Is telecoms in the Caribbean in trouble?

A few Caribbean telecoms firms have been experiencing some challenges, which could be signs to trouble not only in individual countries but also the region as a whole.

if you have been keeping an eye on the latest ICT/tech news developments over the past last week or so, such through our roundup published on Monday, you may have noticeed that to varying degrees, many of our telecoms companies appear to be in trouble:

  • In the Bahamas, the incumbent telecoms carrier, the Bahamas Telecommunications Company (BTC) has been resisting mobile number portability (Source: Bahamas Weekly), especially since competition in that segment is emerging with the launch of Aliv, the mobile/cellular brand operated by new entrant, NewCo2015 Limited.
  • In Guyana, the incumbent carrier, Guyana Telephone and Telegraph Company (GTT) is planning to cut around 120 people, which the local union is challenging (Source: Kaieteur News).
  • In Saint Kitts and Nevis, multi-play provider, The Cable, in which that Government is the majority shareholder, has been challenged to meet its expenses, such as compulsory licensing fees for television content, whilst its staff is demanding a pay increase (Source: West Indies News Network).
  • Finally, and the most glaring is Digicel, which operates in 31 markets worldwide including 26 in the Caribbean. The firm is planning to cut around 25% of its global staff, starting March 2017. That initiative is part of a wider programme to make the company more efficient, as it needs to figure out how to service, reportedly, over EUR 6.2 billion in debt (Source: Daily Express).

What does this mean?

To an appreciable extent, Caribbean telecoms landscape is reflecting the phenomenon that has become the norm in the wider business environment: the need to more efficient operations to realise cost savings, and to improve the overall viability and profitability of a business. In countries, there had been little or no competition, especially in the mobile/cellular segment, such as the Bahamas and Guyana, the incumbent carrier was buffered from those effects. However, with competition emerging, that status quo is changing – either with the company taking the lead, to cut staff for example, or through regulatory intervention to compel certain behaviour.

The case of Digicel is a bit unique. It was not the incumbent carrier, but rather the new entrant in the markets in which it now has a presence. However, some experts have opined that the company expanded to fast – 31 countries in 15 years (the last being Tres Network in Curacao in 2016) – and took on huge loans through which to do so. Soon, the chicken will be coming home to roost. Those debts need to be paid. The Initial Public Offer (IPO) the company sought to launch on the New York Stock Exchange in 2015, was an attempt to begin to raise the cash needed, but projections were that the share price would be considerably less than the firm expected, and the IPO was abandoned. However, that also meant that the company still needed to find a way to address its dilemma.

Parting thoughts…

Ultimately, these recent developments speak to the continually changing telecoms environment in the Caribbean, and the growing sophistication of our markets. All service segments must be operated efficiently, and hopefully profitably. Further, the business must also be customer–focussed, in order for firms to maintain its market share, in light of competition and the growing ease with which customers can change their service providers. Finally, this changing environment may also result in even more mergers and acquisitions in the future, as companies seek to capitalise on savings and efficiencies that can be realised from improved economies of scale and scope.

 

Image credits:  Peter Jozwiak (flickr)

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1 Comment

  • Greetings Michele

    Another thought-provoking article.

    The thing is the Caribbean is not really a dominant player in the telecoms sector. And just like in all the major industries, you have clusters of powerful, ; mature organisations that buy off their competitors. That is why technology companies buy start – ups. On the other hand. It is better to to have a small percentage in a big pie. Than to have a large percentage in a small one.

    It remains to be seen. What strategies Caribbean telecoms entrepreneurs will deploy to bring the best return-on-investment(ROI) for their share- holders and ultimately a better quality product, and service for their customers.

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