In Jamaica, where deregulation completes this month, regulators are considering 36 applications for providing international services, while two Wall Street banks are in the running for the Bahamas’ telecoms provider being privatised this year. Guyana’s carrier is also attracting interest.
Agreements between Cable and Wireless and Caribbean governments bought a premature end to the UK group’s decades-long monopolies, which were seen as hindering economic development, stifling competition and being inconsistent with obligations to the World Trade Organisation.
“The liberalised Caribbean market is attractive to investors because of its potential for expansion, and its obvious profitability,” said Ronald Ramkissoon, president of the Economists Association of Trinidad and Tobago.
Profitability is indicated by C&W’s returns in the region. C&W reported that while group revenues fell last fiscal year, the Caribbean fixed-line and mobile businesses continued to perform strongly with revenues up 8 per cent at οΎ£1.46bn ($2.27bn).
Concerns about the size of the market, and prospects for profitable operations for entrants, have been confounded. Licences given in Jamaica to Digicel of Ireland and Oceanic of the US not only brought competition to C&W, but saw wireless subscriptions expand fourfold to 1.3m in two years.
Similar expansion is expected for several eastern islands where Digicel and AT&T Wireless of the US, are beginning operations. C&W says it welcomes competition, provided the sector is transparently regulated.
Expansion prospects for the Bahamas are clear. The country has the third-highest per capita income in the Americas after the US and Canada, but the Bahamian provider has a penetration rate of just 41 per cent for fixed-line services, and 31 per cent for wireless.
JP Morgan Partners and Citicorp Venture Capital have joined local companies in a consortium that has made the final three short-listed bidders for the state-owned Bahamas carrier.
Guyana Telephone & Telegraph, a subsidiary of Atlantic Tele Network (ATN) of the US, has an interconnection agreement with Cel Star of California, which will provide competition in mobile services. Meanwhile, the Jamaican government is considering a further mobile provider, with AT&T said to be a front runner.
In response to the end of its monopolies, C&W has been aggressive in seeking new markets. It failed to make the shortlist in the Bahamas, but has gained permits to operate in the French overseas departements of Martinique and Guadeloupe.
C&W has not commented on reports it wants to buy a majority stake in GT&T. Cornelius Prior, chief ATN executive officer, said there had been a “credible, unsolicited” offer from C&W for an 80 per cent stake in GT&T.
Part of the reason for such strong interest lies in proximity to the US. “Links between the region and the US generate significant quantities of business. The level of development of the region also has potential for new services and markets,” says Mr Ramkissoon.
By Canute James, The Financial Times
