> Koneksyon > Did Conatel make due diligence in Digicel’s takeover of Voilà?

Gotson Pierre and Harold Isaac, in partnership with Group Medialternatif, present "Koneksyon"

Did Conatel make due diligence in Digicel’s takeover of Voilà?

A lot of questions are arising from this rather dubious operation

Publié le Wednesday 11 April 2012

The hot topic in telecommunications in Haiti this week is Digicel’s takeover of Voilà on March 30th. This purchase has been settled between Digicel and Voilà’s parent US Trilogy International Partners.

Unlike common practice in such big transactions the amount remains undisclosed. Similarly, the regulatory authority, the National Telecommunications Council (Conatel), which is supposed to rule on compliance and fairness, failed to perform its duties.

In any case, one can say that it is the largest transaction in telecommunications in the country since May 2010, when Vietnamese Viettel bought 60% of Teleco, the state company. This transformed the former national carrier into Natcom, with the state holding 40% of its stocks,

For Teleco’s purchase, we know Viettel had committed to an initial investment of $ 59 million.

What seems clear now, is that the Digicel’s takeover of Voilà, was performed in a "black bottle" despite the insistence of the press and the right of the public to be informed.

In a free market economy, when a large competitor purchases a rival, regulatory authorities (in our case, Conatel) will generally oversee the transaction to make sure it does not harm competition which must exist for consumers to have a choice.

According to data we’ve compiled, prior to the transaction Digicel controlled about 66% of the market while Voilà (Comcel) had approximately 32% and Haitel approximately 2%.

Which would mean that, after the purchase, Digicel shares have increased to a whopping 98% of the market in the cell phone industry in Haiti, putting the giant in a monopoly situation.

And generally, consumers do not benefit from a monopoly situation at least as per antitrust laws as applied in countries such as the United States or in Jamaica.

Digicel began operating in Haiti in 2005 while Voilà is the new trademark of Comcel established in Haiti since 1999.

This new monopoly situation worries some experts down in Haiti, especially when we consider that Haitel (2% of market share) has just been driven out of business.

They regret the transaction has been performed in such a fashion. For these experts, we have regressed because Conatel should have avoided such a quagmire which is making consumers lose the benefits of competition that allowed them access to the best prices.

But these experts agree that what happened was predictable. Because, since Natcom’s entrance into the market, prices have been pushed downwards, weakening Voilà. And according to analysts, Conatel should have limited the bout between the companies in order to avoid such cannibalism.

Overseas, we’ve witnessed at least 3 historical cases where monopoly was questioned :

The first is the Standard Oil Co. (ExxonMobil ancestor):

In 1911, the U.S. Supreme Court declared Standard Oil guilty of monopoly in the oil market, and broke the company into 34 entities that compete with each other.

The second is AT&T (American Telephone & Telegraph):

In 1984, the U.S. government broke the company into 7 regional companies (The "Baby Bells") to allow competition.

The Third is Digicel-Claro merger in Jamaica where FTC (Fair Trade Commission) is currently suing the company in court for monopoly issues.

Is the Haitian government considering that Digicel is currently in a monopoly situation ?

Actually, according to some estimates, Natcom controls about 10 to 15% of the telecommunications market and they are predominant in the Internet market. Question is: Will this company find room to grow?

According to the specialists we’ve spoken to, the state has to take responsibility with regards to what happens next. However the problem is that we do not know if there is a plan, we do not know where we are going and who is running the game. Gotson Pierre/Harold Isaac