BMI View: The announcement of the IPO by pan-Caribbean operator Digicel bodes well for the future of the region, with additional funds raised for investment in next-generation networks, converged services and further market expansion. However, it also demonstrates the saturated nature of the telecoms industry in the Caribbean, with revenue and subscriber growth flattening . A key downside risk is the company's exposure to weak consumer spending trends in its core markets, an issue that could undermine investor confidence further down the line. Haiti and Cuba represent the largest organic growth opportunities in the region, as both are significantly underdeveloped compared to their peers. However, the risks associated with business in these two markets mean that a mobile subscription boom is far from likely.
Cayman Islands has the highest mobile penetration at over 160%, while Cuba's penetration rate remained below 20%.
The number of mobile lines in Cuba reached the 3mn mark in April, up from 2.4mn lines at the start of 2015, according to data published by state-owned telecoms operator Empresa de Telecomunicaciones de Cuba (ETECSA). The increase was mainly owing to a promotion, called Si activas ganas 30, wherein new users obtained USD30 in credit for activating a line for the same amount. ETECSA revealed that 300,000 new mobile subscribers signed up in just five days due to the promotion . Digicel Jamaica currently has 1mn smartphone users on its mobile network, which accounts for more than 45% of the operator's overall subscriber base in Jamaica.
Altice registered a 14% year-on-year rise in revenues to EUR169.2mn (USD190.16mn) in Q115 in the Dominican Republic. EBITDA increased 28% on a constant currency basis to EUR89mn (USD100.03mn) in the reported quarter. The operator's capital expenditure in the Dominican Republic grew 63% on a constant currency basis to EUR22.9mn (USD25.75mn), following the upgrade of its fibre and 3G networks. Mobile revenues increased 1% on a constant currency basis to EUR116.5mn (USD131.02mn), driven by rise in its mobile subscriber base, which grew by 126,000 during the past 12 months to 3.7mn .
Key Develop ments
Digicel will sell Class A common shares on the New York Stock Exchange, a move that will fund the company's ongoing geographic and product expansion. Mobile-focused Digicel claims to be evolving into a key provider of 'total communications and entertainment' through submarine cables, fibre-to-the-home (FTTH) and pay-TV. Higher-value premium converged products will enable the company to compete more effectively outside its current footprint and restore the lustre of its flagging ARPUs.
In a surprising move, pan-Caribbean telecoms operator Digicel has decided not to participate in the Bahamas May 2015 spectrum auction. The Bahamas government is in the process of finding a second player to challenge the current mobile monopoly held by Bahamas Telecommunications Company (BTC) with Digicel seen as the favourite to win the licence due its wide Caribbean presence, experience and financial resources. The two remaining bidders are locally-owned cable company Cable Bahamas and mobile virtual network operator (MVNO) Virgin Mobile.
Liberty Global's subsidiary, Liberty Cablevision of Puerto Rico, completed the acquisition of Choice Cable TV on June 3, for nearly USD273mn. The parties first agreed to the deal in December 2014. Under the merged multi-service cable group, Liberty will operate a network covering more than 80% of households across the country, with around 750,000 cable TV, broadband internet and fixed telephony RGUs generating more than USD380mn in revenue annually.
Jamaica's government has postponed the number portability implementation deadline to June 22 from May 31 to provide more time to LIME Jamaica to carry out tests on its number porting systems. The extension has been granted to ensure seamless implementation of the portability in the country, according to the Minister of Science, Technology, Energy and Mining Phillip Paulwell. 'The concession will allow for critical tests to ensure optimum performance and prevent any calamitous system failure that would negatively impact the entire service, impede the porting process, and erode consumer satisfaction and confidence,' the minister said.