Instituto Nicaragüense de Telecomunicaciones (Telcor) will auction two new mobile network operating licences. Reportedly, the new licensees will be permitted to offer 4G mobile broadband services across the country. The regulator hopes the new operators will focus on Nicaragua's underserved rural market, home to around 1mn potential new mobile customers. Unnamed Asian investors are said to have expressed interest in the auction and BMI believes that certain carriers - such as Viettel of Vietnam - would be best placed to succeed in this underperforming market.
As yet, it is not known how much frequency is being offered, what reserve price has been set for the spectrum or even whether the licences will be technology neutral. It is also unclear whether existing operators Claro and Móvistar will automatically be granted additional spectrum to enable them to offer similar 4G services; BMI believes that such a move would almost certainly be necessary to ensure a level competitive playing field.
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|Nicaragua Mobile Market Indicators, 2009-2016|
América Mó vil -owned Claro is the leading mobile operator in Nicaragua, serving approximately 2.5mn subscribers as of June 2012, according to the regulator. The agency also claims that Móvistar has approximately 1.5mn subscribers, although the Telefónica -owned company recently claimed to have a subscriber base in the region of 2.8mn. BMI believes Telefónica may be including fixed-line, broadband and fixed wireless accesses in that total; if it is not, then it may be that Móvistar has a large base of inactive subscribers, which could send mixed messages to potential new investors in the market.
Approximately 80% of the Nicaraguan mobile market is based on low-cost prepaid services and, although neither Telefónica nor Claro provide detailed information regarding their Central American operations, BMI thinks it likely that churn rates are very high and ARPUs fairly low. We therefore believe that Asian operators with considerable experience in operating under such conditions would be ideally placed to secure the new mobile licences and operate services in a cost-efficient manner. For that reason, we see Viettel as a prime candidate to enter the Nicaraguan mobile market. The company has secured licences in Peru and Haiti and had recently expressed interest in acquiring 3G spectrum in Argentina. The Nicaraguan market is, therefore, more challenging and less appealing from a return on investment perspective but, as Móvistar has recently intimated, increased focus on underserved areas represents a significant revenue-generating opportunity (see our online service, May 25 2012, ' Mobile Market Needs Investment And regulations ' ).
The regulator claims that companies from China, South Korea and Taiwan have expressed interest in bidding for the new licences and, with Datang Telecom/ China Mobile having secured spectrum in Belgium and China Telecom having embarked on an ambitious plan to establish itself as an MVNO across Europe, it would not be surprising if these companies were also sounding out Nicaragua's potential. SK Telecom of South Korea also seems a likely candidate given its international expansion ambitions.
BMI forecasts Nicaragua's mobile market to grow from 3.863mn subscribers in 2011 to 4.450mn by 2012 and then to 6.102mn by 2016. Over this time, the mobile penetration rate will grow from 65.8% to 96.9%. The launch of two new mobile networks should provide a further catalyst for expansion in the latter part of the forecast period.