The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Digicel was last night said to have pulled out of the bidding for this nation’s second cellular licence, leaving just Cable Bahamas and Virgin Mobile (Bahamas) vying to become the first competitor to the Bahamas Telecommunications Company (BTC).

The Cellular Liberalisation Task Force said Digicel (Bahamas) “voluntarily decided not to proceed with its participation in the selection process”, giving no reason for why the cellular giant had pulled out.

That leaves just BISX-listed Cable Bahamas and Virgin Mobile (Bahamas) to participate in the auction for wireless spectrum that they will use to operate their networks. That auction is scheduled to take place in May, and will be administered by the Utilities Regulation and Competition Authority (URCA).

Digicel’s reasons for pulling out were not given by the Task Force, and no official statement has yet been issued by the company.

Its departure, from the process, though, will not be celebrated just by Cable Bahamas and Virgin Mobile (Bahamas). For the Bahamas Telecommunications Company (BTC) and its controlling shareholder, Cable & Wireless Communications (CWC), will also likely be dancing with glee at not having to face Digicel in their core business.

The regional mobile giant, which has already displaced CWC (LIME) as market leader in Jamaica and several other Caribbean territories, would likely have represented formidable competition for BTC given its aggressive approach upon entering new markets.

Seizing a 50 per cent market share within one-three years, effectively taking $120-$130 million of BTC’s top-line revenues, would not have been beyond Digicel.

One source close to the cellular liberalisation process, speaking on condition of anonymity, said of Digicel’s withdrawal: “I am as surprised as you are. It’s a different feel to the process now, that’s for sure.”

Reaction from rival bidders was more muted. David Burrows, Cable Bahamas’ head of marketing, focused on the BISX-listed provider’s chances, telling Tribune Business: “We are certainly ready for it.

“It’s all about the network. Cable Bahamas has plans to build out its own network; we’ve always been very clear about that.”

The reasons behind Digicel’s pull-out were a mystery last night, with the company’s executives and spokespersons unable to be reached for comment before press time.

Digicel and its Irish owner, Dennis O’Brien, had been waiting for 13 years for an opportunity to enter the Bahamian communications market, having been ‘chomping at the bit’ since 2002.

This makes Digicel’s departure all the more strange, and will likely raise questions as to whether the company was unhappy with the liberalisation process and some of the requirements it was being asked to meet.

Its withdrawal could send further mixed messages to potential foreign investors, something the Christie administration can ill afford in the wake of the criticisms made by Baha Mar chairman, Sarkis Izmirlian, regarding the Bahamas’ investment climate.

Frank O’Carroll, Digicel’s head of business development, previously told Tribune Business that the Government’s network roll-out targets for the second bidder were aggressive, saying that “all stars must be aligned” to meet them.

Under the RFP, when it comes to network roll-out, the winning bidder must provide 75 per cent mobile services to New Providence/Paradise Island; Grand Bahama; Abaco and all its cays; Eleuthera, including the likes of Harbour Island and Spanish Wells; Andros; Bimini (including Cat Cay and Ocean Cay); and Exuma and its main cays within six months of being awarded the licence.

Still, Digicel had invested in 18 months of due diligence on the Bahamian market, and was prepared to make a $200-$250 million investment in building out the 200-300 towers it would need for a cellular network in this nation.

The company had promised to create 1,000 construction and 300 full-time jobs if it won the bid for the second mobile licence, and had even gone to the extend of identifying where it would locate its customer service centres, head office and retail stores in the Bahamas.

“We’ve literally travelled every square inch of the country,” Mr O’Carroll told Tribune Business. “We know where the towers would be, where we would put the customer care centre, the retail stores, and have identified some of the Bahamian team we’re likely to employ.

“We believe we can roll out and launch the network within six months of the licence being awarded. It certainly will be challenging, there’s no question about that. It’s only through having prepared completely to-date that gives us the element of confidence that it will be completed in six months.

“We certainly need to have all the stars aligned.”

Mr O’Carroll added that orders had already been placed with key equipment suppliers such as Ericsson Huawei, plus cell tower manufacturers, enabling Digicel to immediately ‘pull the trigger’ on sourcing and shipping its network components the moment it is awarded a licence.

He previously said bidding on the Bahamas’ second cellular licence “makes great sense for us”, as this nation remains virtually the only Caribbean territory where it does not have a presence.

Entering newly-deregulated markets as the second cellular operator to challenge a long-standing monopoly incumbent is Digicel’s core business model, and one it has proven successful at.

The biggest losers from Digicel’s withdrawal will be Bahamian consumers, who now miss out on what the company may have offered in terms of competition on prices and service quality, plus the liberalisation process itself.

The field is now reduced to two, leaving the Government with just two to choose from.

With the spectrum auction set for May, the Christie administration will then have to move quickly to choose between Cable Bahamas and Virgin Mobile (Bahamas) if it wants BTC’s first rival to begin offering services before year-end 2015.