Digicel Group Holdings Limited (DGHL) has announced that Digicel Panama intends to apply for voluntary liquidation and withdraw from the Panamanian telecoms market. Describing the decision as ‘regrettable’, Digicel says it has been compelled to act after the Consumer Protection and Competition Authority (Autoridad de Proteccion al Consumidor y Defensa de la Competencia, ACODECO) approved the proposed takeover of Claro Panama by Cable & Wireless Panama (trading as +Movil).
Digicel explains: ‘Today’s announcement will not come as a surprise to the Panamanian government [which owns a 49% stake in Cable & Wireless Panama] and regulator. Since the announcement of the merger, Digicel Panama has repeatedly conveyed in writing to the authorities that approval of the merger without appropriate remedies would result in our exit as we cannot continue to fund the semblance of a three-player market. In addition to the initial licence cost, the continuous requirement to buy additional spectrum through auctions, together with the exorbitant renewal costs contribute to a high-cost regulatory environment.’
The statement continues: ‘DGHL has undertaken numerous strategic initiatives over the last two years in relation to Digicel Panama. These initiatives have included the appointment of an investment bank to actively market the business to financial and strategic parties, extensive engagement with the [ACODECO] in relation to the proposed merger and finally proposals to migrate customers to another operator which were not taken forward. We have at all times behaved responsibly.’
Note: Digicel holds its equity in Digicel Panama through an unrestricted subsidiary of DGHL for the purposes of its bond indentures. Digicel Panama is not consolidated in Digicel’s financial reporting but treated as an investment in an associate.