Hondutel-Cedar Herald Index

Hondutel (Empresa Hondureña de Telecomunicaciones), is the Honduras government's telecommunications company. It has a monopoly on international calls.

History

Creation

The organization was created on May 7, 1976, as an autonomous organization responsible for the modernization of Honduras' telecommunication system, and to achieve a better efficiency in its administration and profitability. Hondutel was historically administered by Honduras' armed forces as telecommunications were considered a matter of national security.

Hondutel

Privatisation attempts

Towards the end of the 20th century, the Honduran government is pressed by the IMF to privatize Hondutel in order to benefit from debt-restructuring solutions and international financial aids. A 1995 law (Framework Law of the Telecommunications Sector) authorized 51% of the company to be sold and privately held. The push towards privatisation was also made by Jaime Rosenthal in 1992, who saw three benefits in this process : bring foreign currency in the country (mainly US dollars), to ensure transparency and accountability, and to boost innovation.

Hondutel

However, a 1995 audit by Price Waterhouse revealed that the company was a high-risk investment thus jeopardizing its privatisation. By 1999, a mere 4.2 lines per 100 inhabitants is accounted.

Hondutel

In 1998, the government is ready to proceed to the privatisation of the company, but the country is badly hit by hurricane Mitch and reviewed its priorities. Finally, by February 2000, seven companies have pre-qualified to capitalize Hondutel (including Telmex, Telefonica and France Telecom). In October 2000, the bid is launched, but only Telmex remained in the race, with a $106 million offer, which was only a third of the government's expectations. The bid was refused. In 2003, the government approved the sale of Hondutel's B band network, acquired by Megatel. In 2004, it is bought back by América Móvil, owner of Telmex.

Recent history

In June 2007, Hondutel launched its first of a series of Personal Communications Services (PCS) networks. It competes with companies such as Luxembourg's Millicom and Mexico's juggernaut América Móvil. In October, it extended to the Sula Valley, including the cities of San Pedro Sula, La Lima, Villanueva and surrounding communities. In December it extended coverage to La Ceiba.

Currently, it offers mobile phone coverage in the cities of Tegucigalpa, San Pedro Sula, La Ceiba, Olancho, Progress and Copan and surrounding areas.

The administration of President Porfirio Lobo created a commission to study the available alternatives to solve Hondutel's lack of funds. The operator needs to modernize and expand its wired infrastructure and complete its nationwide mobile footprint. Hondutel's dire financial situation has forced the government to intervene in order to provide funds to cover employees salaries. Unofficially it has been said that there are only two viable solutions for Hondutel: either finding a strategic partner that is willing to have the state as a partner shareholder or total privatization. According to an Hondutel executive, the operator needs an immediate cash injection of US$150 million to become more competitive.

During August 2013, the government announced its intention to auction two AWS mobile licenses and directly grant a third one to Hondutel. The government expects that these new spectrum concessions will be used for the deployment of LTE services. The Uruguayan government also made an offer that year, suggesting that ANTEL acquires 51% of Hondutel to develop its presence in Latin America, even though Hondutel loses $1 million a month and holds a $18 million operating deficit.

In 2015, the company grew its internet capacity by 300% to cope with the ever-rising demand. At the end of 2016, the company lowered its prices on internet offers to grow its customers base. On the other hand, Hondutel started to depreciate its nationwide landline coverage and completely shut down service in some rural areas of the country.

Financial statements

In 2014, it was revealed by an informer from the secretary of finance that between 2000 and 2012, Hondutel informally wired 17 million of lempiras to the country's government, including 10 million in cash.

In 2015, Hondutel closed its fiscal year with a HNL 80 million profit, largely benefitting from the internet and mobile boom, along with heavy job cuts.