What’s good and bad about the Digicel / Claro Jamaican buy out deal

What’s great about this deal

1. Digicel gets out of America Movil’s market, therefore no longer pissing off the richest man in the world. Carlos Slim Helu is worth US$74billion, Dennis O’Brien is worth 1/10 of that.

2. America Movil gets out of the Jamaican market and stop pissing off Dennis O’brien and ends the distracting tactics that was meant to confuse the Jamaican consumer with branding similar to Digicel and painting Digicel’s as overpriced and misleading. Additionally, the poaching of talent and also accepting of employees made redundant by Digicel will no longer matter.

 

3. Will CLARO prices increase to match that of Digicel’s? Pricing was a major pull factor that Claro used to move subscribers from LIME and Digicel or at the very least wooed them to be carrying another cell phone. So with Digicel owning the Claro Business in Jamaica now, will that mean CLARO subscribers can expect increase in call rates and data plans?

4. Now many Jamaican consumers can get better deals for the iPhone and iPad 2 here. This also may mean Jamaican Blackberry addicts may become less dominant. I know I’d be one of them, switching to the iPhone and happy to get the wifi and 3G iPad2 and unapologetically so.

5. Claro will no longer be seen as the stepchild in the local mobile market. When America Movil bought the then MipHone for US$70 million, the MiPhone culture remained despite the pretty red branding. MiPhone was perceived as not an important entity with a God awful customer service culture. Digicel getting Claro’s  Jamaican business,  means their customer service culture will be transplanted there. Whew!

6. iPad in Education. With Digicel having access to the exclusivity that CLARO has for the iPhone and possibly iPad 3G, if they choose to, Digicel can use the iPad2 to really influence some reinvention in education with that device as have been happening in other parts of the world. And not make it into some pricey, luxury device for the few.

 

 

What’s NOT so great  about this deal? Which depends on where you sit.

1. Swapping one monopoly for another? This deal gives Digicel too much power in the Jamaican market. While they have been dominant in the  Jamaican market pretty much since it launched, this deal makes Digicel the biggest network here.

LIME formerly Cable & Wireless, held a monopoly here for 50 years, so Digicel was like a buffet in front of the starving Jamaican consumer when the market opened. Stil, is this healthy for the Jamaican market, to swap one monopoly for another, simply because the new one is more benevolent?

While everyone loves a winner, it’s not good market conditions to have, not even for the consumer and not even if it’s Digicel.  The market regulators- Office of Utilities Regulations (OUR) and The Spectrum Authority ( when it decides to grow bigger balls, get stronger teeth and people who really understand the damn market) will have to monitor like a hawk.

2. LIME is in trouble BIG TIME. They have been bleeding ink over the years despite rebranding, repositioning efforts and unleashing innovative products such as Mobile TV. Can they turn thins around to become a formidable competitor in the marketplace.

3. It doesn’t leave much of the market for a 3rd competitor  ?…unless the technology shifts the market so much it destabilises Digicel and LIME which at the pace of innovation these days is quite possible.

4. What about FLOW? With the Internet becoming more mobile and the devices like iPad2 coming cheaper as a computing device giving greater access to consumers, where does this leave FLOW in the Internet Market?

Related Posts
Digicel and Claro swap business assets and calls a Truce in Jamaica and LatAm markets
MIPHONE vs DIGICEL vs CABLE & WIRELESS- Who’ll win the cellphone war?
Digicel’s Blackberry business up 135%, revenues up to US$2.2 billion
America Movil to buy MiPhone for…US$70 million. And now the rumours and questions.

  • Anthony

    I’m a jamaican living at america and you guys have a long way to go before you guys can catch up to the real tecnology blackberry people that phone is so outdated its not even fun the top phone are andriod and iphone in america until someone step up you guys will be in stone age.what if I tell u that I us my voice to send this entire message.This is only for andriod &iphone voice control feature

  • Interesting…so you feel FLOW is dead in the water? You do know that 70% of all Caribbean internet traffic flows over their fibre that’s around the Caribbean and to the USA. How can you lose with that kind of infrastructure?

  • Kamron

    Well, obviously the Flow has dried up. It was clearly, clearly (can I say clearly?) a bad investment decision in the first place to get into any form of business aimed nationwide that has wires. I told everyone this the minute I left high school way, way back in 2000 that the thing called the internet would be in almost every home and in phones and virtually with no wires whatsoever – and they laughed at me!!! Hate to say I told you so! So Flow, wish you weren’t so short-sighted, the writing was already on the wall from Slime’s collapse and that was a very very silly move to invest in internet via cables. They are trying to market Wi-FI but that gives u so much mobility in the confines of your home/business but doesn’t allow you to chat up people while in the middle of Coronation Market if Falmouth Square from your (drumbrolls) cell phone!!! Once Digicel gets this pseudo-4G thing down then we’ll see the death of another player in the Telecoms sector. Bwoy Digicel is just dishing out blows left and right!

  • I can’t be as flippant as you to accept Digicel as a monopoly. We seemed to have quickly forgotten our experiences when LIME was the monopoly. So no matter how benevolent DIgicel has been and how great their customer services…we have to still ask the tough questions…and hold them up to standards and scrutiny like anyone else.

  • Jamdon

    Claro has exclusive rights to distribute the iphone in the Caribbean region through its parent company America Movil so get that iphone and ipad dream out of ur head. As for LIME I hope they get run out of business regardless of whatever monopoly it creates. They have been in Jamaica for years and what have they done to improve the market? Their customer service and coverage is terrible and they haven’t a clue what the mobile market demands are or how to respond to it. I avoid them like the plague because of my many disappointing experiences with both their landline and mobile services “just a pity i don’t have an alternative to the landline as yet”.

  • I’m assuming in hope that the iPhone deal is transferable.

  • exactly, we dont if the deal is transferable, so why assume that it is?

  • exactly, we don’t know if the iphone/ipad deal is transferable so why assume that it is?

  • Well Garfield, as I was saying to Dale, we don’t know all the details of the deal as yet. Maybe Digicel did negotiate that the iPhone exclusivity be part of the deal IF they saw it beneficial to them in the Jamaican market. Let’s see what he next few days bring.

  • Possibly? But we don’t know the details of the deal yet do we.

  • Dale

    Ingrid

    Could that deal be with American Movil and thus not transferable if a subsidiary is sold, thus maiing it null and void ?

  • GB

    They will most likely have to renegotiate that one as a new entity. It might get passed down to Digicel, but it’s not automatically so. The fact is that it’s Claro Jamaica/Miphone that has been acquired, not American Movil, and Apple’s deal was with the latter. IMO Jamaica only benefitted because we piggy backed on the larger Latin America deal with AM managed to strike because of their market share size, to which Jamaica’s market is minuscule when compared.

  • The iPhone and Android will have a staggering adaption rate here in Jamaica unless the one major challenge is taken care of, that is the ability to purchase apps from the Apple App Store or Android Market. When it become much more easily to access credit or debit cards with online capability such as the more recent Visa Debit Card from First Caribbean. Then there is the data rates, it has to be affordable for the average user, specifically the BlackBerry users.

  • Jme30

    Yes, Claro Not Digicel. That I believe will remain the same as the deal will continue to exist with America Movil and not Digicel.

    If you compare customer base America Movil has more overall customers than Digicel worldwide.

  • Claro has always had an exclusive for selling the iPhone in Jamaica via its parent company America Movil based in Mexico.

  • jme30

    Why do you think they will have access to the apple deal?