Jamaica Takes Lead in Regional Telecoms Talks, after Liberty Global Announces CWC Acquisition

KINGSTON, Jamaica—A multi billion-dollar telecommunications deal, touted as a significant growth opportunity for the Caribbean information and communication technology sector, has come under the scrutiny of the Jamaican government.

Liberty Global announced the completion of its US$5 billion cash-and-stock takeover of Cable and Wireless Communications (CWC) on May 16. The combined business will generate combined annual revenues totalling about US$3.5 billion from an estimated subscriber base of 10 million video, voice, broadband and mobile clients in more than 20 countries, as well as a substantial submarine fibre network business, making it better placed to compete with large rivals such as Digicel and America Movil.

Liberty Global chief exec Mike Fries said he “couldn’t be more excited” about the deal, in part because the region was “underpenetrated and underserved in broadband, mobile data and pay-TV services.”

CAPTION: Cable and Wireless Communications CEO Phil Bentley, Minister of Science, Energy and Technology Andrew Wheatley, FLOW Managing Director Garfield Sinclair and FLOW Foundation Executive Chairman Errol Miller during a meeting at the ministry on May 11, 2016. PHOTO COURTESY Jamaica Ministry of Science, Energy and Technology.

Fries’ bullish view is not shared by all, however. Before the announcement, Jamaican Minister of Science, Energy and Technology Andrew Wheatley had met with top CWC executives and discussed the proposed acquisition. And the ministry’s post-meeting media release sounded far less sanguine.

“All acquisitions should benefit the stakeholders, and in this instance, it is expected that the consumers and economies both locally and regionally will be the ultimate beneficiaries,” it stated, adding that Wheatley remained “optimistic” that the acquisition would create opportunity for more investment in the technology and telecommunications sector in Jamaica and the wider Caribbean.

And one day after the announcement of the acquisition, Wheatley stated publicly that his ministry had not yet given the required regulatory approval for Liberty Global’s merged entity to be licensed locally, according to a Jamaica Observer report, a statement countered almost immediately by Flow.

Behind the rhetorical tension, there is a stark difference in the priorities of big business and big government. As Fries’ put it, the focus for Liberty Global is on “creating a unique and well-diversified Latin America and Caribbean investment vehicle, which we believe will enhance long-term equity value for our shareholders.” But the Jamaican government has a different agenda. It wants to get major players like Liberty Global and Digicel on board in support of the country’s and the region’s overall growth and creation of a knowledge-based society.

A senior official in the ministry explained how the Jamaican government intends to get large private companies like Liberty Global to practise good corporate citizenship and act more consistently in the interest of the wider public.

“We want to encourage the involvement of the service providers in the delivery of content and services that foster a knowledge-based society. For example, we want to get true universal access to essential government and educational services for every citizen,” the official said.

The government plans to encourage service providers to give preferential pricing for Internet access at schools, hospitals and other critical institutions. The Ministry of Technology wants telcos to work more closely with the Ministry of Education to better use their technology resources to support public education.

“If it is a critical service or if it is content approved by the Ministry of Education, you should be able to access that at zero cost,” the official said. “If you have a data plan on your phone and you’re accessing a government resource, it should not impact your data plan. In fact, if you are connected to the network via your smartphone, tablet or desktop computer and your data plan is not paid up, it should not mean that you cannot access these government services.”

The vision goes beyond giving government more efficient ways to deliver critical services. It is about growing Jamaica’s Internet economy by giving more citizens access to essential online services, all while lowering the bar for digital entrepreneurs to enter the growing market.

There’s also potential benefit for operators. If more people are using the Internet to access essential services, that represents a larger pool of prospective subscribers. And if that growing user base starts using the Internet to do more things, that could mean increased diversity or sophistication of users’ appetite, which is another key selling point for operators.

“You’re going to see an explosion in the kinds of services that are being delivered to people who are consuming in this way,” the official said.