Friday, July 18, 2008

Cook Islands - Digicel GSM licence

Digicel seeks $69 Million loan for expansion in South Pacific

Cabinet recently announced they had entered into negotiations with the Digicel Group but gave no information about the telecommunications company, so CI Herald decided to do a bit of research for our readers. So far the report card is quite positive and the company appears to be sound. Question is whether Government intend to have them as an extra player or simply replace one monopoly for another?

According to their own company information, Digicel wants to expand into the Pacific Islands and are seeking a $69 Million loan from the International Finance Corporation (IFC) to fund their latest expansions.

Digicel told the IFC that the loan would fund the building and expansion of mobile networks in the region over the next 12 to 18 months and already has a presence in Samoa, Tonga and Papua Niugini (PNG).

The company is also known to prefer high speed services backed by WIMAX.
Digicel was founded by Irish entrepreneur, Denis O’Brien in 2000 based in Kingston, Jamaica and provides mobile telecommunications services to the Carribean and Central American markets.

In April 2001, the company launched their GSM mobile service in Jamaica and within 100 days of operation had attracted 100,000 customers to their services.
The company is hailed as a ‘major contributor’ to the national income and employment of Jamaicans and has driven mobile rates down by as much as ‘50%’ and cut international rates by ‘40%’ (in that market) by providing robust competition.
Digicel has demonstrated their social responsibility through sponsorships such as a refuge for children with HIV, the Jamaica Cancer Society and the Office of Disaster Preparedness and Management as well as promotions such as the Air Jamaica and Carribean Fashion Week, the Digicel Derby (horse racing), netball, motor racing, track and field and more.

So far, the report card for the company has been good and financially the company appears to be sound.

However, question is whether Government is bringing Digicel in to provide competition to Telecom Cook Islands which is 60% owned by Telecom NZ and 40% by the Cook Islands government (as trustees for the people of the Cook Islands) or whether they intend to replace one monopoly for another?

Perhaps Telecom NZ itself may be willing to give up its stake in the Cook Islands given the numerous regulatory changes they are undergoing in New Zealand where they are required to reshape their services into retail and wholesale rather than as a comprehensive package. Reportedly, Telecom has complained that these regulatory changes have created extra costs and distracted their attention from their core services.

However, as the subscribers to TCI would tell the Government, the public has waited a long time for competition so that we too can enjoy the benefits of lower prices for services similar to those enjoyed by subscribers in Jamaica where Digicel is domiciled.

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