The Jamaican government has formally approved the takeover of the Jamaican operations of Claro, the America Movil subsidiary, by regional mobile operator Digicel.
In a statement to parliament, Jamaican Prime Minister Bruce Golding confirmed that he…
The Jamaican government has formally approved the takeover of the Jamaican operations of Claro, the America Movil subsidiary, by regional mobile operator Digicel.
In a statement to parliament, Jamaican Prime Minister Bruce Golding confirmed that he would approve the transaction, but added significant caveats.
While Golding approved the Claro-Digicel deal, he did so without modifying the licences held by Claro.
This means that Digicel will be required to maintain Claro’s network separate to its own. It also must fulfil the obligation to extend the reach of the Claro network to achieve 90% penetration on the island.
The government and Digicel had been unable to come to an agreement that would have allowed modifications to the Claro licence.
According to Prime Minister Golding, Digicel had initially indicated an intention to migrate Claro’s existing subscribers to Digicel’s own network. This would have involved a modification of Claro’s existing licence.
Golding said that his government had entered into negotiations with Digicel about a potential voluntary agreement on a range of issues, including “more uniform” interconnection rates between Digicel and the other telecoms suppliers. This voluntary agreement was seen as a requirement for a change to Claro’s licence.
Yet Golding dismissed the plan eventually put forward by Digicel, which involved lowering its interconnection peak and off-peak rate to its main mobile competitor LIME, as “unimpressive”.
No voluntary agreement was reached, so Claro’s existing licence obligations were retained.
Golding also argued in his speech that new telecommunications regulation was required on the island.
“This issue has brought into sharp focus the need to strengthen the legal and regulatory framework for the telecommunications industry to bring it in line with contemporary best practices and ensure that the interest of the consumer is held paramount,” he said.
While work was proceeding to bring forward a new bill to amend the current telecommunications act, he said that some amendments may need to be fast-tracked.
These include the extension of current interconnection rules on voice services to data and other services, as well as giving the regulator the power to determine the terms by which telecoms providers share or provide access to their facilities.
“Given the urgency of the need for these amendments, efforts are being made to have the appropriate Bill brought to parliament within the next six weeks,” he said.
Under the terms of the original deal between the two companies, Digicel would take over Claro’s operations in Jamaica, while Claro would acquire Digicel’s operations in El Salvador and Honduras.
In a statement yesterday, Digicel said that it had still not received regulatory clearance for the deal in the two Central American countries.
The operations of Claro and Digicel in these countries will remain separate until the regulators in all three countries have given the green light to the deal.
The forecast regulatory changes in Jamaica have the potential to aid Cable & Wireless Communications (CWC), which is the main competitor to Claro and Digicel in the mobile space. CWC’s LIME also provides fixed-line, TV and broadband services on the island.
An analyst report by Deutsche Bank concluded that there is “no favourable resolution for CWC yet but that is looking very hopeful that the current onerous regulatory environment can be properly resolved [by] year-end benefitting CWC in this, the biggest of its Caribbean markets”.
According to the CIA World Factbook, Jamaica’s estimated population in July 2011 was 2.87m.
