Spectrum auction set to encourage cellular sector competition in Nicaragua

Nicaragua is the largest and least densely populated countries in Central America. The country’s significant GDP growth since 2010 belies the low economic base, given that it has the lowest GDP per capita in the region, with some 60% of the population live below the poverty line. As a result, much of the economic drive has been the result of international assistance, particularly from the World Bank and other agencies.

Nicaragua’s telecoms market has mirrored the poor economic achievements, with fixed-line teledensity and mobile penetration also the lowest in Central America. The broadband market remains nascent, with population penetration at about 1%. Most internet users are concentrated in the largest cities because the rural and marginal areas lack access to the most basic telecom infrastructure. A number of internet cafés provide public access to internet and email services, but these are also restricted to the larger population centres.

América Móvil’s Claro has a clear leadership in all of Nicaragua’s telecom sectors, including fixed-line, mobile, broadband, and pay TV. Mobile subscribers overtook the country’s main lines in early 2002, and now make up the significant majority of all lines.

Telefónica’s Movistar is the only company competing with Claro in the fixed-line and mobile market. In the mobile sector, Movistar holds almost one third of the market, but in the fixed-line sector, it has only about 10% of the country’s fixed lines in service.

Due to a weak regulatory structure and bureaucratic delays, further liberalisation has been slow to be implemented. The duopoly situation has dampened the competitive drive, and as a result there has been less effort than in neighbouring countries to improve quality and lower prices. However, other companies operating in the market include the Russian state corporation Rostejnologuii, Yota Mobile and IWB Holding.

The fixed-line market will probably continue to be stable, leaving growth principally in the mobile and broadband sectors. While competition in the mobile sector is expected to improve from 2013 with the introduction of two prospective players following the auction of 1800MHz spectrum, the broadband sector will be the main growth engine given the extremely low penetration coupled with consumer demand for services. In this regard, the longer-term prospect is promising.

Nicaragua – key telecom parameters – 2010 – 2012

Category

2010

2012 (e)

Fixed-line service

Total number of subscribers

258,000

305,000

Teledensity

4.4%

5.3%

Internet

Internet users

118,000

170,000

Internet users penetration

1.8%

2.9%

Broadband

Total number of subscribers

48,000

50,000

Penetration rate

0.9%

1%

Mobile telephony subscribers

Total number of subscribers (million)

3.96

5.54

Mobile penetration rate

68%

86%

(Source: BuddeComm)

Market highlights:

  • The anticipated auction of spectrum in the 1800MHz band, aimed at breaking the existing market duopoly, should increase competition and lower prices for consumers from 2013.
  • The commissioned new satellite to provide pay-TV and telecom services should be operational from mid-2015, boosting the availability and scale of services both for the country and region.
  • Claro retains a near-monopoly over broadband in Nicaragua since acquiring cable TV company Estesa, which was the only company that offered any meaningful competition. Claro’s ADSL and cable modem services are both branded Turbonett Fijo. The cable modem service uses the Hybrid Fibre Coaxial (HFC) network inherited from Estesa.

For detailed information, table of contents and pricing see: Nicaragua – Telecoms IP Networks Digital Media and Forecasts

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