Digicel takeover consultation closes
This summer’s takeover of the Digicel Group by its bondholders is being considered by the Regulatory Authority of Bermuda after public input to the consultation ended overnight.
Written comments were to be submitted by 11.59pm yesterday, under the Regulatory Authority Act on the global Digicel ownership change – first agreed in March.
The RA sought public input regarding Digicel Bermuda’s change of control notification request, involving the new investor/debtholders having indirect control of Digicel Bermuda.
Notice on the RA website of the consultation was given on December 18 and the RA has indicated tentative plans to issue a final report, decision and order, and general determination by the end of the month.
Change in ownership control of a sectoral provider requires public consultation and RA approval.
Digicel Bermuda’s ownership change comes from the global restructuring agreement of the group in June.
The company, which also operates in 25 Caribbean and Central American countries, entered into a restructuring agreement, where certain existing debtholders will convert some of the Digicel Group’s existing debt into equity.
Certain of the group’s credit arrangements will be amended and replaced with a restructured set of debt facilities.
The company has told the RA that the change will improve its financial stability, allowing investment in network, infrastructure, technology upgrades and an expansion of services.
The RA said it has been told that the change “will underpin their viability in the Bermuda sector“ and assist Digicel Bermuda in retaining and growing as a critical competitor in the market.
The consultation document said: “The Digicel Group also stated that there is no planned reduction of staff due to the restructuring transaction. They further stated that management will retain control of decisions related to employees. Moreover, they stated that they are committed to the retention of critical staff by means of appropriate incentives.”
Digicel Bermuda controls two of 20 integrated communications operating licences.
The RA’s market assessment reported that the Electronic Communications Sector in 2022, including fixed, mobile, broadband and business connectivity:
• Generated $192.9 million in relevant revenue, a 4 per cent increase from 2021
• Contributed $16.7 million in direct government fees, including government administration fees, handset fees and spectrum fees
• Contributed $3.1 million to the RA in regulatory administration fees
• Employed 322 full-time staff, a 10 per cent increase from 2021
• Made capital investments in electronic communications infrastructure and assets of $18.1 million, a 35 per cent increase on the $11.7 million in 2021
The RA’s most recent market review of the Electronic Communications Sector in September 2020, noted that there were “competition concerns in seven of the 15 markets across four of the six services: broadband, mobile, fixed voice and business connectivity”.
It observed that One Communications and Digicel Bermuda were identified as having significant market power in one or more of these categories.
The consultation document said: “In September 2020, two new ICOLs were issued to Horizon Communications and Paradise Mobile.
“As of November 2023, the impact of these two new ICOLs has been negligible. Horizon Communications did come to market with a predominantly fixed internet broadband offering, but went into liquidation in January 2023 and stopped operating in June 2023.
“Paradise Mobile is only just starting beta trials for a mobile network as of November 2023.
“The RA commenced an annual market analysis process in 2021 and has collated information for the periods 2019 through 2022. This information has shown that there has not been any significant shift in overall market share with approximately 90 per cent of the [electronic communications] market controlled by Digicel Bermuda and One Communications over the entire period.”
The figures show over the four years through 2022, One Communications grew a larger slice of the market (from 47 per cent to 50 per cent), and cut into Digicel’s share (from 42 per cent to 39 per cent), as the combination of all other sectoral providers remained relatively unchanged at 11 per cent.
The consultation document states: “It appears that there will be no discernible market impact anticipated with this change of control process based on the submission from Digicel Bermuda.”
The public comments being invited by the RA were limited to whether the proposed transaction is likely to affect:
1, Competition within Bermuda’s electronic communications sector
2, The residents of Bermuda with particular interest in, but not limited to, the provision of electronic communication services in Bermuda
3, Innovation within Bermuda’s electronic communications sector
• For the full Digicel Change of Control Public Consultation, see Related Media
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