Market overview: The telco and towerco markets in the Caribbean

Telecommunications infrastructure in the Caribbean is facing a number of challenges - and opportunities - in the current market. The Caribbean region has a diverse population and geography, and as a result, the telecommunications infrastructure varies greatly from country to country. While some countries have well-developed telecommunications infrastructure, others are still struggling to provide basic services to their citizens.

One of the main challenges facing telecommunications infrastructure in the Caribbean is the lack of investment in the sector. Many Caribbean countries have small populations and limited resources, which makes it difficult for them to invest in the necessary infrastructure to provide high-speed internet and mobile services. Additionally, many Caribbean countries are dependent on tourism, which has been hit hard by the Covid-19 pandemic, further exacerbating the lack of investment in the telecommunications sector.

Another major challenge facing telecommunications infrastructure in the Caribbean is the lack of competition in the market. Many Caribbean countries have a single telecommunications provider that dominates the market, which can lead to higher prices and limited services for consumers. This lack of competition also makes it difficult for new companies to enter the market and provide competition to existing providers.

Despite these challenges, there are also opportunities for the development of telecommunications infrastructure in the Caribbean. One of the biggest ones is the increasing demand for high-speed internet and mobile services. As more and more people in the Caribbean gain access to smartphones and other mobile devices, the demand for internet and mobile services is increasing rapidly.

Another opportunity is the increasing use of technology in various sectors. As more and more businesses and organisations adopt technology to improve their operations and services, the demand for high-speed internet and mobile services will continue to grow. This presents an opportunity for telecommunications companies to invest in infrastructure and expand their services to meet this growing demand.

Cable & Wireless Communications (C&W Communications or CWC) is one of the biggest telecommunications companies in the Caribbean. The company also has operations in Central America (as Cable & Wireless Panama). In May 2016, CWC was acquired by Liberty Global, and in 2018 was transferred to a newly separate entity Liberty Latin America, headquartered in Denver, Colorado, USA. The company operates under a number of brands, providing cable television, internet, fixed telephone services, along with wireless communications across the region.

FLOW is the new major brand for the Cable & Wireless Communications (CWC) telecommunications company. CWC operates under the BTC brand in the Bahamas and as FLOW in the majority of territories in the Caribbean. Liberty operates under own brand in Puerto Rico and United States Virgin Islands. The company has been steadily expanding its presence in the region through a series of acquisitions, such as the purchase of the United Telecommunications Service (UTS) in the Dutch and French Caribbean by the company in 2019, the purchase of Columbus Communications in 2015, and the subsequent replacement of its Lime brand with FLOW.

FLOW is one of the biggest mobile operators in The Caribbean by the number of locations covered, operating in 15 locations, including: Anguilla, Antigua and Barbuda, The Bahamas, Barbados, British Virgin Islands, Cayman Islands, Dominica, Grenada, Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Turks and Caicos Islands, Trinidad and Tobago. In addition, FLOW owns a pre-paid brand called CHIPPIE, which in turn covers additional 11 localities, including: Curacao, Sint Maarten, Bonaire, Saba, Sint Eustatius, French Guiana, Guadeloupe, Martinique, Saint Kitts and Nevis, Saint Barthélemy, Saint Martin.

Flow offers 2G services formerly offered by the Lime brand In June 2009, FLOW launched their first 3G networks in Jamaica, followed by an introduction of 4G services in Jamaica in 2012. In Jamaica, FLOW's largest market, the network covers around 2.8 million people. The company has been running a major US$250 million investment programme to improve its coverage in the region from 2014. Currently, FLOW operates 4G LTE networks in 12 markets in the Caribbean.

The only other operator with a comparable footprint in the Caribbean is Digicel. Digicel, headquartered in Kingston, Jamaica provides mobile phone network, home entertainment and mobile banking service (in Fiji and Haiti) in 25 markets worldwide, mostly in the Caribbean, with some additional operations in Central America (El Salvador), and South America (Guyana, Suriname and the French Guiana). Founded in 2001, Digicel has been steadily expanding its footprint by both organic and inorganic (such as purchases of operators in El Salvador, Guyana, Haiti and Bermuda) growth. In 2011, Digicel sold its Central American operations in Honduras to América Móvil, and América Móvil sold its operations in Jamaica to Digicel. The companies were also in discussion about the aqcuisition of Digicel's operations in El Salvador by América Móvil, but the deal didn't go ahead.

