Digicel to exit Panama in the face of CWP-Claro merger

Digicel to exit Panama in the face of CWP-Claro merger

Digicel has announced its “regrettable” exit from Panama, with its local unit set to file for voluntary liquidation.

The decision was taken after the country’s Consumer Protection and Competition Authority (ACODECO) cleared the proposed acquisition of Claro’s local unit by Cable & Wireless Panama – in which the Panamanian government holds a 49% stake. Reuters reported that the combined unit would have a 56% share of the market, which Digicel claimed “effectively spells the end of competition in the telecoms market for smaller players.”

Since the merger was first proposed, Digicel noted that it had enacted several initiatives relating to its Panama unit, including appointing an investment bank to market the unit to possible investors or partners and floating the possibility of migrating its customers to another operator.

Digicel repeatedly told to the relevant authorities that it would exit the market unless “appropriate remedies” were applied, “as we cannot continue to fund the semblance of a three-player market.” The operator noted that licence fees, renewal fees and the need to acquire additional spectrum at auction all contributed to a “high-cost regulatory environment”, with Digicel chairman Denis O’Brien saying “it’s not sustainable for us to continue investing in the market.”

Following Digicel’s exit from Panama, only Millicom’s Tigo will compete against the newly-merged player.

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