As Cable and Wireless Communications Plc (CWC) prepares for life as a new, enlarged entity, following completion of its acquisition of Columbus International Inc. (Columbus), the Caribbean awaits first signs of how their promise of being “Better Together” will actually play out.
Better Together
Since the deal for CWC to acquire Columbus for US$3.025 billion was announced last November, the two regional telecommunications providers embarked on a campaign to convince consumers, competitors, regulators and investors that their union will be “transformational for CWC and Columbus and beneficial for customers and the wider economies across the Caribbean." It has not been an easy sell.
The message of the two companies being “Better Together” met with cautious optimism in some quarters and in other cases with fear, skepticism and outright opposition. The shadow of Cable and Wireless’ past and the uncertainty of the telecom sector’s future have given occasion for region-wide concern.
In the five countries in which their operations overlapped, the CWC had to make extra effort to convince wary governments and consumers that its acquisition of Columbus would not signal a return to the dreaded monopoly era, with attendant high prices, poor service and limited innovation. Governments and customers sought assurances that they would not be adversely affected post-acquisition.
The March 27th announcement by the Barbados Fair Trading Commission (FTC) of its conditions for the approval the merger in Barbados marked the last major regulatory hurdle for the deal. It cleared the way for CWC to shift its focus fully to integrating the operations of the two companies. However, there are still some regulatory requirements to be satisfied.
Conditions apply
CWC has not received an unconditional blessing. Regulators and governments have either imposed conditions or requested assurances to safeguard consumer interests and to protect the competitiveness of local markets.
In January, Jamaica became the first country to officially approve the merger of local assets of CWC and Columbus. The Jamaican government in a statement indicated that the Jamaican Telecommunications Act did not expressly authorise the imposition of conditions in relation to the transaction. Jamaica’s Science, Technology, Energy and Mining Minister, Phillip Paulwell , however, claimed he was able to achieve major concessions for consumers in return for the approval.
Those concessions, Paulwell said, included commitments for CWC to preserve access to Flow's undersea fibre cables, LIME poles, as well as other broadband entry points to the country to Digicel and other competitors. He added that CWC had also agreed to support and be ready for number portability by May 31, 2015.
T&T’s regulator followed with their own pronouncement in March, signalling it would approve the deal with conditions that include CWC’s divestment of its 49 per cent stake in Telecommunications Services of T&T (TSTT). The local regulator, Telecommunications Authority of T&T (TATT), has prescribed a timeline of one year, with a possible extension to 18 months, for CWC to comply. In the interim, CWC will be required to suspend its shareholder rights, including the right to name directors. It can, however, continue to collect dividends.
For Barbados, the FTC listed 14 conditions to its approval, including that customers of the fixed voice residential and commercial business and the fixed broadband residential and commercial business "must be released from any contracts, if they so desire, so that they are able to exercise the option to choose a service provider." The FTC also stipulated the divestment of one set of fibre cables in the zones where there exists total overlap of the LIME and Flow networks.
Compete if you can
Competitor Digicel has been one of the loudest critics of the deal. Digicel, the region’s largest mobile service provider, heavily campaigned regional regulators to prevent or impose conditions on the merger. Digicel Group CEO, Colm Delves, said, “The proposed merger between Columbus and CWC also involves the creation of a monopoly and strong potential anti-competitive effects in the markets for landline, broadband and Cable TV in Grenada, St Lucia and St Vincent and the Grenadines.”
CWC has consistently pushed back against Digicel’s arguments about monopoly concerns, countering that Digicel, with is substantial customer base and sizable investments in cable, fixed-line, and submarine systems, is fully capable of competing for market share.
Digicel’s quest to mobilise support for its arguments against the deal have also been undermined by its own business practices and positions. The company last year angered and alienated customers with its oppositional stance to popular “over-the-top” Voice over IP (VoIP) services like Viber. It has also frustrated regulators with its vacillation and sometimes antagonistic positions on important issues like local number portability and elimination of voice and data roaming in the Caribbean markets in which it operates. A more objective regional watchdog will have to emerge if consumer interests are to be truly safeguarded.
One thing is certain, the region’s telecom sector is forever changed. The merger will trigger transformation not only within CWC, but amongst its competitors. And that should be good news for consumers.
Completing the CWC Transformation
As CWC completes its assimilation of Columbus, it still has a lot to be do. It has to work out the details of management team composition, branding, service and consolidated product service portfolios, pricing, staffing levels and infrastructure investment.
This leaves several questions outstanding. Will its products and services be better and more affordable? Will the new CWC be able to deliver on its customer service pledge? Will its social commitment increase to match its increase influence as a corporate citizen? Will its drive to realize a return on its considerable financial investment be matched by commensurate investment in human resource capital?
The answers to these questions will not be long in coming.
Bevil Wooding is an Internet Strategist with Packet Clearing House (www.pch.net) an international non-profit organization responsible for providing operational support and security to critical Internet infrastructure, including Internet exchange points and the core of the domain name system. Follow on Twitter: @bevilwooding