Jamaica sells part of spectrum to Digicel for US$25M

-questions remain about revenue flows here from E-Networks, Broadband Wireless

Digicel yesterday acquired a third of the bands on Jamaica’s 700 MHz spectrum for US$25 million whereas it is still unclear what benefits are flowing to Guyana from the granting of the 2.5 GHz band frequencies in 2010 to two companies close to the PPP/C government.

The deal, inked between the Government of Jamaica through its Ministry of Science, Technology, Energy and Mining and Digicel’s CEO Barry O’brien, was announced in yesterday’s edition of the Jamaica Gleaner.

According to the news report, Jamaica’s government was initially looking to sell one-third of the 700 MHz band by way of auction for US$45 million but altered the price to US$25 million after finding the original figure unrealistic. It also dropped the auction process.

Phillip Paulwell, Minister of Science, Technology, Energy and Mining said, “In retrospect, it would have been difficult for us to have got as much as we thought there was value in it and even after we were seeking to negotiate, we were way below the US$25 million. People were coming to us at (US$) 10 (million). Getting 25 in the end has been quite significant,” the Gleaner reported.

Last year, Stabroek News reported that Brian Yong of Broadband Wireless and Vishok Persaud of E-Networks, considered to be closely associated with government and the ruling party, had been issued cable licences in the sought after 2.5 GHz band without any clear idea from the government as to what they paid or are paying for it. Neither of the two companies have spoken about their acquisitions of the so-called triple play facility – telecoms, TV and high speed internet – or how much they paid. Critics have argued that both companies have been given preferential treatment by the government.

When Stabroek News had reported on this matter in April last year, Prime Minister Samuel Hinds had said that “governments collect revenue from telecoms operators in a variety of ways and auction is one of the ways, but the Guyana Government after reviewing the matter, chose not to go the way of auction. No one has paid an auction charge in Guyana. Jamaica has not received anything yet: many times when auctions are held offers are less than expected,” Hinds said in a GINA report. According to GINA, the Prime Minister stressed that the important thing is consistency in applying the same schedule of fees and taxes to every telecoms operator. “Further that a telecoms operator recovers all the payments to a government from the receipts from their customers”,  said Hinds.

“It is with this awareness that up-front auction money comes with the need of its recovery (from) the market that the Government did not take the option of going by way of auction, but by a combination of annual fees as the telecoms operator grows,” he said.

Neither Hinds nor the government has provided any information on what has been paid or is being paid by Yong and Persaud for the 2.5 GHz licence.

According to GINA, Hinds said studies across states and countries show that the average Government revenue from telecoms operators, through a variety of means – auctions and annual fees- ranges from 6% to 16% of the gross receipts from customers.

Hinds said that Guyana may still be considered a start-up situation with little record of “big bucks” being made in the Guyanese market. Critics however point out that these two companies are competing with other operators who pay inscribed fees.

The Prime Minister had also taken issue with an article published in the April 19th 2013 edition of Stabroek News titled ‘Jamaica seeking big bucks for cable licences in public auction – what did Guyana get?’

At the time, Jamaica’s bid to sell the bands for amounts of and above US$40 million were unsuccessful and Hinds criticized the headline as misleading, noting that while Jamaica was looking to make a profit from the sale of its bands, it was yet to do so. He added that Guyana had too small a population for the auctioning of the bands to be a viable option for those looking to acquire licences and commence operations.

Jamaica’s population is pegged at 2.9 million and Guyana’s is 735,554. Hinds continued that government took a position to “forego or minimize flows to the government (when allocating the bands) so as to encourage operation and use.

Yong and Persaud were granted licences while Anthony Vieira’s attempts to bring in a Trinidad cable network provider were snubbed even though his proposal entailed revenue to the city of Georgetown. In the year prior to the granting of the licences, both Yong and Persaud were connected in different ways to the campaign to have former President Bharrat Jagdeo re-elected to a third term. Yong had been linked to a group supporting Jagdeo’s re-election to another term. But, in an interview with Stabroek News, he distanced himself from the effort while giving a ringing endorsement to Jagdeo. Persaud’s father, the late Reepu Daman Persaud, had endorsed Jagdeo for a third term.Meantime, the sale of the 700 MHz band in Jamaica has opened the doors to new prospects. The Jamaica Gleaner reports Obrien as saying that the acquisition “gives us the confidence to further invest in Jamaica.”

The 700MHz band is seen as a cost effective option to deploy 4G technologies such as long-term evolution (LTE), the Jamaica Gleaner reported. The report said that the company’s network is designed with the rollout if LTE in mind, and that LTE technology will significantly advance Digicel’s position in the Jamaican marketplace.

Here in Guyana, Digicel has been pressing for many years for the end of the telecoms monopoly so it could move into new areas like 4G technologies.

Earlier this year, the holder of the monopoly, GT&T, had also complained that Government’s failure over several years to accede to successive requests for “appropriate spectrum allocation” to hasten the creation of third and fourth generation (3G/4G) ICT technology continues to have a significant negative effect on the development of the sector locally.









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