Panama seeks an operator for the cellular network that Digicel abandoned after the merger of América Móvil with Liberty

The Panamanian State is looking for a telecommunications company that is interested in maintaining the operation of the cellular network that belonged to Digicel Group, a company that left Panama after arguing that the merger of its competitors Cable & Wireless Communications of Liberty Latin America with Clear of Mobile America it would unleash effects on the concurrence and competition of the Panamanian mobile market.

Panama is now looking for an operator that provides service to 13% of the total Panamanian market that Digicel served at the time. This company, the smallest in the comparison between the four main operators in the country, reported that it had invested more than 660 million dollars in the development of redes 3G y 4Gand simultaneously generated up to 170 direct jobs in that country.

Following the voluntary departure of Digicel from Panama through a petition to liquidate its businesses filed with the authorities, the Panamanian market is now basically made up of two large network operators: Tigowhich had also acquired the assets of Telefónica Movistar, and for the new +Móvil that resulted from a combination of Claro’s businesses with Liberty.

This postcard of the market with only two operators encouraged the National Authority of Public Services (ASEP) to find a new operator for the Panamanian mobile market.

The ASEP offers a twenty-year concession for the operator that resumes the operation of the cellular network that Digicel abandoned and through the exploitation of 30 MHz of frequencies in the 1.9 GHz band (PCS) and an additional 20 MHz in the 700 MHz band. In exchange, ASEP requests that interested parties must have at least 500,000 mobile phone users served in some other market, if they intend to compete in the tender with file No. 01-2023-Telco.

“The National Authority for Public Services announces that as of January 12, 2023, the prequalification process will open for companies interested in participating in Public Tender No. 01-2023-Telco for the granting of a new concession to operate and to exploit the Personal Communications Service No.106 (PCS) and for the purchase and sale of certain goods, networks and equipment of the Digicel company”, said the ASEP.

The purpose of this process is the incorporation of a third mobile operator in the telecommunications sector and guarantee competition as provided for in the regulation”, added that authority.

According to ASEP, the Digicel company still provides regular service and is monitored by a government inspector, while the new operator appears. “The company continues to operate hand in hand with the controller, providing its services without interruptions,” he said.

Digicel Group, which arrived in Panama in 2008, announced in mid-2022 the liquidation of its Panamanian business due to the possible effects on competition and market competition that the merger of Cable & Wireless Communications of Liberty Latin America with clear of America Movil.

Digicel, with about 13% of the Panamanian cellular market by 2021, tried to stop the merger of these other two companies, because in his opinion this consolidation in the same entity would hinder competition in the mobile segment, by making Panama a market with virtually two operators: Millicom International Cellular’s newcomer Tigo and the new Liberty.

The merger of these other two companies is actually a takeover of Claro’s cellular customers in favor of Liberty, given that América Móvil sold those assets to Liberty for US$200 million in September 2021, not including the tower infrastructure and the trademark “Claro” in said operation, .

América Móvil’s exit from the local cellular business follows the also exit of Telefónica from the same market for the sale of Movistar in 573 million euros to Tigo in 2019, which had previously also bought Cable Onda for 1,640 million dollars in 2018, to create a new convergent operator in Panama with all those assets.

Digicel accuses that the disappearance of the Movistar and Claro brands from the Panamanian cellular market is an alert for the authority to review the regulatory framework; He even warned that coordination practices could originate for the fixing of consumer prices. For the Panamanian government, consolidation will make the market more competitive.

But Digicel questions the authority for approving the concentration of Claro with Liberty, since there will be a conflict of interest as the State has a stake of up to 49% in the resulting company and it would control between 56% and 70% of the cellular business. .

The operation Claro-Liberty It already involved the transfer of around 770,000 prepaid and postpaid users and annual revenues of 160 million dollars, and 4G cellular coverage over 80% of the Panamanian population.

In its financial report, the Liberty subsidiary said it had 3,533,600 mobile users at the end of 2021, plus 2,162,900 landline, broadband, and television subscriptions, as well as a fiber network that reaches 2,335,800 homes.

Tigo, for its part, indicates that it received Movistar with 1.5 million users in 2019, which increased to 2,095 million mobile consumers in 2021.

These assets and the investment muscles of Tigo and Liberty made Digicel think that its business could be displaced in Panama.

Panama had 4.4 million inhabitants in 2021 and a cell park of 5.6 million active lines in 2020, a penetration of more than 138% to be supported by two operators, such as Tigo and Liberty.