Company’s investment plan hinges on outcome of CWC’s buyout of Columbus
Arthur Hall, Senior News Editor
Mobile telephone giant Digicel has warned that it will re-examine its investment plans in Jamaica and the region if it is not happy with the terms of the buyout of Columbus International by Cable and Wireless Communications Plc (CWC).
The Irish firm, which has invested billions of United States dollars in the region since its first foray into Jamaica a little more than 13 years ago, last week reiterated its claim that the planned acquisition could lead to a monopoly in some sections of the regional communications sector.
“We are prepared to invest in the region but that has to be in the knowledge that there is going to be a level playing field. I think it is important that we understand what the acquisition means because we have to make choices as to where we invest our dollars,” Digicel Group CEO Colm Delves told The Sunday Gleaner.
In a seeming nudge to regional regulators, who are considering the US$3.025 billion acquisition of Columbus by CWC, Delves hinted that his company is now in a wait-and-see mode.
“We want to invest in the knowledge that there is a level playing field going forward. We don’t want to be in a position that the monopoly uses their dominant position to inhibit and restrict growth and competition,” added Delves whose company revolutionised the local communications industry when it set up shop here in 2001.
According to the Digicel boss, the CWC takeover of Columbus, which has made its name in Jamaica operating as Flow, will be a major move and, “whatever way you measure it, I think the end result of the acquisition, assuming it goes ahead, will mean that there will be virtual monopolies in fixed telephone, cable TV, on-island fibre, fixed Internet broadband, and also, which is a big issue, on the off-island submarine capacity to the United States.
“This acquisition, unless controlled and unless subject to certain restrictions, will lead to monopolies across a number of areas in telecommunications.”
Delves argued that Digicel is not urging regional regulators to block the acquisition but instead to take note that there are several potential problems associated with it.
He declared that there needs to be sufficient measures to protect competition going forward, as the twinning of the two powerful entities may not be good for competition.
“It could cause a number of issues in the marketplace unless appropriate measures, safeguards, controls are put in place. That will require an in-depth, objective analysis of the transaction and the potential ramifications.”
Delves rejected claims that his company is angry because it lost out on its bid to acquire Columbus, and that CWC is only now getting even based on its 5.6 million mobile customers in 17 markets compared to Digicel’s 13.5 million customers in 32 markets.
With regulators already looking at the deal, Delves argued that there needs to be informed analysis of the transaction as he urged agencies such as the Office of Utilities Regulation in Jamaica not to rush to achieve any time frame imposed by CWC.
“The region is going to have to live for years with the consequences of whatever decision is made.”
Delves’ comments came hours before CWC shareholders voted overwhelmingly in favour of the merger with Columbus.
Following the announcement of the transaction, CWC shareholders attended a general meeting in London last Friday to vote on the merger and demonstrated their support by voting almost nine to one in favour of the deal.
The shareholders agreed that the combined business of CWC and Columbus “will deliver broader pro-consumer product offerings and improved services; inject state-of-the-art TV and next-generation super-high-speed broadband technology into the combined business.
Commenting on the shareholders’ approval, Phil Bentley, CWC’s chief executive officer, said: “We know we have to work closely with governments and regulators to ensure that our customers benefit, and that competition is not compromised – and that’s a commitment we’ve happily made to all our stakeholders, which we will uphold.”