CANTO Weekly Newsletter – BNamericas: 04/04/14

CANTO Weekly Newsletter – BNamericas: 04/04/14

Friday, April 4, 2014

 

Indotel finalizing tougher service quality regulations, price caps – Dominican R.

The Dominican Republic’s telecoms regulator Indotel is working on the “final touches” of new telecom regulations that will impose considerable fines on companies that do not provide adequate service quality, El Nuevo Diario quoted Indotel president Gedeón Santos as saying.

“We wouldn’t want to have to fine anybody; we just want to launch these regulations and hope that companies comply,” Santos said.

Indotel is also running studies to determine the best means of cutting phone and internet prices.

Santos said that the Dominican Republic had some of the best telecom infrastructure in the Americas in the late 1990s, on par with that of the United States.

“However, now we are among the low-averages in terms of telecom quality in the entire region,” Santos said.

This is because Indotel failed to perform its responsibilities in ensuring quality service, even as the sector grew quickly and was well-funded by taxes, Santos added.

The Dominican Republic has 10 fixed line connections per 100 residents, and 4.3% of the population has a fixed broadband connection, according to the International Telecommunication Union (ITU).

Columbus International completes US$1.25bn bond offering – Regional

Barbados-based telecom provider Columbus International closed its US$1.25bn bond offering of senior unsecured notes, according to a company release.

Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM) and RBC Capital Markets led the transaction which saw notes issued at a 7.375% coupon, priced at par and set to mature in 2021.

The proceeds are expected to retire previous notes issuances of US$640mn (senior secured at 11.5%) and US$212mn (senior unsecured at 9.5%) as well as fund early redemption fees on the two notes. The balance of proceeds may also be used for general corporate purposes, including to finance a previously announced acquisition of Colombian telecom infrastructure provider Lazus, in addition to potentially compensating shareholders up to US$100mn.

The closing, stated to be six times oversubscribed with an order book around US$8bn, drew demand from over 300 investors worldwide.

Could Cuba’s foreign investment reform boost the telecoms sector? – Cuba

The news that Cuba’s national assembly will vote on Saturday on a new foreign investment law sends out a positive message to the international investment community, but also raises questions of whether it will be enough to turn around the country’s economic blues.

BNamericas examines the proposed changes and looks at the telecoms sector, where some loosening of controls is already underway.

THE REFORM

While intricate details of the bill are yet to be released, a few issues are clear based on a report by local publication Juventud Rebelde.

Foreign participation would be allowed in all sectors except healthcare and education. Wholly foreign-owned businesses and Cubans not based in the country would be permitted to invest.

Taxation of profits would be halved to 15%. Duties on operations that exploit natural resources like minerals and oil, which face taxes as high as 45%, would be limited to 22.5%. Labor tax laws, currently at 25%, would be waived.

However, 100% foreign owned companies would not enjoy the same tax benefits as joint ventures with Cuban associates.

RESERVATIONS

The news has been greeted with a lukewarm response from international media.

Bloomberg quoted Washington attorney Jason Poblete as saying that Cuba still lacks two of the bedrocks of investing: rule of law and protection of property rights.

Meanwhile, Christopher Sabatini, senior policy director at the Council of the Americas, said that many will remain cautious about entering a market where they have no control over the hiring of personnel. There are also fears that Cuba might continue to show favoritism to companies from nations that share its political ideals, such as Venezuela and China.

TELECOMMUNICATIONS

The Cuban government has long blamed the US trade embargo for its lack of internet access, and any foreign investment is going to be made a lot easier with a good communications system.

Hence, last year Cuba saw the landing of the ALBA-1 submarine cable, a joint Venezuela-Cuban venture that runs from Venezuela to Cuba and Jamaica. The cable has provided the country with fixed-line internet infrastructure, decreasing its historic dependence on slow satellite connections.

The move was part of a wave of reforms for the country in 2013, kicked off by President Raul Castro’s relaxation on foreign travel restrictions in January.

Castro began allowing the sale of cellular phone services to the general public for the first time in 2008 and the country is expected to reach 2mn mobile lines by the end of the year. The population is 11mn.

The country chose the Chinese standard for terrestrial digital TV last year, breaking with the Latin American standard of following Brazil’s adaptation of the Japanese digital TV standard ISDB-T.

The telecommunications revolution is still at the very early stages in Cuba. But if foreign investors are given greater access to the economy, there is no doubt that the demand is there and that the country could see the digital revolution ramp up as quickly as it has in many other highly underdeveloped markets.

In the rest of Latin America, mobile wallet platforms have taken off faster in places where there was little access to formal banking channels, as is the case in Cuba. Operators that specialize in emerging markets like Orange and Millicom (Nasdaq: MICCF) may well be interested.

The cost of smartphones is rapidly heading below US$100, especially with devices from Cuban-friendly Chinese vendors. Perhaps change could happen quicker than one would think.

Digicel expands presence in Turks & Caicos – Caribbean

Irish-owned mobile operator Digicel and Telemedia, its partner in the Turks and Caicos Islands, acquired local company WIV Cable TV for an undisclosed amount, local paper Sun reported.

The acquisition also includes WIV Cable TV’s sister company TCT, which operates the TCExpress high speed cable internet service.

The deal is expected to reinforce Digicel’s Internet offering in the Turks and Caicos, where it has already launched 4G services, in addition to entering the local television segment.

Roundup: Orange, Tricom, Cisco, online gambling – Regional

Dominican Republic operators Orange and Tricom could drop their rates following their acquisition last year by Israeli-owned cable and mobile operator Altice, Altice’s president Patric Drahi was quoted as saying by local press.

Bhij Mansour, Israel’s ambassador in the Dominican Republic said that Altice had acquired a telecoms operator in Israel and shortly afterwards had dropped calling rates by 66%. He reportedly added that Drahi has expressed interest in doing the same in the Dominican Republic.

Speaking during a meeting with the country’s foreign affairs commission, Mansour said that Israel is also interested in investing in the areas of agriculture and ICT, especially in software development.

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Mexican cable operator Multimedios has contracted Cisco Systems (Nasdaq: CSCO) to deploy a Docsis 3.0 solution to enable it to offer IP Next Generation Network services.

Docsis 3.0 enables operators to increase the speeds of download and upload to 1Gbps and provide support for new services based on the IPv6 protocol.

Multimedios, through the Cablevisión and Telum brands, offers triple play services in the northern states of Nuevo León, Coahuila and Tamaulipas to residential and corporate clients.

***

Uruguay’s government has sent a bill to congress to create a decentralized casinos and online games regulator, local daily La República reported.

The bill recognizes that several European countries have been attempting to regulate online gaming, which extends gambling beyond national boundaries, tax centers and monopolies.

CANTO's Secretary General Teresa Wankin strikes a pose with Aruba's Prime Minister Evelyn Wever-Croes (left). The CANTO Board is currently in Aruba for its 138th Board Meeting. pic.twitter.com/uG3W5eYyi1

About 2 days ago from CANTO's Twitter via TweetDeck

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