The World Bank’s private equity investment arm, IFC, is providing US$120mn in financing for Guatemalan mobile infrastructure provider Continental Towers for the building and maintenance of mobile phone towers across Central America, the former said in a release.

The finance package is comprised of a US$40mn loan and US$80mn syndicated loan with participation from HSBC’s Panamanian unit, Dutch development bank FMO and the Interamerican Corporation for Infrastructure Finance (ICIF).

Financing will be used to double the number of towers that Continental Towers operates in Central America, the release said.

Continental Towers was established in Guatemala in 2008 and is the result of an alliance between Terra Towers and investment bank Credit Suisse (NYSE: CS), and has since expanded to Costa Rica, El Salvador, Honduras, and Panama.

The loan will also be used to finance expansion into Nicaragua, which has one of the lowest levesl of mobile telephony penetration in Central America.

Continental Towers’ infrastructure aims to reduce the cost of mobile service for operators and users. The reduced cost of leasing towers gives smaller companies greater access to facilities and allows larger companies to expand into remote areas which would otherwise be unprofitable, IFC said.

Mobile penetration in many Central American countries is fairly high. As of end-1Q12 Costa Rica, Guatemala, El Salvador and Panama all have over 100% penetration, while Honduras has 95.9% penetration, according to a recent BNamericas stats report.

Belize and Nicaragua are lagging behind neighboring countries, with 55.2% and 65.7% penetration respectively. Of course, it must also be noted that 100% mobile penetration does not necessarily equate to every member of the population owning a telephone, or 100% coverage.

Fixed line penetration generally very low in Central America, and many countries effectively leapfrogged this technology and moved straight to mobile.

Together with fixed-line voice services, fixed broadband penetration is also low in Central America, with only Costa Rica reaching more than 10% penetration at the end of 2011, according to a BNamericas Intelligence Series Report.

Mobile broadband also remains below 20% penetration in all Central American countries according to a recent IDB report, but may become increasingly relevant in the region given the low level of fixed-line infrastructure compared to mobile infrastructure.

Source: BN Americas