Tigo Panamá stepping up investments in fiber optics

Tigo Panamá announced that it plans to invest US$100mn this year to improve fiber optic coverage and modernize its mobile networks.

Although the investment is slightly lower than the annual average it has spent over the last four years, having disbursed a total of US$475mn in the period, the announcement implies that Tigo will step up investments in fiber optics.

Tigo will cover some 90,000 homes with fiber optics this year in Puerto Armuelles (Chiriquí), Colón, Panama City, the north of Penomé, the Azuero region and San Miguelito, according to news agency ANPanamá.

In a recent Fitch analysis of Tigo's fixed operation in Panama, the ratings agency estimated that the company's investments would be equivalent to 17% of revenues this year, a slight decrease from previous years.

Tigo is one of the biggest investors in Panama's telecom industry. According to estimates by regulator Asep, the telecommunications market in the country should end 2022 with total investments of US$276mn, while sector revenues are expected to reach US$1.12bn.

In 2019, Tigo's parent company Millicom invested more than US$2bn in Panama to acquire Cable Onda and Movistar.

“Low broadband penetration in Panama creates growth opportunities for the company,” Fitch said with respect to Tigo.

The agency noted that Tigo had nearly 900,000 homes passed with fiber as of the end of 2022.

Fitch expects the company to accelerate its investments to increase the number of homes passed in the coming years, although its focus will also be on having a greater number of homes connected to the network.

The agency estimated that it would add 80,000 homes passed in 2023, some 10,000 below the figure announced by Tigo, while in subsequent years, that figure is expected to dip to 20,000 additions per year.

"In contrast, the mobile market, despite recently announced industry consolidation, remains competitive, and growth opportunities are becoming more challenging as it matures," the Fitch report reads.

Fitch estimates that revenue-generating units (RGUs) in fixed services will grow by 4% between 2023-2024. Meanwhile, prepaid mobile subscribers will grow at a moderate rate, with postpaid increasing in "the mid-single digit zone."

Tigo mentioned that part of its investments in 2023 will be used to increase LTE capacity and increase coverage in new areas. The company assured that "the central part" of the network is already prepared for 4G.

According to Millicom data for the third quarter of 2022, as of end-September, the company had 2.4mn mobile users and 469,000 fixed income generating units.

The regulator Asep estimated that there were over 663,000 fixed broadband subscribers in Panama as of the end of 2022 and 6.9mn mobile lines.

Tigo's main competitor is Cable & Wireless Panamá. The country recently launched a tender for a third mobile operator to fill the spot vacated by Digicel.