Market Insight

Xinwei to operate in Nicaragua

September 10, 2014

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Nicaraguan telecoms regulator Instituto Nicaragüense de Telecomunicaciones y Correos (Telcor) has awarded six telecoms licences to Xinwei Telecom Enterprise Group, enabling the Chinese operator to provide public telephony, fixed voice, fixed broadband, data transmission, mobile, and pay TV services in the country. The fixed voice license will last 20 years, while the others will last for a 10-year period.

Our Analysis

In June 2014, Xinwei’s Nicaraguan representative Pablo de la Roca has announced his company’s investment of $300 million to develop its operations in Nicaragua during the period from 2013 to 2015. The company has already received equipment worth $5 million and plans to install the required service networks in the next four months. Xinwei aims to start a trial period for its telecommunications network from next October. The Chinese operator plans to provide services for 240,000 subscribers at the beginning of its operations and aims to reach around 3 million customers.

The entrance of Xinwei and its intention to reach a significant percentage of market shares will boost competition among telecoms operators. Xinwei will enter the Nicaraguan telecoms market, which is a de facto duopoly of América Móvil and Telefónica. América Móvil operates in the country through the Claro Nicaragua brand while Telefónica operates through its Movistar Nicaragua brand.

At the end of 2013, the mobile market is the largest telecommunication sector with a total of 6.8 million subscribers divided between prepay subscribers, 6.3 million and postpay subscribers, 396,701. Claro Nicaragua is the leading mobile player with 53.89% of market share at the end of 2013 followed by Movistar Nicaragua with 46.11%.

Being able to operate in every section of the market will be central to Xinwei’s success. Claro Nicaragua offers triple plays including broadband, voice, and pay TV alongside its mobile plans. A possible solution for Xinwei to effectively launch its new offers would be through bundling mobile and fixed line services together, thus providing quad-play offers. This would help Xinwei to create a customer base and to acquire subscribers across all sectors of the market.

 

Geography
Nicaragua
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