Digicel has agreed to acquire the Bermuda Telephone Company (BTC) in an attempt to keep up with Cable and Wireless, who bought Caribbean’s dominant telecom capacity vendor Columbus International last November.
Analysts say the acquisition also puts Digicel in direct competition with CableVision. The agreement is subject to regulatory approval in Bermuda. BTC said the merger injects competition into the region’s telecom market.
Internet penetration is as high as 91% in Bermuda, although broadband service remains expensive, largely due to a lack of competition.
Digicel moved into Bermuda in 2012 when it acquired local telecom operator Transact. Today the carrier controls nearly 48% of the market share with 94,300 mobile users.
Digicel did not disclose what price it paid for BTC, but analysts estimate it might have paid around US$30 million. That was the price that Canadian group Barrie OpCo paid to acquire the Bermudan firm just six months ago.
It is not clear how many customers BCT is serving in the Caribbean, but Digicel is thought to have been drawn by its extensive fixed-line network and its many broadband customers in Bermuda. However, analysts say BTC’s fixed-voice and Internet services can only supplement Digicel’s existing network in the Caribbean country.
“We always look for opportunities to enhance our service offering,” said Digicel. The Jamaica-based firm appears to have been concerned by the growing influence of its regional rival Cable and Wireless.
In December last year, Digicel executive Denis O’Brien urged Caribbean nations to suspend Cable and Wireless’ agreement to acquire Columbus, saying the purchase destroys competition, giving birth to a monopoly operator.