Home' Trinidad and Tobago Guardian : November 9th 2014 Contents NOVEMBER 9 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COMMENTARY | SBG3
On Thursday, millions
of people across the
Caribbean woke up to
the news that Cable
& Wireless Commu-
nications, which has
been operating in the
Caribbean for more
than 130 years, had
acquired cable and fibre provider Columbus
International Inc (which trades across the region
as Flow) for US$1.85 billion plus US$1.17 billion
in net debt.
The transaction brings together CWC---which
is strong across the Caribbean in mobile, Internet
and home phone services and also provides tel-
evision content---with Flow, that is strong across
the region with its Internet and cable offerings
and in business-to-business services, but not so
strong in the provision of home phone (landline)
CWC has just over 2 million customers in the
13 Caribbean countries that use the LIME brand,
plus a 49 per cent stake in TSTT, while Columbus,
only established in 2005, has 700,000 residential
customers in the Caribbean, Central America
and parts of South America, as well as information
technology services to businesses.
If approved by the CWC shareholders, and
regulators in T&T, Barbados and Jamaica, the
proposed merger will create a regional telecom-
munications that would be a strong quad play-
er---meaning providing mobile, Internet, cable
television and in home phone service---across
Across the Caribbean, the merged and enlarged
CWC will face one bitter corporate enemy: Digicel,
majority owned by Irish billionaire, Denis O Brien,
and established only 13 years ago.
Digicel operates in 21 Caribbean countries as
well as Central America, Oceania and French
Guyana in South America.
While Digicel made its name as a mobile oper-
ator throughout the Caribbean, it has recently
positioned itself to become a quad-play provider,
offering mobile, broadband, television and land-
line, particularly to business places.
Digicel s recent moves include:
• In October, the company launched its fibre-
to-business offering, which aims to provide busi-
nesses, small and large, with Internet connectivity
of up to 100MB.
Although hugely expensive to install, fibre to
businesses is potentially a very lucrative venture
for Digicel, which it would like to monopolise.
A local business with a fibre connection will
automatically be able to offer its employees
extremely fast, internal, data download speeds,
mobile telephony, television content and PBX
(landline-type) connectivity, both locally and
regionally. Installing fibre allows Digicel to become
a quad-play operator in T&T, one of its larger
The fibre-to-business offering would facilitate,
for example, someone calling the Guardian Hold-
ings office in Westmoorings and being transferred
to the company s Jamaican office, for the cost
of a local call.
It also allows video conferencing, multimedia
streaming and VOIP applications
Digicel is planning similar fibre-to-business
offerings in Barbados, Haiti and Jamaica;
: Flow already offers a 100MB
download speed service to small and medium-
sized businesses and high-income households
in Trinidad, which CWC will inherit, at $650 a
This means that the enlarged CWC will go
head-to-head with Digicel in offering high-speed
broadband Internet services when the Irish-
owned company fully rolls out its service;
• In October, as well, a company called Sierra
Support Services ran full-page newspaper adver-
tisements seeking to employ over 30 fibre instal-
lation managers and supervisors. Sierra is owned
and controlled by Denis O Brien, the Irish bil-
lionaire who also owns and controls Digicel.
Presumably, this means Digicel will outsource
its fibre installation to Sierra. But it also probably
means that Digicel is not going to be satisfied
with simply offering fibre to businesses and will
seek to bring fibre to homes in high-income
urban centres like Westmoorings and Lange Park;
• In September, Digicel closed a transaction
involving the purchase of a submarine fibre optic
cable network providing capacity from Trinidad
and connecting 12 countries to Puerto Rico with
onwards connectivity to the United States.
That deal gives the company an international
fibre-connectivity backbone that facilitates and
globalizes the fibre-to-business offering in T&T;
: Before Thursday s announce-
ment, CWC and Columbus were partners (27.5%
and 72.5% respectively) in a submarine cable
network connecting 42 countries in the Caribbean
and Latin America, spanning 42,000 kilometres.
If the transaction is approved CWC will own
100 per cent of that company;
• In September, as well, the company
announced that it had acquired majority own-
ership and control of the parent regional sports
broadcaster, Sports Max, providing Digicel with
content for its television offering
• In the last six months, Digicel has hired
journalists in Jamaica, Barbados and T&T as it
launched a mobile app called Loop that provides
news and information to the company s mobile
With Sports Max and Loop,
Digicel may be thinking of establishing a regional
broadcasting company that would provide direct
competition to One Caribbean Media, the Inde-
pendence Square-based company with regional
newspaper and broadcasting offerings
• In T&T in August, Digicel applied to the
Telecommunications Authority for a licence to
provide a subscription broadcasting service via
a telecommunications network. In short, Digicel
wants to be able to offer cable entertainment to
households in T&T. If Digicel s application is
approved, this would bring it into direct com-
petition with DirecTV, GreenDot and CWC/Flow
• Over the course of the last year, Digicel has
been buying up cable companies in the north
Caribbean. Four transactions have provided Digicel
with cable television, broadband and telephony
access in Jamaica, Turks and Caicos, Dominica,
Anguilla, Nevis and Montserrat.
