Digicel buying out Cingular

JD Buckley, CEO Digicel

Friday,  June 24, 2005

The battle for the mobile market in the Caribbean has heated up. After several weeks of speculation the confirmation has arrived that Digicel intends to buy Cingular’s Caribbean operations across five countries including the Cayman Islands in a multi-million dollar deal.

The acquisition of Cingular will significantly strengthen Digicel’s market share throughout the Caribbean market as more countries liberate its telecommunication monopolies.

The acquisition is expected to take four to six months to close as each country is subject to a regulatory approval within that country.

The Information and Communication Technology Authority (ICTA) will need to approve the acquisition here in Cayman.

When contacted by Cayman Net News about a buy out of Cingular about a month ago, Digicel denied the reports. However, Digicel CEO JD Buckley acknowledged that negotiations were at a sensitive stage and consequently could not be confirmed at the time.

“Digicel is acquiring all Cingular Caribbean operations and will be adding five new markets including Bermuda, Anguilla, St Kitts and Nevis, Antigua and Barbuda and Dominica, adding to its existing nine markets,” said Mr Buckley. “Digicel is delighted to have the opportunity to expand its telecommunication coverage and build out the Caribbean network.”

He added that for the short term nothing will change in Cayman and Digicel will continue to compete with Cingular.

“The trend within the Caribbean is to encourage competition that will benefit the customer. Namely, reducing prices, better customer service and coverage,” said Mr Buckley.

He also said that it is too early to say if there will be employee layoffs in Cayman when the acquisition is finalised.

“We will assess the needs and will work to include Cingular employees into the Digicel family. If there are areas where there are redundancies, those employees will be re-assigned to other areas that are growing. It is too early to speculate on the number of Cingular employees that will be leaving.”

Cingular General Manager Raul Nicholson-Coe also noted that consumers will not see any changes immediately and it will be business as usual for a while.

“The industry is a complicated landscape and the ICTA still needs to do its due diligence,” said Mr Nicholson-Coe. “The deal hasn’t been finalised yet so it is too early to speculate on employee layoffs.

“But I want to emphasise that we are still Cingular and the customer can still expect good rates and exceptional service. We are continuing to bring out new products and that will not change.

“I visited all the Cingular stores today and customers were still purchasing our services and products,” he said.

Although consolidation of telecommunications is expected in the Caribbean market as competition increases, the Cingular acquisition is a unique deal according to ICTA Director David Archbold.

“Cingular bought out AT & T Wireless primarily to get more market share in the US and the Canadian market, but it also included the Caribbean. It was Cingular’s strategic plan to operate in the US and Canada. As part of a review of AT & T’s operations, they made a strategic decision to sell off the Caribbean operations. It is not necessarily a profit and loss decision, but a strategic business decision.”

He stated that competition will not be a factor in deciding to approve the acquisition as two new competitors, Blue Sky and CaymanOne, will be entering the mobile market within the next few months. Consequently, consumers will still have a number of choices.

“Our main concerns will be looking after the interests of consumers and staff. But since I don’t have the details yet it is too early to say if the deal will be approved.”

Meanwhile competitors Cable & Wireless said it was considering the implications.

“Cable& Wireless does believe, however, that such a sale could raise some important public policy concerns,” a spokesperson said.

“We note in this regard that the announced transaction is contingent upon approval from each nation’s regulatory authority. To that end we will work with our local government officials on a country-by-country basis to understand possible impacts on each market in question with respect to competition issues, customer service, and license obligations.”

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