While Cable & Wireless (C&W) and Claro carry out the last steps of the merger, which should be concluded before the end of January, the Government of Panama launched the bidding process for a third operator to play in the country.
The Autoridad Nacional de Servicios Públicos (ASEP) (National Public Services Authority) gave C&W (owned by Liberty Latin America and the Panamanian State, which owns 49% of the shares) until the first month of this year to complete the purchase made last year of Claro Panama's assets, for which it paid US$200 million.
The approval of this acquisition by ASEP gave rise to the decision of Digicel Panama to withdraw from that market due to the "impossibility of competing" in the scenario of market concentration.
As Panamanian law requires the presence of three mobile telephony and data operators, ASEP took control of Digicel's assets in a process that the regulator and the operator conducted smoothly to make the withdrawal as orderly as possible. In this way, Digicel's customers had no inconvenience with the service and, at the same time, the value of Digicel's assets was preserved in the face of a possible subsequent sale. "Digicel will maintain its operations until the entry of the new operator and, in addition, it will accompany the new company in the transition process", ASEP said in a statement.
This process began with the announcement of the launch of the tender in which the 20-year concession of the spectrum bands that had been awarded to Digicel will be offered to the market. These are the 1,900 MHz band, with 1,859 MHz to 1,865 MHz for uplink and 1,930 MHz to 1,945 MHz for downlink. In addition, in the 700 MHz band, channel Canal H (738 MHz to 743 MHz), channel Canal H' (793 MHz to 798 MHz), channel Canal I (743 MHz to 748 MHz) and channel Canal I' (798MHz to 803MHz).
ASEP said that certain assets, networks and equipment operated by Digicel will also be put up for sale.
Regarding the requirements that the interested parties must meet, ASEP indicated that the bidder must prove an experience of not less than 5 years in the operation of personal communications systems (PCS) or cellular mobile telephony systems. In addition, it must have a number of active PCS users of not less than 500,000.
These requirements leave open the possibility that regional players may enter Panama.
The merger created a new market leader, ahead of Millicom-owned Tigo. In this context, Digicel affirmed that the merger made competition impossible for small players, like itself. Digicel has strongly criticized the regulatory environment in Panama, criticizing the high cost of doing business there. It also admitted that it had unsuccessfully tried to find a buyer for its operation in Panama.