CWC/Columbus Merger Finalized

Cable and Wireless Communications, Plc (CWC) announced that it has completed its US$1.85bn acquisition of 100% of the equity of Columbus International Inc.

Commenting on the completion of the transaction, Chief Executive Officer, Phil Bentley, said: “This is a transformational deal for Cable & Wireless Communications. Columbus Communications is an outstanding business; not only do we add significant fibre optic submarine backhaul and terrestrial broadband and TV capability to our leading mobile and legacy copper networks in the Caribbean, but our complementary B2B divisions can now offer geographical focus and a wider product offering in the faster-growing Latin American markets”.

“We expect the operating synergies to be significant; together, the new merged company creates the opportunity to invest more, grow faster, and provide an improved customer experience and, most importantly, a development opportunity for our people that either company could never have achieved on their own”, he added.

Bentley went on to say: ‘There has been an extensive and professional regulatory review, with appropriate remedies. We are pleased we now have the necessary Government support to conclude this important transaction and to start making the financial commitments required to deliver an outstanding customer experience and to enhance the telecommunications infrastructure and economic development of the communities we serve.”

He noted that as part of the integration process, the Company “is undertaking a full review of all the brands we currently operate under, including the Flow and LIME brands as well as the business and wholesale brands,” but added that “no decision has yet been made.”

Commenting on the merger process and next steps, Bentley said, “Most of the markets we operate in have approved our integration plans and therefore today we can start to release some of the US$1.5bn investment monies we have set aside to provide our customers with an unrivalled telecommunications experience, improving coverage, reliability, products and speeds, and providing a welcome boost to both jobs and the economy in the countries in which we operate”.

“In a small number of markets where we have yet to receive all the necessary approvals required, we cannot commence our integration and investment plans; we will therefore continue to support the local regulatory due process until we have the green light to move forward in those markets”, he added.

Meanwhile, rival company, Digicel has put out its own release stating that it welcomes the position adopted by the Barbados Fair Trade Commission (BFTC) on the application for merger approval filed by Cable and Wireless Communications and Flow/Columbus.

DIGICEL pointed out that in its decision published on 27th March, the FTC confirmed its view that the merger would create ‘… anti-competitive effects … in the Fixed-voice (landline) telephony and Fixed Data (broadband internet)….’ markets.

Accordingly, the FTC imposed 14 separate significant conditions on its merger approval compelling Cable and Wireless to promptly divest of significant overlap fibre assets in Barbados to a third party or parties to be approved by the FTC.

These compulsory divestments include fibre assets relating to 27,000+ homes passed by the Karib Cable network and an additional 28,000+ homes outside of the Karib Cable network; but within the combined LIME/FLOW networks.

The FTC also made its approval conditional on other specific conditions, including guaranteed consumer choice on service contracts, provision of pole and duct access to third party providers and retail price tariffing in the product markets affected by the strongly anti-competitive effects of the merger.

Digicel regards the FTC’s decision as being vitally important in terms of helping to prevent the retrograde creation of highly anti-competitive Cable and Wireless monopolies in Barbados in the markets for fixed voice and broadband internet.

However, in order for the decision to have the desired effect of preventing the creation of such overwhelming monopolies, the conditions as set out in the decision must be fully implemented by Cable and Wireless.

As such, the mandatory divestments to the approved third party or parties must be properly monitored and put into effect. This implementation must be comprehensive and completed expeditiously.

It is critical that both the spirit and the substance of the FTC’s decision is complied with, without delay, by Cable and Wireless in Barbados. This will require on-going determined vigilance on the part of all relevant authorities; including the FTC itself to ensure that the interests of consumers in Barbados are fully protected from the anti-competitive effects of this new Cable and Wireless monopoly in fixed voice and broadband services.

Under the Fair Competition Act in Barbados, a party that fails to comply with merger conditions commits a criminal offence and may be convicted on indictment to a fine of $500 000 or to 10 per cent of the turnover of the enterprise for the financial year preceding the date of the commission of the offence; whichever is the greater.

Digicel Group CEO, Colm Delves, commented; “We applaud the FTC for the diligent and comprehensive manner in which it conducted this critical merger analysis. We agree with the fundamental findings of the FTC in relation to the requirement that Cable and Wireless promptly divest of significant fibre assets to third parties in order to seek to maintain competition in Barbados in key markets.

“It is absolutely vital however that having made the decision, that all concerned ensure that the decision is quickly and fully implemented and that all relevant conditions regarding divestment to a third party or parties are complied with by Cable and Wireless without exception.

“The expressed will of the FTC must not be thwarted, delayed or otherwise frustrated by this new Cable and Wireless monopoly. We believe that the FTC’s decision sets the groundwork for the creation and maintenance of a vibrant, competitive environment to protect customer choice and competition in Barbados.”

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