Executive summary
El Salvador is the smallest country in Central America, with the third largest population. It suffers from extreme income inequality, rampant crime rates, lack of infrastructure, inadequate social capital, and one of the highest homicide rates in the world. In June 2009, moderate leftist journalist Mauricio Funes won the presidential election, pledging to fight poverty and crime and push for reform in education and health.
Telecommunications has been one of the most successful sectors in El Salvador’s economy. This is particularly true of mobile services, which are emerging as the country’s preferred avenue of communication. The use of text messaging and multimedia is gradually replacing voice, and there is a clear trend towards services supported by 3G networks.
El Salvador’s fixed-line teledensity is about 19% lower than the Latin American and Caribbean average. In reality, considering the country’s poor GDP per capita, this compares favourably with the rest of the region. However, there was a 10% drop in the number of fixed lines in 2010 alone, largely due to the substitution for mobile-only alternatives.
Mobile penetration is remarkably high based on El Salvador’s economic indicators, being about 35% higher than average for Latin America and the Caribbean. Of the estimated total number of telephones in the country, 11% are fixed and 91% are mobile.
El Salvador’s telecom legislation has been hailed as one of the most liberal in Latin America because it encourages maximum competition in most aspects of telecommunications and permits foreign investment in all areas. All telecom sectors have been functioning in a competitive environment for many years, but there are no regulations to promote wholesale broadband, therefore the ADSL market is a virtual monopoly. The only meaningful broadband competition comes from cable modem access.
Although many companies launched services when the telecom sector was liberalised, the market has been undergoing a gradual process of consolidation, leaving a few dominant multinational operators (Millicom’s Tigo, América Móvil’s Claro, and Teléfonica’s Movistar), which have managed to expand into almost all telecom sectors through a process of convergence.
The mobile market is served by five operators: Tigo, Movistar, Claro, Digicel, and Intelfon. Mobile penetration passed the 100% threshold towards end 2009.
The fastest growing sectors in coming years will continue to be pay TV and broadband, both fixed and mobile. The outlook is especially promising for mobile broadband, which could help to bolster the slipping mobile ARPU figures in the medium term.
The longer-term prospect is more promising. The mobile market is likely to start growing again well past the 100% penetration rate, more people wanting multiple mobile devices for different options and applications. With increased GDP per capita, demand for broadband and ICT services should intensify. Competition between Claro, Tigo, and Telefónica will force operators to diversify their services and reduce prices.
Key highlights:
- CTE Telecom, trading as Claro, is the incumbent fixed-line operator in the country. The CTE brand was discontinued in 2009, and all services were unified under the Claro brand name, including mobile and fixed-line telephony, ADSL and mobile broadband, as well as cable and satellite TV. Claro is the dominant fixed-line operator and ADSL provider in El Salvador.
- Claro’s main competitor is Tigo, originally only a mobile operator. However, since Millicom acquired cable TV leader and triple player Amnet, all services were unified under the Tigo brand name in 2009, including mobile and fixed-line telephony, cable modem and mobile broadband, as well as cable TV. Tigo is the leading mobile operator and provider of cable TV/cable modem services in El Salvador. In 2012 Amnet purchased Telefonica Multiservicios’ fixed telephony and internet clients.
- Telefónica/Movistar occupies third place in the country’s telecom market. In 2010, all its services were gradually being unified under the Movistar brand name, including fixed-line and fixed-wireless services, mobile services, cable broadband, and cable TV. In 2010 the company ceased CDMA operations in El Salvador and Guatemala.
- In early 2011 Carlos Slim, the world’s richest man and owner of América Móvil initiated proceedings to acquire Digicel’s network in El Salvador and Honduras in return for that company’s operations in Jamaica. The Honduras and Jamaica parts were agreed by May 2012 though the El Salvador part has stalled on regulatory concerns on the surrender of spectrum.
El Salvador – key telecom parameters – 2010; 2012
Category (millions)
| 2010
| 2012 (e)
|
|---|
Fixed-line subscribers
| 1.01
| 1.03
|
Internet users
| 0.98
| 0.14
|
Broadband subscribers
| 0.17
| 0.22
|
Mobile subscribers
| 7.52
| 10.34
|
(Source: BuddeComm)
El Salvador has good long-term growth potential especially in fixed and mobile broadband and in pay television. The report covers trends and developments in the fixed-line, mobile, Internet, broadband, and pay TV markets. Subjects include:
- Market and industry analyses, trends and developments;
- Facts, figures, and statistics;
- Government policies and regulatory issues;
- Major players (fixed, mobile and broadband);
- Infrastructure development;
- Internet and broadband market (DSL, cable modem, wireless);
- Mobile market (including 3G and mobile broadband).