In a sense, in those six markets, Digicel is
already a quad-play provider and its fibre-to-
business rollout, when completed, will make the
company a quad-play provider in Barbados, Haiti
Questions for Digicel
On Friday morning, the Sunday BG sent fol-
low-up questions to Antonia Graham, the Digicel
Group spokesperson, who is based in Jamaica.
The questioning went like this: Does CWC
acquiring Columbus change the competition pic-
ture in T&T? TSTT is a quad-play provider, Dig-
icel is rolling out fibre, which would allow it to
become a quad-play provider and CWC (with
Flow) may be a quad-play provider soon. If TSTT
sells its 49 per cent stake in TSTT, won t there
be three strong large quad-play providers in T&T
and won t that mean intense competition
(which favours consumers) and not less?
Answers from Digicel
The company responded by stating: "As CWC
(with its 49 stake in TSTT) and Flow are each
others main competitors for fixed telephony and
fixed broadband in T&T, the merged company
would hold a near monopoly position for these
"The combined entity may also enjoy signif-
icant infrastructural advantages that could be
difficult for competitors to replicate in the short
term and this could enable it to raise prices."
In a lengthy statement to the Sunday BG, Dig-
icel also called for a comprehensive and trans-
parent approval process that would allow all
stakeholders (including Digicel) to have their say.
Is Digicel right?
Digicel is right that TSTT (not CWC) and Flow
are direct competitors in fixed-line telephony
and fixed broadband.
But TSTT and CWC are entirely different enti-
ties and the Government of T&T has ownership
and management control over TSTT.
And yes, while TSTT (not CWC) and Flow
are direct competitors in fixed (landline) services
in T&T, all telecom experts acknowledge that
landlines to the home is a business in decline
and the real money is to be made by offering
bundled fibre services to businesses, which Digicel
is rolling out.
Also, the broadband situation is a little more
complicated than Digicel seems to think.
TSTT had 94,000 broadband subscribers, as
at September 30, 2014, which was down by 13
per cent from 108,000 a year earlier, according
to CWC s six-month financial report, released
on Thursday, the same day as the announce-
According to the Telecommunications Author-
ity of T&T s (TATT) most recent quarterly report,
this country had 228,000 fixed Internet (broad-
band) subscriptions as at the end of June 2014.
This means, with a little extrapolation, that
TSTT has 41 per cent of the fixed broadband
and that its share of that market is in decline.
The market fox fixed broadband in T&T has
declined by 1 per cent if the June 2014 data are
compared with June 2013.
But at only 53 per cent penetration in June ,
according to the TATT, there is room for some
expansion in this market if competition leads to
a decrease in prices.
Moreover, the gross revenues from all fixed
broadband offerings in T&T at the end of June
was $178 million.
While this was a nine per cent increase from
a year earlier, revenues from fixed broadband are
dwarfed by the gross revenues generated by
mobile voice services, which amounted to $686
million at the end of June 2014.
As well, the following companies provide fixed
broadband service in T&T---Lisa Communications,
Massy Communications, Green Dot and Open
Is fixed broadband
The TATT quarterly report makes it very clear
that the future of broadband in T&T (as elsewhere)
is mobile broadband.
The penetration for mobile broadband sub-
scriptions increased by 20 per cent to 36,000 in
June 2014 compared with a year earlier.
What s more is that the TATT board forwarded
to its line minister in "early September" its rec-
ommendations for the award of licences in the
700 Mhz spectrum, the so-called LTE (long-
term evolution) band, which allows providers to
deliver enhanced mobile data services.
According to the January 2014 edition of TATT
Bytes, the regulator s magazine, the authority is
looking to attract providers via the following
1) Award licences for the 700 MHz spectrum
to incumbent mobile operator(s) and or potential
third mobile operator;
2) Potential for award of a concession to a
3) Potential award of licences for available 850
MHz and 1900 MHz spectrum to a third mobile
Obviously, the 700 MHz spectrum---for which
Digicel is in with a chance of winning---would
be the crown jewel for local mobile operators.
CWC and Flow have both applied for the LTE
spectrum and the decision is up to Cabinet,
which as is often the case, is sharply divided on
this issue between those who favour going with
the TATT recommendations and those who wish
to carve out a niche for the legacy, majority state-
owned company, TSTT.
One says no more on that issue, at this point,
except to add that Section 21 (1) of the Telecom-
munications Act states: "No person shall operate
a public telecommunications network, provide
a public telecommunications service or broad-
casting service, without a concession granted by
Subsection 5 of clause 21 states that TATT has
90 days of receiving all relevant information on
Will telecom merger succeed?
Continued on Page 5
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