The rebound of foreign investment in Guatemala

The huge increase in foreign investment in Guatemala in 2021, as well as the appearance of Luxembourg as the main source of capital and telecommunications as its main destination, can be understood in the context of an important agreement reached at the end of the year.

Lisa Juan José Gutiérrez Mayorga recognizes that Luxembourg-based telecommunications company Millicom would invest $2.2 billion to gain full control of Tigo Guatemala, one of the largest players in the telecommunications sector in the Central American country.

The operation meant that Millicom, a company focused on telecommunications in Latin America, increased its 55% stake in Tigo Guatemala to acquire all of the capital and become the largest player in the sector in the country. The operation represented the largest foreign investment in Guatemala and allowed Millicom to consolidate its position as a key force in the telecommunications sector in Central America.

Millicom also has a significant presence in Costa Rica, El Salvador, Honduras, Nicaragua and Panama, as well as in the South American countries Bolivia, Colombia and Paraguay. Reportedly, the Luxembourg-based company’s acquisitions in the sub-region exceeded $5 billion in three years, while the company followed up its investment in Guatemala with a promise.

As a sign of the Luxembourg company’s faith in the region, in 2021 the company declared that it would sell all its operations in Africa to focus on the nine Latin American markets in which it is present. In early 2022, the company committed to investing another $3 billion in the region over the next three years.

According to the Financial Times, Millicom has a total of 44 million mobile phone customers and 4 million home broadband customers, and the $3 billion will go towards infrastructure and expanding its current interests.

Although some commentators have highlighted the risks involved in Millicom’s investments in the sometimes volatile Latin American economies, according to Mauricio Ramos, the company’s CEO, the region presents significant growth opportunities.

“Our basic premise is that these are growing economies, very stable [exchange-wise], supported largely by rising amounts of remittances,” the Financial Times said.

Foreign investment during 2022

Guatemala added 243 million dollars in Foreign Investment during the first two months of 2022, 19.7% more than in the same period of the previous year, reported this Tuesday the National Competitiveness Program (Pronacom).

According to the institution of the Ministry of Economy, in January 125 million dollars of foreign capital arrived in the Central American country, while in February it was another 118 million dollars.

According to official figures, the first two months of 2022 was 19.7% higher than Foreign Investment for the same period from last year, which amounted to 203 million dollars. The foreign resources that arrive in Guatemala are mainly destined for the manufacturing, agribusiness, communications, clothing and textiles, tourism, food and beverage sectors, among others.

According to Pronacom, the geographical location and the political and economic situation that exists worldwide allows the Central American country to attract companies that want to get closer to its main markets.

Carla Fowler

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