Has the horse already left the stable in countries that want “even more” telecoms competition?

Four considerations in light of Trinidad and Tobago’s plans to licence a third mobile/cellular operator and service provider.

Although most Caribbean countries enjoy a fully liberalised telecoms environment, where there are at least two players in most of the major market segments, there are still a few countries, such as Belize, the Bahamas, Antigua and Barbuda, and Guyana were monopoly segments exist. However, occasionally, a country that appears to have at least a two-player market decides it wants “even more” competition in that segment. Case in point and most recently, is the Republic of Trinidad and Tobago. In the local newspapers last week, Minister of Science and Technology, Dr. Rupert Griffith, announced that a third mobile/cellular operator will be launching soon:

This is a sector that started off with one operator, a virtual monopoly, moved to a duopoly with two operators, and very soon citizens will see a third operator introduced, in a very methodical and transparent manner in order to deepen competition and yield to the consumer greater affordability, wide choice and faster speeds among a list of benefits…

(Source: Trinidad Express Newspapers)

As at the time of publishing, there are two mobile/cellular providers in Trinidad and Tobago: Digicel (Trinidad and Tobago) Limited; and Telecommunications Services of Trinidad and Tobago Limited. Though the introduction of a third mobile/cellular provider may potentially shake up that duopoly, and result in more dynamic behaviour, outlined below are four points that should also be considered.

Three often becomes two

Efforts to have three mobile/cellular providers are not new in the Caribbean. Countries such as Jamaica, and most of the ECTEL Member States (Saint Kitts and Nevis, Dominica, Saint Lucia, Saint Vincent and the Grenadines, and Grenada) at one time had three firms. Today, they all have two.

In all of those cases, a merger and acquisition occurred. One of the existing players in the market – Digicel – bought out those operations, which meant that it not only absorbed customers, but also additional licences and resources, such as radio frequency spectrum and numbers that had been assigned to the other operator.

Unbalanced three-party race

From the Caribbean experience (so far), and even at the best of times, when there has been a three-player mobile/cellular market, one of the providers tends to be considerably weaker than the other two. Hence although this third provider might enhance the dynamic of the market, it might not necessarily materially alter the behaviour of the other providers, especially if its market share is significantly less than the other two in the market.

In the case of Trinidad and Tobago, where this proposed third mobile/cellular operator will be entering the market well after the two existing providers have established their presence, it is likely that this third provider will be challenged to get a reasonable market share. However, this difficulty might be lessened if the firm already provides services in other telecoms segments, such as fixed-line and Internet, as it may be able to capitalise on its existing infrastructure, brand recognition, etc., in that new market.

Market share is critical

For a population of approximately 1.2 million, Trinidad and Tobago has 144 mobile/cellular subscriptions per 100 inhabitants, as of March 2014. It therefore means that for every 10 persons, there are 14.4 mobile/cellular subscriptions, and as the Minister boasted, that this density is one of the highest in the world (Source: Trinidad Express Newspapers).

However, such a high subscription density, suggests that the market is relatively developed – as there will be few persons who do not have access to mobile/cellular service in Trinidad and Tobago. Furthermore and perhaps more importantly, the new entrant’s primary strategy to gain market share may need to be developed around seizing market share from the existing players, rather than deploying infrastructure in underserved areas.

The RoI must be there

Establishing and operating a mobile/cellular network, and delivering mobile/cellular service to the public, is a costly affair. Hence ensuring a reasonable return on investment (RoI) is critical.

Again, launching a new operation in a well-developed market that can still be profitable – i.e. realise the desired RoI – can be a challenge. However, this challenge may be lessened if it is an existing provider that is adding on another service to the suite that it already offers, and its RoI expectation can be spread across a number of services and not yet one. Nevertheless, a robust strategy, a long-term approach, and the resources to support that posture, will be critical until the anticipated gains eventuate.


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