Business, News

C&W BUY OUT – Digicel Concerned About Purchase of Columbus

THE announcement Thursday by the Board of Cable & Wireless Communications Plc (CWC) to acquire Columbus International Inc., has not gone down well with Digicel, CWC’s sole mobile telecommunications competitor in Saint Lucia and the rest of the region.

Phil Bently, Chief Executive Officer of Cable and Wireless Communications (left) and Brendon Paddick, CEO and Chairman of Columbus Communications
Phil Bently, Chief Executive Officer of Cable and Wireless Communications (left) and Brendon Paddick, CEO and Chairman of Columbus Communications

At the same time it was not clear prior to press time yesterday, whether the acquisition would have any impact in the Eastern Caribbean which has a telecommunications regulatory body called the Eastern Caribbean Telecommunications Authority (ECTEL) that deals with harmonized polices on a regional level for Contracting States.

Although the proposed acquisition has been written as a done deal in several news reports emanating from England and the region, Cable and Wireless Communications, yesterday in a document on its financial status for the first half of this year noted that “while completion of the acquisition is not conditional upon obtaining regulatory approvals and/or regulatory notifications, approvals may be required from some jurisdictions.”

Efforts to contact ECTEL to determine whether the OECS jurisdiction is one in which regulatory approval or notice is required before the completion of the acquisition were futile.

ECTEL plays a key role in regulating telecommunications in the country. Its major purpose is to promote open entry, market liberalization and competition in telecommunications of the Contracting States. It is there to promote a universal service, so as to ensure the widest possible access to telecommunications at an affordable rate by the public and to enable the people to share in the freedom to communicate over an efficient and modern telecommunications network.

It is also there to promote an objective and harmonized regulatory regime in telecommunications of the countries, fair pricing and the use of cost-based pricing methods by telecommunications providers and fair competition practices by discouraging anti-competitive practices by telecommunications providers.

Columbus, with approximately 700,000 residential customers in the Caribbean, Central America and the Andean region is one of the leading providers of triple-play cable TV and broadband enabled services over its proprietary fibre optic network infrastructure. Through its wholly owned subsidiary, Columbus Networks provides backhaul connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services.

CWC will pay US$1.9bn for the privately-held, Barbados-based business, and will also assume Columbus’ net debt, which stood at US$1.17bn as at June 30, 2014.

The buyout of Columbus revert many Caribbean markets to a duopoly telecoms structure, with the Irish telecom firm Digicel being the sole competitor to Cable & Wireless’ LIME operations in several Caribbean markets.

Digicel is the largest competitor for Cable & Wireless Communications (CWC), which operates the company, LIME, in the Caribbean.

In a press statement, released Thursday afternoon, Digicel said that it is naturally concerned about the clear and obvious challenges and potential issues posed by such a proposed move from a regulatory and competition perspective.

The telecommunications company said it understood that the proposed acquisition will require significant regulatory approvals from a number of bodies in the region including Ministerial approvals, approvals from Regulatory Bodies as well as approvals from certain anti-trust agencies.

The company wants an opportunity to engage in the approvals process, in light of what, it asserts, is its status as a major telecommunications provider in the Caribbean region.

“We are naturally concerned to ensure that this proposed transaction will not result in an un-level playing field in the Caribbean. We look forward to engaging constructively and responsibly with all relevant agencies and bodies to the fullest extent necessary to ensure that fair and vibrant competition is maintained in the Caribbean region and that the interests of all Caribbean consumers are fully protected,” Colm Delves, Digicel Group CEO noted.

CWC owns LIME and Columbus International owns FLOW; both subsidiaries are major providers in the Saint Lucia and Caribbean telecommunications sector.

Micah George is an established name in the journalism landscape in St. Lucia. He started his journalism tutelage under the critical eye of the Star Newspaper Publisher and well known journalist, Rick Wayne, as a freelancer. A few months later he moved to the Voice Newspaper under the guidance of the paper’s recognized editor, Guy Ellis in 1988.

Since then he has remained with the Voice Newspaper, progressing from a cub reporter covering court cases and the police to a senior journalist with a focus on parliamentary issues, government and politics. Read full bio...

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