Digicel ups pressure in Trinidad mobile battle

 

Amid the clatter of steel drums and adjustments to costumes in preparation for the Trinidad and Tobago Carnival this month, locals are keeping an eye on a battle between two telecommunications companies that will determine how residents of the Caribbean islands talk to one another.

It is a confrontation between the established order and new arrivals that has been played out in several other Caribbean countries over the past seven years as the region's telecoms market has been deregulated.

Telecommunications Services of Trinidad and Tobago (TSTT), which until last year had exclusive control of the country's market, is in dispute with Digicel, a newcomer taking advantage of liberalisation there.

In June last year, Digicel, controlled by entrepreneur Denis O'Brien, won an auction for one of two additional 10-year mobile telephone licences offered by Trinidad, with the other given to Laqtel, a local investor.

However, Digicel says that TSTT has delayed the opening of the market by being slow in allowing Digicel's system to connect with the established infrastructure. TSTT has rejected the claims.

Cable & Wireless has a 49 per cent stake in TSTT, with the government holding the remaining interest. Trinidad and Tobago is a market in which C&W is yet to be challenged by Digicel, an Irish-owned company that has used Jamaica as a beachhead to exploit opportunities in the Caribbean.

"Our growth strategy for next year is built on the success and momentum developed during 2005," says Colm Delves, Digicel chief executive. "We have changed the face of telecommunications across the region."

In dealing with the competition - including significant upgrading of its infrastructure - C&W says it has spent $2 billion (€1.67 billion) in the region over the past six years.

The Caribbean market began to open seven years ago when Jamaica and C&W agreed to prematurely terminate the company's exclusive licences and deregulate the market. This was followed by similar agreements between C&W and other governments, ending the company's century-old monopoly on telephony in the region.

Governments contended that exclusive licences were hindering economic development, stifling competition and were inconsistent with World Trade Organisation obligations. However, deregulation has not been easy, with disputes across the region about the terms and conditions of interconnection to C&W's infrastructure.

C&W says it is not against competition but wants a "level playing field" and satisfactory regulatory oversight. The Caribbean remains an important market for the company.

Financial results published in November show that regional operations contribute a fifth of C&W's revenues.

Although other potential providers have appeared in the Caribbean market over the past five years - Centennial, Cingular and Gensat of France - it is Digicel that has proved the most resilient.

The company plans this year to begin operating in Haiti. Last year it acquired Curaçao Telecom and the assets and licences of Cingular Wireless in Bermuda and the Caribbean.

The Cingular acquisition expanded Digicel's network to Bermuda, Anguilla, St Kitts and Nevis, Antigua and Barbuda, and Dominica.

Digicel has not spoken publicly on reports that its next move will be into the central American market. However, its aggressive strategy suggests it could consider opportunities such as the opening likely to be offered by Millicom, the European mobile holding company that is thinking of selling assets in Guatemala, Honduras and El Salvador.

For the time being, in Trinidad, most of the equipment needed for Digicel's interconnection is currently being installed.

However, this is unlikely to be completed before mid-March, in the relative quiet that will follow the music and colour of the Carnival.