Bentley alleges sour grapes, says Digicel made a play for Flow but lost out
Avia Collinder, Business Reporter
Cable and Wireless Communications Plc CEO Phil Bentley has thumbed his nose at Digicel, which will be pushing for a rigorous review of the Columbus International deal by regulators, saying his mobile rival might be feeling spurned.
Speaking with Sunday Business from London, Bentley said Digicel Group had also bid for Columbus' triple-play assets, but its offer was not accepted.
"For us, it seems a little bit like a spurned … a bit like sour grapes," he said last Friday.
Digicel would neither confirm nor deny Bentley's statement, saying through spokeswoman Antonia Graham that it does not comment on "that kind of rumour in circulation".
Columbus declined to address the query, saying it involved "sensitive and confidential information", but added that its advisers received bids from "numerous potential buyers, several of which have significant operations in the region".
On November 6, CWC announced an agreement to purchase Columbus, which offers broadband, fixed-line telephony and cable or subscriber television services to a customer base of about 700,000.
Columbus operates as Flow in Jamaica, Trinidad & Tobago, Barbados, Grenada, St Vincent & the Grenadines, St Lucia, and Curacao; and as Karib in Antigua.
The company's shareholders were offered cash and shares valued at US$1.85 billion, with debt of about US$1.2 billion also to be assumed by CWC - valuing the deal at US$3 billion.
CWC plans to invest US$145 million of capital in the operation over three years, dating from the closing of the acquisition.
The deal will give three principal owners of Columbus a 36 per cent stake in CWC in exchange for 100 per cent of their company.
Bentley said CWC will argue to regulators that the acquisition is good for investment, for employment and the consumer.
"Obviously, we want to talk to the regulator and make the case why this is good for Jamaica. It brings a mobile business like LIME and a TV business together, so for consumers, it will be a better deal," said the telecoms executive, who was hired to run CWC on January 1, less than a year ago. He ran British Gas before that for six years.
"We also think it should be good for employment, because if your business is growing faster you need more people. There're also investments," he said.
Digicel has said the combination of Columbus and CWC, which operates as LIME, could "unlevel" the playing field and be bad for competition.
But CWC plans to counter that argument using Digicel's size and its recent buying spree to bolster its case.
Digicel's subscriber base at over 13 million in 33 markets more than doubles CWC's 5.6 million customers in 17 markets.
"They are a lot bigger than we are, even in Jamaica … and they have bought SportsMax, the cable TV business, and they are roving outside the network. The idea that we can't do the same is a little bit rich, in a way," said the CWC CEO.
"We will make all those points to the regulator and I am confident they will see merit in what we are proposing."
As to the structure of the merged companies, in relation to whether the Flow brand will survive the merger and whether the brands will have separate or unified operations, Bentley said that was yet to be decided.
"It's one of the first questions we will have to answer once we start thinking about how to do the integration," he said.
"LIME has a bigger customer base than Flow, but Flow actually has very good service and very good branding. To be honest, that is one question that we will need to address very, very quickly."
Customers are likely to want "one company, one brand and one bill" and their preference will drive the decision, he adds.
Columbus' Jamaican operation is now run by Sean Latty, who has been just four months at the helm. LIME Jamaica is headed by Garfield 'Garry' Sinclair.
Bentley signalled that CWC may redeploy talent across the merged group, saying such assignments will be based on merit.
"I think we have very good leadership in either place. In Jamaica, Garry Sinclair is a very good leader as well. I think we will take the very best person for the job on their merit," he said.
"We might want to move some Jamaicans to different islands, to other markets. I think the deal will be good for employees in the longer run because they have more opportunities."
However, those decisions will come later after tying up the deal and securing regulatory approval, he said.
LIME, which has been in product expansion mode, had been planning the launch of pay-TV later this year, but will instead be making that push through Flow.
The acquisition, Bentley added, opens up opportunities in Internet protocol TV, high definition TV, video on demand, cloud storage, the ability to download programming unto mobile phone or laptop computer, and remote programming of home viewing.
"Increasingly, mobile offerings as well as TV will be important to us," he said.
"We have four million mobile customers; they [Flow] have 250,000 TV customers - we think we will be able to offer a lot more TV, better TV products, to our LIME customers."
The integration of the fixed, fibre and mobile networks should lead to lower cost, which means "we will be able to pass those savings on to our customers", Bentley told Sunday Business.
"We are focusing on the financial services, the banks the Government; we will have a broader range of solutions - for example, security, CCTV, monitoring patient records - these are the kinds of things we are going to focus more on under a bigger IT programme," he said.
As for CWC's decade-long rivalry with Digicel, that fight lives on.
"We are going to fight back. We are not going to let them just hoover up all the best bits of the Caribbean," said the CWC boss.
"This is our home. We are connected to Jamaica. One hundred years ago, we put telephones into Jamaica, in Kingston. This is our home and we are going to fight. We are going to compete."