Overview

El Salvador’s telecommunication sector has operated under a privatized legal and institutional framework since 1997, encouraging competition in most areas and allowing foreign investment. América Móvil (Mexico), Grupo IBW (local), General International Telecom Limited GITL (UK), and Tigo El Salvador (Millicom International Cellular of Luxembourg) offer high-speed data and internet service through cable systems, as well as dial-up internet access.

The regulatory authority responsible for spectrum development is the General Superintendence of Electricity and Telecommunications (SIGET). The Superintendency of Competition also controls the concentration of telecommunication operators as its antitrust agency. Telecommunication operators decide upon the system, technology, and services and contract with private tower operators to expand the infrastructure. The country’s transition to digital transmission began in 2018 with the Japanese-Brazilian Digital Standard (ISDB-T) adoption.

In 2021 mobile phone lines were up to 11,300,786, exceeding the total population of 6.5 million; the mobile network covers 93% of the territory according to SIGET. Mobile penetration is remarkably high considering El Salvador’s economic indicators, higher than the average for Latin America and the Caribbean. The growth in fixed-line services slowed in the face of mobile-cellular competition; fixed lines were 853,770 in 2021. Internet subscriptions reported by SIGET were 830,512 in 2021, 37.2% higher than in 2019.

Source: World Bank Indicators

Broadcast media combines multiple privately owned national terrestrial TV networks, supplemented by cable TV networks that carry international channels and hundreds of commercial radio broadcast stations. The country was among the last in the region to provide 4G LTE services, mainly due to the inadequacy of a suitable spectrum. In 2019 the telecommunications regulator (SIGET) awarded more spectrum through a public tender, after which private operators deployed LTE 4.5G. It is estimated that by 2022 LTE 4.5G will reach close to 30% of the mobile subscriptions market.

(Total market size= (total local production + imports) – exports)

Units: USD millions

The United States is among the top four sources of ICT goods imports in El Salvador, with about 4% of the imports market share in 2021; China leads with 68%, followed by Vietnam and Mexico, each with 9.8% of the market share. There is no significant local production of information and communication technology, except for capacitors used in electronic equipment produced at a free trade zone for specific clients. Import duties for information and communication technology and equipment are zero percent, subject to a 13% value-added tax. Companies should either register an office or work with a local agent to do business in El Salvador.

Leading Sub-Sectors

• Consulting
• Professional and Technical Services
• Software Development
• Cloud Services
• Data Center Operations
• Computer and Network hardware and software
• Telcommunications systems and products.

Opportunities

The Innovation Secretariat’s 2020-2030 Digital Agenda aims to implement a digital transformation through four pillars: 1. Digital identity; 2. Innovation, education, and competitiveness; 3. Modernization of the government; and 4. digital governance. Projects under execution include digital identity, digitalization of medical records, reduction of the digital gap, a centralized data center, electronic commerce, electronic signature and electronic invoice implementation, biometric passport, and a national connectivity plan, which includes a subsea fiber optic cable system with two landing stations.

El Salvador has ambitious plans to modernize ports, airports, water, and sewage systems and improve and expand mass mobility, lighting, and surveillance of roads. There are opportunities for water metering, smart traffic solutions, smart lighting systems, CCTV cameras, and city monitoring systems.

El Salvador’s private and public sector prefers U.S. products, services, and technologies. The primary buyer is the public sector, channeling purchases through Comprasal, an online portal for competitive bidding processes. Projects may also be listed on the websites for the various multilateral development banks, a good local partner should be able to keep on top of where the various government opportunities will be listed. Government purchases are mostly regulated by the Acquisition and Purchasing Law (Ley de Adquisiciones y Contrataciones –LACAP), including direct purchases often announced for special projects and technology, but there are several exceptions approved by the Legislature.  

Main challenges facing the ICT sector in El Salvador:

• Broadband: El Salvador does not have a radioelectric spectrum tender plan to stimulate investment in mobile broadband networks.
• Regulations and the use of international standards that promote infrastructure sharing and standardized permitting are crucial to increase investment in telecommunications infrastructure, antennas, repeaters, and base stations.
• Emerging cybersecurity and data privacy laws and regulations; the right policies are necessary to encourage an innovative digital economy while avoiding unnecessarily costly or overly restrictive policies.

Resources

• Telecommunication Regulator SIGET
• Trading economics World Bank Indicators.

Interested parties may contact Senior Commercial Specialist Maria Rivera at maria.rivera@trade.gov