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MeneameA Russian-Venezuelan-Nicaraguan consortium called Yota de Nicaragua has won an auction for a fixed wireless and internet concession in Nicaragua in the 2,500-2,690 MHz bands, local and international press reported.
In a resolution published on September 30, telecoms regulator Telcor recommended awarding the license to Yota de Nicaragua, after presenting a bid on September 25.
Yota de Nicaragua is a unit of Yota Mobile WiMax, which forms part of Russian state corporation Rostejnologuii.
Local daily El Nuevo Diario quoted Telcor head Orlando Castillo as saying that no other companies had presented economic bids. Central American internet and pay TV provider Amnet-Newcom, Spanish mobile operator Movistar and incumbent Enitel, which is owned by Mexican giant América Móvil (NYSE: AMX), had all originally expressed interest.
Yota won with the minimum bidding price of US$729,000, Castillo said, adding that the other companies found the minimum bidding price too high, the newspaper reported. BNamericas was unable to confirm the news, despite repeated attempts to contact Telcor.
"Yota won the auction because the others felt the bidding price was too high for two licenses [telephony and internet]... We were criticized for charging too little for the license. Compare what was paid in Honduras, for example, US$80mn, and what we charged here which was US$729,000," Castillo said.
Digicel and América Móvil paid US$80mn each for licenses to enter the Honduran market last year.
Castillo confirmed that the technology to be used would be WiMax standard IEEE 802.16e. He said that the basic telephony base of 270,000 subscribers has not grown in the last 15 years as it is not an attractive business for operators.
However that could change with packages of internet and telephony, and the official predicted that the number of basic telephony subscribers could double in the first year and eventually reach as much as 2mn. Yota has promised to drop prices for internet and basic telephony by 20%, the official said, adding that Yota was granted a license this year to import equipment and has offices installed in Managua.
According to Yota's website the company already has over 100,000 WiMax subscribers in Russia.
NEW COMPETITION POSITIVE
José Magana, analyst with Pyramid Research, told BNamericas that any new competition in Nicaragua would be positive given the underdeveloped nature of the country's telecommunications market.
Nicaragua has one of the lowest telecommunications penetration rates in Central America with broadband at under 1% of the population and 4% of households, while mobile telephony is around 50% and fixed line telephony is some 5%.
"América Móvil holds a dominant position in the fixed and mobile markets, so competition is definitely going to help. First of all, if these are wireless technologies they are going to help the coverage. The incumbent has no pressure to introduce new wireless technologies, which are expensive, especially in areas that appear less profitable," Magana said.
"The main goals of the regulator should be first to boost coverage, second [make the service] affordable and third increase quality. So if they can bring in new players and more investment, and help extend coverage, this is definitely positive for Nicaragua," the analyst added.
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