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Will Digicel, Cingular Win Cell Licence Race?
Posted: Wednesday, December 22, 2004

By George Alleyne,

While I tend to dismiss the claims of seer men and others of that ilk of being able to predict the future, nonetheless it does appear that Digicel TT Ltd, and Cingular, two of the five companies which will take part in the February 2005 auction for cellular licences, are front runners and will likely breast the tape. The five contenders, for the record are, apart from Digicel and Cingular, Laqtel Limited, Telkom Caribe, which already provides services up the islands, and NatTel LLC. Telecommunications Services of Trinidad and Tobago (TSTT) is the incumbent operator.

From where I sit I believe it is quite possible that bids in the auction, whose acceptance by the Telecommunications Authority of Trinidad and Tobago (TATT) will herald the end of the Telecommunications Services of Trinidad and Tobago's monopoly of the mobile telephone industry and indeed in a broader sense the telephone service itself, may reach and possibly soar beyond US$100 million per licence. This should not be seen as extraordinary, bearing in mind the immense potential of the Trinidad and Tobago mobile phone industry market what with the country's significantly expanding industrial base and the immense potential for the market should this country become the headquarters of the Free Trade Area of the Americas (FTAA).

What also must be factored into the equation is that Digicel, a subsidiary of the Irish major, Mossel, and C L Financial, together submitted a joint bid of US$47.5 million a few years ago for a mobile telecom licence in Jamaica. Another provider, Centennial, paid US$45 million for its licence. In addition, both sums were paid for the coveted licences in an environment of a sliding Jamaican economy and a weak and still weak Jamaican dollar. Yet, even in an industrial climate which had seen Jamaican government intervention in the private sector and the acquisition of several corporations through state-owned FINSAC, as well as subsequent acquisition by Trinidad and Tobago companies, relatively high unemployment and underemployment and consequent low purchasing power of the broad mass of people, the payments for both licences were considered sound investments. And sound investments they have proven to be.

I mentioned Cingular as being one of the front runners likely to breast the tape at the end of the cellular licences race. While Cingular may not be as well known by most Trinidadians and Tobagonians as Digicel, it bought out AT&T's wireless section. This would have included fairly well advanced plans by AT&T to position itself in the race for cellular licences, that is to prepare itself for the possibility of being awarded on of the licences. AT&T had earlier leased some two floors of the Issa Nicholas building on Independence Square South. Should Trinidad and Tobago be successful in its bid for the FTAA headquarters to be sited here this will mean an immediate and significant increase in the use of mobile telephones resulting from both official business and private calls by heads, senior officials and staff of offices of the various member states of the FTAA, in addition to the Secretariat.

In turn, the siting of the FTAA headquarters here will generate a greater demand for office space and housing accommodation as well as further investment interest in the country with its not inconsiderable reserves of crude and natural gas and a bankable work force. This will lead to a greater turn around of money within the economy and increased employment opportunities. All of the above will add up to more use of mobile telephones both for local and overseas calls. The deregulation of the industry and the end of the monopoly enjoyed by TSTT will see not only a drop in domestic and international rates, but a rush by the providers to offer cellular phones at sharply reduced costs.

There will be understandable moves by the service providers to lock customers into contracts under which, in exchange for inexpensive phones, they will use the services provided by the relevant mobile phone companies. Already, TSTT has started the process. Interestingly, a company, not one of the five, recently sent out promotional flyers, via TT Post, offering persons the facility of being able to make international calls "from the convenience of any phone." These included calls to the United States of America and Canada for 88 cents a minute, and to the United Kingdom, France, Germany, China, Japan, Australia, Ireland and Italy at $1 per minute.

Persons wishing to avail themselves of the service will have to pay a contract sum of $100. The inclusion of China recognises the growing importance of that country as an exporter, and that of Japan, possibly because of the considerable trade in the importing of Japanese second hand cars and parts into Trinidad and Tobago. Telephone rates are expected to come tumbling down generally and it would not be surprising should TSTT bring its rates down to as low as either 75 cents or 85 cents early in the New Year as part of a strategy designed to help it retain substantial market share. I am writing this on Sunday afternoon. In turn I would not be surprised should TSTT offer its customers special rates for calls made on Christmas day to the United Kingdom, the US, Canada and France at, say, 85 cents a minute. And since more international telephone calls are made on Christmas day than on any other day of the year the response, should TSTT do this, would be significant. Merry Christmas to all of my readers.

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