BTC breathes easy as Digicel backs out of mobile licence auction

1 May 2015

Pan-Caribbean telecoms group Digicel has pulled out of the running for the Bahamas’ second mobile licence, Tribune 242 writes, citing the Cellular Liberalisation Task Force. Digicel’s withdrawal from the race leaves just locally-owned cableco Cable Bahamas and regional mobile virtual network operator (MVNO) giant Virgin Mobile competing to become the first challenger to the current cellular monopoly holder Bahamas Telecommunications Company (BTC). The remaining duo will now proceed to a spectrum auction administered by the Utilities Regulation and Competition Authority (URCA), scheduled to take place later this month.

Digicel’s decision to back out of the process was voluntary, the task force noted, but the group has not yet offered an explanation for the surprise move. The group has been eager to enter the market for several years, having begun talks with the government in 2012, and was widely considered the favourite to win the licence. Indeed, according to TeleGeography’s GlobalComms Database, as part of its preparations for the liberalisation of the market BTC drafted in help from its Panamanian sister company – which has experience as an incumbent fighting off new challengers, including Digicel – and from parent company Cable & Wireless Communications’ (CWC’s) chief commercial officer, Niall Merry, a former Digicel executive. CWC’s CEO told shareholders and analysts in mid-2014 that: ‘We’ve had the team in, and certainly Niall has been helping in war gaming what we think Digicel might do if they come in.’

Speculating on Digicel’s reasoning for backing out of the competition, the Tribune noted that the group’s head of business development Frank O’Carroll had previously questioned the requirements set by the government, saying that for an operator to hit the rollout targets ‘all stars must be aligned.’ Under the government’s request for proposals (RFP), the winning bidder must provide 75% coverage of the following islands and their main cays within six months: New Providence, Grand Bahama, Abaco, Eleuthera, Andros, Bimini and Exuma. Within twelve months coverage of these areas must reach 99% (85% for Abaco), whilst 75% coverage must also be achieved for Cat Island, Long Island, San Salvador, the Berry Islands, Inagua and Ragged Island. Despite the group’s scepticism, though, it had already placed orders with vendors Huawei and Ericsson, so that it could immediately ‘pull the trigger’ on deployment should it win the licence. Rollout targets are not the only questionable aspect of the tender, however; the government has also required that the winner should be majority Bahamian-owned, setting out a process for a 51% stake in the new cellco to be owned by a holding company, shares in which would be made available to the public. The stipulation is hardly a challenge for Cable Bahamas, which is already listed on the Bahamian bourse, but Digicel may have balked at the obligation to sell a majority stake in its new division.