Competition heats up in Trinidad and Tobago’s telecoms industry

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The transformation of Trinidad and Tobago’s telecoms and mobile market is entering a new phase, following news in August that the regulator has given the go-ahead for the sale of a 49% stake in key local player Telecommunications Services of T&T (TSTT).

UK-based Cable and Wireless Communications (CWC) currently holds the minority stake in the telco, with the remaining 51% controlled by the government through its holding company, National Enterprises Ltd (NEL).

The sale is part of a regulatory requirement from the Telecommunications Authority of T&T (TATT), triggered by CWC’s purchase of Columbus International, a regional player that operates in T&T and the wider Caribbean under the Flow brand.

Change afoot

CWC made a $1.85bn takeover bid for Columbus last year. Despite concerns voiced by Digicel and others that the company created by the merger would have too large a regional market share, the takeover eventually cleared the regulatory hurdles in all major markets and was formally completed in March this year. As part of the deal, CWC was given 18 months to divest its shareholding in TSTT.

The regulator’s approval of the sale in August marks a key step forward in the process. According to the CEO of the TATT, Cris Seecheran, CWC and NEL were looking to receive proposals from potential investors by December, with a view to selecting a buyer early next year.

Attracting a new minority shareholder could yield benefits for TSTT. The company confirmed that it has already received several expressions of interest, though it has stopped short of disclosing any names.

Competition on the rise

While TSTT’s origins date back to the fixed-line government monopoly, the company has modernised in recent years, moving into mobile, broadband and video, where it operates the Blink and bmobile brands.

The Trinbagonian operator’s main rival in the mobile market is the leader Digicel, which has a presence in more than 30 markets across the Caribbean and Central America. As of late last year, Digicel’s market share stood at around 56%, according to Business Monitor International, while TSTT accounted for the remaining 44% of mobile subscribers.

TSTT is also facing increasing competition from broadband and TV providers that are keen to expand into the mobile segment.

The fiscal year to March 31 saw TSTT’s revenue fall by 2.1% to TTD2.96bn ($466.1m), according to the company. Everald Snaggs, chairman of TSTT, attributed the decline in part to “increased efforts of existing competitors,” signalling that the growing presence of other players in the T&T market is beginning to have an impact.

Digicel, meanwhile, recorded a 4.8% rise in mobile revenues in T&T over the same period to $264m. While the two companies’ earnings cannot be directly compared, as TSTT offers both fixed-line and mobile services, T&T posted the strongest growth of any of Digicel’s markets in the region, and the company has clear ambitions to expand. Indeed, Digicel acquired a fixed concession last year and is building infrastructure to expand into fixed-line services.

In late September Digicel announced plans to raise some $2bn in an initial public offering on the New York Stock Exchange, with $1.3bn of the capital to go towards repaying debts and the remaining $700m to be invested in capital spending and acquisitions. This comes on top of $1.6bn worth of capital expenditure over the past three years to strengthen its network infrastructure.

The upside of partnership

With telecoms companies increasingly focused on offering their customers combined broadband internet, television, telephone and wireless services – otherwise known as quadruple play – on a regional level, TSTT could find its local market share under further threat. Securing a minority shareholder with experience operating in a competitive market could be to TSTT’s advantage.

A partner with deep pockets to fund capital expenditure would be a welcome development, as rising smartphone penetration and mobile data usage puts greater pressure on existing telecoms infrastructure in the country, and regional competitors like Digicel plan to divert funds towards network expansion.

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