Digicel could scale back Caribbean investment

The CWC-Columbus deal would create ‘virtual monopolies’ in several Caribbean markets

Colm Delves, who runs Denis O’Brien’s Caribbean telco Digicel

Colm Delves, who runs Denis O’Brien’s Caribbean telco Digicel

 

Colm Delves, who runs Denis O’Brien’s Caribbean telco Digicel, gave a most interesting interview over the weekend in its main market of Jamaica.

No doubt reflecting the views of its billionaire owner, he suggested the company could scale back investment in the region because of the $3 billion deal by Cable & Wireless Communications (CWC), Digicel’s bitter rival, to buy fixed-line outfit Columbus Communications.

The deal has, at a stroke, dramatically altered the competitive landscape for Digicel, which usurped CWC in the noughties but is now digging in for another war with its resurgent rival. Delves stopped short of saying regulators should block the said the deal should said it should be subject to stringent conditions.

“We are prepared to invest in the region but but that has to be in the knowledge that there is going to be a level playing field,” Delves said. “I think it is important that we understand what the acquisiton means because we have to make choices as to where we invest our dollars.”

He said the CWC-Columbus deal would create “virtual monopolies” in several Caribbean markets in “fixed-telephone, cable TV, on-island fibre, fixed internet broadband.... and submarine capacity to the United States”. In other words, most of the areas that O’Brien had pencilled in for the next wave of Digicel’s growth.

“This acquisition, unless controlled and subject to certain restrictions, will lead to [monopolies]. The region is going to have to live for years with the consequences of whatever decision is made,” said Delves.

He called for a lengthy examination of the merger by competition authorities. The longer the better, one presumes, as it will give Digicel time to formulate a strategy to respond.

Digicel also wanted to buy Columbus, whose shareholders include Liberty Global founder John Malone. But it only valued it at €2 billion. If Digicel had managed to acquire it, however, it would also have had a stranglehold on certain segmentsw of the marklet in the region, instead of CWC.

One wonders if Digicel would have believed it necessary to have such a stringent competition review in those circumstances.

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