Denis O'Brien, the chairman of Digicel, has hinted he will ask regulators in the Caribbean to force rival Cable & Wireless Communications (CWC) to sell off chunks of the business created through its $3 billion purchase of cable operator Columbus Communications.
Digicel also wanted to buy Columbus but was only prepared to pay $2 billion. Mr O’Brien is now leading a furious lobbying campaign in relation to the CWC deal on competition grounds. The tie-up will create a major competitor for Digicel, the source of much of Mr O’Brien’s wealth of more than €4 billion.
He flew into Trinidad yesterday to address a meeting of regional regulators, companies and other members of the Caribbean Telecommunications Union (CTU), where the CWC deal topped the agenda. Sources said he spoke out stridently about the competition risks.
Digicel declined to reveal the contents of his speech because the meeting was conducted under Chatham House rules, meaning participants are prevented from saying who said what.
Proposed merger
However, Mr O’Brien provided a statement afterwards outlining his views on the proposed merger of CWC, which operates as Lime, and Columbus, which trades as Flow.
He claimed the deal "will have near 100 per cent monopolies in fixed voice, broadband, pay and cable TV and off island submarine capacity in Jamaica, Trinidad and Tobago, St Vincent and the Grenadines, St Lucia and Grenada".
In order to maintain a “level-playing field”, he said, “divestiture is the key”.
This would appear to suggest that Digicel wants competition regulators to get CWC to offload assets in countries where it overlaps with Columbus.
Digicel, which has bought four cable companies recently and is heavily investing in broadband fibre, would be a prime candidate to pick off any assets. Digicel is primarily a mobile operator but the company is targeting fixed-line and cable for much of its future growth.
Outside of the provision of 4G, its headroom for organic mobile growth is challenged by the company’s sheer ubiquity in its markets, while average revenues are threatened by internet telephony outfits like Viber.
The CWC-Columbus tie-up is dependent upon regulatory clearance in Trinidad and Tobago, Digicel's core market of Jamaica, Barbados and also in the US, by dint of their submarine cables to that country.
It may also require regulatory clearance in the smaller island nations of the eastern Caribbean, whose combined telcos regulator has already expressed competition concerns. CWC’s shareholders voted in favour of the merger in London last week by a margin of nine to one.
CWC has promised regional governments that it can address any competition concerns, and denies it will have monopoly status in cable and fixed-line.
Broadband customers
The
Trinidad Guardian
newspaper said it obtained CWC documents at the London meeting that claimed the merged company would have 153,000 broadband customers in Jamaica against 40,000 for Digicel. In Jamaican cable, it would be 130,000 versus Digicel’s 21,000.
Mr O’Brien added that “we cannot risk an environment of higher prices, slower investment and degraded service which often flow from virtual or actual monopolies”.
