BRIDGETOWN, Barbados, November 7, 2014 (AMG) — An analyst is calling on Barbados and other regional governments to block a proposed merger between Cable and Wireless Communications (CWC) and the Barbados-based telecoms provider, Columbus International, until they have secured guarantees open to public scrutiny and monitoring.
The warning came from Professor Avinash Persaud, who deemed that the deal was a “major threat” to competition in the region, echoing concerns by telecoms provider Digicel, which may now revert to being the lone competitor to CWC’s enlarged LIME businesses in several Caribbean markets.
Persad, a senior fellow at the Peterson Institute for International Economics, told media houses that the deal represented a major blow to attempts to improve quality access to telecommunication connectivity, which he argues is a critical factor in the region’s economic future:
Despite the region’s need for economic salvation and its importance to the region’s economic future, broadband in the region is more expensive, less broad and less reliable than in markets the region needs to be competitive with. This deal will widen the gap with those competitors, not close it.
The economist also noted that were a similar deal even proposed in the United States or Europe, competition authorities would have placed a stay on the deal “until they were sure it would not compromise quality and price, or until they had received guarantees on both issues from the company”.
Consumer reaction: CWC was the former monopoly provider of telecoms services in several Caribbean markets prior to the entry of the Digicel Group in 2001. Columbus International, a Barbados-based international business corporation which also trades as Flow, broke the duopoly in 2004 and grew to provide “triple-play” services in landline, internet and subscription television to over 700,000 customers in the Caribbean, Central America and the Andean region.
CWC response: In an exclusive interview with Barbados Today, CWC CEO Phil Bentley said that his company will not “roll over and play dead” while Digicel continues its expansion. Bentley also downplayed concerns over any potential impact on consumer rates, saying that increased efficiencies should allow for savings to customers.
“This 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.
Pointing out that the acquisition process between CWC and Columbus had been initiated several months prior to yesterday’s announcement, Bentley told Barbados Today:
“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”
“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”, the CEO said, while calling Digicel’s reaction “a bit like sour grapes because they didn’t get the business”.
H/T Barbados Today