The telecoms market in Trinidad and Tobago is preparing itself for a shake-up following the news of a major acquisition in December at the same time as competition is set to intensify via the launch of a new mobile phone licence.
Major operators are squaring off to increase their market share after the government invited bids for a third mobile phone operating licence last year, the completion of which would overturn the current duopoly in mobile telephony. The largest player TSTT (Telecommunications Services of Trinidad & Tobago) is controlled by the government and Cable & Wireless Communications (CWC) while its competitor, Digicel, is a regional player whose chairman is Ireland’s Denis O’Brien.
In another major development, London-based CWC announced a $3bn takeover of regional cable TV and Internet operator Columbus International Inc. in December, heralding consolidation in a country where standards of living, and hence mobile penetration, are already high.
T&T’s mobile phone penetration rate of 146.4% − indicating more than one mobile phone per customer − is the fourth highest in the Caribbean with TSTT and Digicel having around 1.9m subscribers between them.
With many Trinidadians now owning two mobile phones, revenue growth from voice-only is levelling off. The latest available data shows telecoms and broadcasting revenues were TT$5.5bn ($900m) in 2013, nearly half from mobile phones.
However, operators see potential to boost data and value added services across all platforms, with new alliances and the development of services such as e- and m-banking expected this year.
Competition for third licence
With the government first expressing an interest in providing a third mobile provider in 2011, the process of establishing another player in the market is firmly underway. According to local media, six companies have reportedly expressed interest in the third operating licence, including the two incumbents, Canadian-owned Columbus, Surinam’s Telesur, local operator Star Mobile Caribbean, and CWC itself (in its own right, not as a minority partner in TSTT).
The telecoms authority is reviewing the applications, with 3G and 4G spectrums in the 700MHz, 800MHz, and 1900MHz bands on offer.
However, a successful CWC bid could put the company in the awkward position of competing against its 49% owned TSTT. To avoid this, a realignment of ownership was thought to be on the cards, but this is not likely to occur until after Trinidad’s May elections according to CWC’s CEO Phil Bentley.
Meanwhile, CWC’s acquisition of Columbus, which is subject to regulatory approval, will effectively reduce the number of bidders for the third operating licence.
Takeover under scrutiny
Colombus, which is a multi-platform operator active across the Caribbean, is a hotly contested prize given its regional footprint and broadband triple play offering in Trinidad under the Flow brand. “This is a transaction that transforms CWC, providing a step change in growth and returns,” said Bentley.
Analysts agree that CWC will benefit from a partner dominant in TV and data transport. "This natural synergy will allow CWC to transform itself from a telecoms company into a true communications & entertainment company,” Khafra Kambon, a telecoms consultant for TSTT, told OBG. “Of the Caribbean markets the largest by revenue and the market with the greatest potential for profitability, is Trinidad & Tobago,” he added.
However, the takeover is under scrutiny. It is contested by several parties including the labour union and will need regulatory approval in various countries. Digicel has been particularly vocal in criticising its potential effect on competition.
“The answer is the big D: divestiture,” said Digicel Chairman Denis O’Brien, attending a meeting of the Caribbean Telecommunications Union (CTU) in Trinidad in January. “CWC and Columbus will have duplicate fixed line, cable TV and submarine fibre infrastructure in the markets if this deal is approved.”
Separately, O’Brien said Digicel had also considered a bid for Columbus, but it had valued the company at no more than $2bn.
The Eastern Caribbean Telecommunications Regulatory Authority (ECTEL) said it had reviewed the preliminary information available regarding the deal and as a result has “deep concern that this development can potentially result in [a] negative impact on competition”. Telecommunication ministers from the Organisation of Eastern Caribbean States (OECS) said in December that the merger would result in the formation of a monopoly in the sub-region.