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Broadband and PayTV to Drive Telecommunications Growth in Central America

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High level market penetration in markets such as El Salvador, Guatemala and Panama, together with falling income from fixed line and long distance services, are forcing operators to seek out new sources of revenue, says Signals Telecom Consulting.

"We have noted an increase in aggressiveness in broadband and PayTV service sales in almost all Central American markets, Nicaragua being the market with the greatest lag. At 2Q10 several of the region's leading operators already offer PayTV services: America Movil (Claro TV), Millicom (Tigo/AMNET) and Cable & Wireless (+TV Digital). At Signals we consider that Movistar could replicate its PayTV strategy in El Salvador and Panama, launching DTH services under the name of Movistar TV, as already offered in Venezuela. The outlook for Digicel is not so clear, however, as its DigiTV service offering for the island of Tonga would not be replicable in Central America unless it were to acquire a CATV operator or seal a commercial alliance with a regional PayTV service," commented Jose F. Otero, President of Signals Consulting.

The report highlights the weakness of the state-owned operator in Honduras when faced by competition, and the urgent need for it to modernize its infrastructure to improve market positioning to compete with Claro, Digicel and Tigo.

"Hondutel appears to be lagging behind as a service provider. Its offer is based on fixed-line telephony and domestic and international long-distance services; in addition, although it has a mobile service, it is basic -voice and SMS- and well behind that of other players in the market. This disadvantage is also evident in broadband service access offerings. In view of this situation, the new administration needs to work to increase operator revenue diversity, most of which - over 60% - comes from local telephone services and domestic long distance. This is mainly because there has been a sharp decline in income from these services following the increased aggressiveness of mobile operators, both from the inroads made by substitution of fixed lines by mobile ones, and from the heavy discounts for on-net calls," declared Elias Vicente, Senior Analyst for Signals Telecom Consulting.

Analysis of the various markets in the region indicates that investment by mobile operators and CATV will be centered on infrastructure upgrades to provide faster data transmission speeds for both cabled and wireless networks. "The region is gradually entering into an era of access speed competition, and offerings centered on broadband access. In such a scenario, operators that consolidate offerings that include greater access speeds will have a considerable advantage over their competitors. Operators will therefore be complementing their investment on FTTx and DOCSIS 3.0 with HSPA+ and LTE networks in coming years, allowing them to be positioned as access alternatives for corporate and business customers," Vicente concluded.

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Tags: era  El Salvador  Guatemala  Panama