-needed reform of legislation governing the telecoms sector. Partly this is due to political stalemate and ineffective legislators, but underlying the difficulties are the close ties between executives at the incumbent Hondutel and key members of the government. Charges of bribery and corruption are rife, and though the framework for reforming the Telecommunications Act remains before the Honduran Congress, there is little prospect of effective change in the short term which would bring about a properly competitive and fair market for some services.

Honduras – Key telecom parameters – 2010; 2012



2012 (e)

Fixed-line service

Total lines in service



Annual growth







Internet users



Annual growth



Internet users penetration



Mobile telephony subscribers

Total number of subscribers (million)



Annual growth



Mobile penetration rate



(Source: BuddeComm)

Market highlights:

  • Despite infrastructure limitations VoIP telephony is increasingly used an as alternative phone, mainly for considerations of cost.
  • High mobile voice penetration has left limited room for further growth, yet low mobile data use will provide operators with considerable opportunities in coming years, stimulated by the migration among uses from basic handsets to smartphones and by the continuing shift from fixed telephony to mobile use. Although the 3G base remains low, at about 4% of all mobile subscribers, investment in network upgrades aims to address infrastructure shortcomings and increase the number of 3G subscribers as well as the proportion of high-end mobile data revenue to overall mobile revenue.
  • Despite a strong growth in Digicel’s subscriber base since 2010, Digicel has sold its businesses in El Salvador and Honduras to América Movil, which operates the Claro brand. The deal has had significant implications for the sector’s competitive environment, but will provide benefits of scale to América Movil which should assist its network development.
  • In 2012 Hondutel set up a JV to develop a mobile broadband scheme, aiming to tap into the potentially lucrative mobile data market. It will rely on a foreign partnership to manage mobile services, and help solve the company’s continuing financial difficulties.
  • Hondutel plans a significant investment programme to deliver a fibre optic network to a number of cities on the north coast, affecting some 1.5 million people.

For detailed information, table of contents and pricing see:

Honduras – Telecoms, Mobile and Broadband

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