THE HOYOS FILE: FTC approval paves way for telecoms battle
The merged entity, accordance with its commitments, must be technically ready for Local Number Portability “(LNP”) in the fixed network by September 30, 2015 and Mobile Number Portability (“MNP”) in the mobile network by November 30th, 2015. – Paragraph 11 from the Fair Trading Commission’s press release approving the LIME-Flow merger in Barbados.
The above paragraph, coming toward the end of the inevitable approval of the LIME-Flow proposed merger (better stated as the proposed merger between Cable & Wireless Communications plc and Columbus International Inc.) was what really made my day last Friday morning, despite the late arrival of the “breaking news” of said approval by the Fair Trading Commission (FTC).
It was a foregone conclusion: Are you really going to tell two of the largest employers on the island, and the region, on whose massive war chest we have been eking out a living for some time as our economies otherwise bit the dust, that they can’t have their way with each other in the marketplace?
All we can say is, get a room, well, a certain kind of room.
And that was just what the FTC did. They are requiring, basically, a room with much less wiring. Trust me, your eyes will glaze over if you try to read the press release. Essentially, the newlyweds must get rid of excess fibre. Cable fibre, I mean. This will enhance competitiveness in the marketplace no end, I am positive.
And if they can’t get it sold, then the FTC will help them try. A trust company to be set up, and so on. What a bore. In Trinidad, it was much more interesting. No, said TATT (Telecommunications Authority of Trinidad & Tobago) – at first. Then, wiser heads prevailed (all that investment…) so TATT revised its no to a provisional yes: CWC must sell its 49 per cent stake in the loss -making TSTT (Telecommunications Services of TT) of which the government owns the other 51 per cent. Its got about 18 months to do so, otherwise…not really sure.
Anyway, back to our little island, where we always find a nice, even-handed way to work things out. So, that is why the paragraph noted above gave me the energy boost I needed.
I didn’t know number portability was coming to us – maybe I missed that press conference, too. So now we have the true telecoms picture emerging in the region: it was always there but there were a lot of red herrings in the way. It’s now a straight fight for Caribbean dominatoin between Irishman Denis O’Brien and American John C. Malone.
Now, we probably won’t see much of the latter personage, as he will be represented on the new CWC board by Thad York, but he is there alright. Malone is an American entrepreneur who started out in the cable business in Colorado, in the days when cable systems brought wireless broadcasts (like the major United States networks) to mountain areas where the signal didn’t reach. There are a lot of them in Colorado.
In just a few decades, he became among the richest and most accomplished media entrepreneurs in the world, tangling successfully with the likes of Rupert Murdoch and TimeWarner.
According to the CWC merger notice sent out to shareholders mere months ago. John C. Malone was described as having a very large and diverse portfolio of investments, characterised by small percentage shareholdings but massive voting rights in Liberty Media Corporation, Liberty Global, Liberty Interactive Corporation, Starz, and Liberty Trip Advisor Holdings, among others.
Drilling down a bit to where his real power lies, the short resume focussed on the Liberty entities: “Liberty Media Corporation owns interests in a broad range of media, communications and entertainment businesses, (including) SiriusXM and Live Nation and minority equity investments in Time Warner Cable, Time Warner Inc., and Viacom.
Liberty Interactive Corporation owns interests in entities engaged in the video and digital commerce industries. Liberty Global plc is the largest international cable company with operations in 14 countries; its consumer brands include Virgin Media, UPC, Unitymedia, Kabel BW, Telenet, VTR, and Libert Puerto Rico.”
When Columbus got something like US$300 million from Malone to roll out its Caribbean fibre dominance programme, and three years later was still having huge losses, anybody could see that Malone was probably not going to keep going longer than necessary playing on the losing side in the fast-changing Caribbean telecom sector.
Perhaps the whole purpose of the intervention by someone as big as Malone was to serve notice on CWC that their days of trying to run the region like a post-colonial backyard were numbered.
In the end, John Malone, John Risley and Brendan Paddick (the latter two, the founders of the company) will own and control just over a third of CWC’s shares. Taking on a US$3 billion purchase has left CWC so “highly leveraged” (which means “up to its neck in debt”) that it may be safe to say we haven’t seen the end of the merger story with those rather placid approvals from Trinidad and now Barbados, Jamaica having rolled over some weeks ago with nary a protest.
Now it’s up to Digicel to determine where it will fight for marketshare in the region. And like any company getting ready for a major campaign, Digicel has announced a new voluntary separation programme to be followed by layoffs, as it struggles to get fighting fit for the campaign ahead.
Meantime, once I can get personal domination over my mobile number, I will sit back and pick my own winner as time goes by.