Panama proceeds to terminate Digicel’s Telecom concession

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By LatAm Reports Editorial Team

The concession left by Digicel expires in 2028 and a new tendering at the moment is not advantageous because of the condition of the international market.

The telecommunications market could be several years with only two dealers, after the departure of Digicel.

The general administrator of the Public Services Authority (Asep), Armando Fuentes, reported that the concession that Digicel maintained expires in 2028 and it will be necessary to decide whether this period is expected to expire or venture into a new attempt to bring another company.

It was twice that he tried to sell Digicel, after the company’s intervention by the State, however, both failed.

“We have to analyze this with the new government; see if a new tender is actually made or whether it is committed to amending the law,” Fuentes said.

It was two companies with which it was tried to award Digicel, however, when the second one was desisted, it was when the liquidation process began, which included firing 188 employees, this Wednesday.

There was78 workers who were rehiredfor the transition process that lasts 30 days and includes the migration of the 330 thousand customers that Digicel maintained to the other two telecommunications operators.

Why has it been so difficult for another operator to the country?

Customers who wish to perform numerical portability to migrate to another operator will not have to pay for the procedure.
Digicel’s departure leaves two companies on the market. Sure, it was bought by Cable & Wireless, after tycoon Carlos Slim withdrew his business from the country.
It will be 30 days that Digicel customers will have to choose the new operator that will provide the service.
Digicel started operations in 2008 with an investment of $86 million in the concession of mobile phone, to offer national coverage in 2G and 3G.

Fuentes acknowledged that at the international level the situation is complex in recent years and economic concentrations between companies have been taking place, both in Latin America and in Europe.

On the other hand, Panama is a small market that stands at an average of 6 million customers, because many have services from more than one operator.

For four operators to intervene, as at one point, “it was too much,” Fuentes said.

With this last point on the size of the market, the administrator of the Asep argued that the exit of the two smaller companies was attributed to this reality and not to an economic concentration by the older dealers.

He added that amendments to the legal framework must be made to encourage new companies to reach the country to provide the service.

As the Asep also regulates radio and television, he explained that a regulatory convergence should be made in a single law.

Sources suggested analyzing the option of a virtual operator, who could be a third party that does not have to make so many investments but offers the service, after agreement with the other companies, so that there is a figure of competitiveness.

At the end of April 2022, the State intervened Digicel Panama.

The company’s controller, Alex Arroyo, said that a sin of the company was that it concentrated on the country’s capital and peripheral areas, when in such a business, a strategy like the one proposed does not work.

Digicel, based on this plan, did not make sufficient investments at the national level, which was weighed by the companies with which its sale was negotiated.

This article has been translated from the original which first appeared in Panama America