Panama to auction cellular licenses by March 2008

PANAMA CITY (Reuters) - Panama will auction two new cellular phone licenses at a minimum price of $36 million each, in a bid to increase competition and encourage lower prices and improved services, the government said on Monday.

Michael Mihalitsianos, the director of National Authority for Public Services, told a news conference the two new contracts will be awarded in March 2008, after a pre-qualification period, which is already under way.

He said around half a dozen companies had expressed interest in the 20-year concessions, including Mexico's America Movil (AMX.N) (AMXL.MX), Latin America's largest cell-phone company owned by billionaire tycoon Carlos Slim.

Other interested companies include Orange, France Telecom's (FTE.PA) mobile company and Bermuda-based Digicel, which already has operations in Jamaica, Trinidad and Tobago and El Salvador, as well as Panamanian company Cable Onda, and Mexico's Iusacell.

Mihalitsianos declined to say whether the incumbents, Britain's Cable & Wireless (CW.L) and Spain's Telefonica (TEF.MC), under its mobile arm Movistar, will be able to bid for the new licenses, or if companies will be able to compete for more than one license. Those issues would be decided in coming weeks, he said.

According to government figures, Panama currently has 2.4 million mobile phone users, including 200,000 new subscribers in the last year. Panama has just over 3 million inhabitants.

Despite the rapid growth of the mobile-phone market in Panama, some industry watchers have expressed doubt that the market can support another two companies.

Cable & Wireless is Panama's main mobile-phone provider. It has been operating in the country for 10 years and the local subsidiary is 49 percent owned by the state.