CWC head describes Digicel’s reaction to buyout as sour grapes
The battle for the number one spot in Barbados’ lucrative telecommunications market is back on.
Former monopoly provider Cable & Wireless Communications (CWC) today served notice that it will not “roll over” and play dead while its main competitor Digicel continues its expansion.
The warning came from CWC’s Chief Executive Officer Phil Bentley in an exclusive interview with Barbados TODAY from his London office, following today’s announcement that the company, which operates here as LIME, had reached a conditional agreement to acquire cable TV and Internet provider Columbus International Inc., in a deal worth about US$3.025 billion.
Asked if the acquisition was likely to impact negatively on rates, Bentley said the company would be making sure its services were efficient and that should allow for savings to customers.
“It puts Cable & Wireless on the map. It says that Cable & Wireless is here to invest, to stand its ground, and stand toe to toe with Digicel. [We are] not going to roll over and we are here to [stay]. The Caribbean is our home now . . . This puts Cable & Wireless at the heart of the Caribbean and that is where we want to be. This is our home. We have been in these markets for over 100 years,” he said.
Telecoms rival Digicel was among the early objectors, saying the proposed transaction raised “a considerable” number of issues, both in terms of regulation and competition.
“The issues that will need to be addressed include such matters as fairness in spectrum allocations, local loop unbundling, price bundling generally, as well as a myriad of other likely issues which will only become apparent once Digicel and other agencies and bodies have been fully appraised of the details of the proposed transaction and likely resultant impact on the telecoms market in the region,” warned Digicel, which entered the Barbados market in 2004 and has been a fierce competitor to LIME ever since then.
However, Bentley pointed out that the acquisition process had started “quite a lot of months” ago and the company had spent “quite a lot of time” thinking about it.
“It is interesting [that] in that time Digicel, our main competitor for mobile, they have been buying TV, businesses, they have been rolling out fibre, they have bought Sports Max from [International Media Content Ltd] . So we can’t just stand by and let them take over the industry,” he told Barbados TODAY.
“This is our strategic bazooka to take them on. This is very much engaging in very active competition and when that happens the winners are the customers,” he said while describing Digicel’s initial reaction as “a bit like sour grapes because they didn’t get the business”.
With the acquisition, CWC takes over Columbus International’s Caribbean and Central American operations.
Columbus, which is Barbados’ newest telecoms entrant, came to the island just over a year ago, ironically after a takeover of TeleBarbados and Karib Cable, and has been busy expanding its fibre footfront, as well as establishing itself as a credible third player in the highly competitive sector.
However, the company which operates here as Flow, today welcomed the takeover deal with CWC.
Flow said in a statement that the move should result in greater efficiency and improvements in all markets serviced by the two companies.
And while the deal is likely to result in structural changes, Flow said no decision had yet been made on what those changes would be and as such the companies would continue to operate “business as usual”.
Flow, which had announced back in April that it would be investing $140 million into the domestic market, including construction of a new headquarters at Warrens, St Michael, also said it remained committed to retaining, developing and attracting “the top local and regional talent in the ICT sector”.
In the meantime, Cable & Wireless is confident that the move should result in “some job creation”.
Bentley noted that Flow, which currently employs over 200 full-time staff here, prided itself in training its own people, adding, “we might find that we can bring jobs back into Cable & Wireless where we have been exporting”.
The CWC head honcho said the merger, gave the company a stronger footing on which to compete with Digicel, adding that it should also lead to more investment for Barbados.
He also described the Barbados Government as pro investment, saying the acquistion was good for the local economy.
“That is why we hope this transaction is welcomed because it would be more investment and more jobs.”
“We are here to fight for our customers and give them better service, better products and we know we are ready to take on Digicel,” he said.
He however stressed it was too early to say if there would be any immediate major changes, noting that both LIME and Flow had their strengths.
When contacted Minister with responsibility for the sector Donville Inniss said he preferred not to comment on the developments at this time.
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