In the Caribbean, Digicel operates in: Anguilla, Antigua and Barbuda, Aruba, Barbados, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Curaçao, Dominica, Grenada, French Guiana, Guadeloupe, Guyana, Haiti, Jamaica, Martinique, Saint Barthelemy, Saint Martin, Saint Kitts and Nevis, Saint Lucia, Sint Maarten, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands.

The company used to have some presence in the Pacific, but in late 2021 it Digicel announced the sale of its Pacific operations to Telstra Group, an Australian telecommunications company for an estimated USD$1.6 billion, the deal was finalised in July 2022. Despite earlier attempts at re-financing, the company has been in considerable financial trouble most recently. Last year, in March 2022, the Papua New Guinea government imposed a retrospective tax of over $100m on the company. Then, in September 2022, credit rating service Fitch issued a warning of a potential debt default. It remains to be seen if there's any longer-term equity value in Digicel.

América Móvil itself has a limited presence in the Caribbean, albeit in important markets. The company operates under the Claro brand here in the Dominican Republic and Puerto Rico. It sold its Jamaican operations to Digicel, as mentioned previously.

Other global carriers with local operations include T-Mobile US (including the Sprint brand), again with the presence in Puerto Rico, and the United States Virgin Islands only.

In the Dominican Republic, Altice Dominicana, formerly known as Tricom, an Orange Mobile brand, is one of the largest wireless connectivity service providers. The company was originally founded in 1990, and eventually acquired from Orange by the Netherlands-based Altice in 2013 for US$1.435 billion. Orange, however, continue to operate in the region, with a solid foothold in French Guiana, Guadeloupe, Martinique, Saint Barthélemy, Saint Martin.

A number of other, smaller and mostly single-country carriers operate in the Caribbean.

One such example includes a local carrier in the Dominican Republic, Trilogy Dominicana, doing business as Viva, which focuses mostly on pre-paid service plans.

In Haiti, Haitel, or Haiti Telecommunication International, the very first operator in the country, was built under contract by Nortel Networks with staff primarily from the US and Canada. Power being a significant issue in the region, the company operated on commercial hydro power as necessary since the beginning, and diesel generators were used to maintain power to the facility and the mobile tower sites.

In Cuba, the government owned Empresa de Telecomunicaciones de Cuba (ETECSA), or the Telecommunications Company of Cuba, is by law the lawful provider of telephony and telecommunications in the country. Cuban state company that provides telephony and communications services in Cuba. The state monopoly has around 8 million clients nationally.

In Trinidad and Tobago, TSTT, or Telecommunications Services of Trinidad and Tobago Limited, is the main mobile services (under the bmobile brand), fixed line, internet service provider. The company is jointly owned by the Government of Trinidad and Tobago and Cable & Wireless Communications (CWC). The controlling 51% of the share capital is owned by the state, with the remainder by CWC. TSTT no longer holds a monopoly in fixed-line telephone services due to FLOW introducing a fixed-line service of their own, and their mobile services monopoly was broken in June 2005, when licenses were granted to Digicel and Laqtel.

In the Bahamas, Aliv is the second mobile telecommunications company, offering fixed, mobile and internet services, licensed after BTC, or Bahamas Telecommunications Company. Aliv is a majority state-owned company, with a private company, Cable Bahamas, owning the rest of the stake, While BTC used to have the government as its controlling shareholder, but in 2011, the company was privatised and the 51% stake passed CWC/Liberty.

Neither of the Latin American heavyweights, global tower companies American Tower Corporation and SBA Communications have presence in the Caribbean. Neither has another international newcomer to the region – IHS Towers. However, Phoenix Tower International is the sole major independent tower company with a significant footprint in all the main localities in the Caribbean.

Phoenix Tower own macro towers and other wireless telecommunication assets in Jamaica (505 towers as of Q4 2022), the Dominican Republic (1,933 towers as of Q4 2022), the French Antilles (the total of 439 towers in Martinique and Guadeloupe as of Q4 2022, a BTS contract for the Altice group's Outremer Telecom) and Puerto Rico (176 towers as of Q4 2022).

Headquartered in Boca Raton, Florida, USA, Phoenix Tower International, through its subsidiaries, owns and operates over 14,000 towers, 986 km of fibre and over 80,000 other wireless infrastructure and related sites throughout Europe, the United States, Latin America and the Caribbean.

Another independent towerco active in the Caribbean is Innovattel /Torresec, who own a modest portfolio of 45 towers in the Dominican Republic and 55 towers in Puerto Rico (figures as of Q4 2022). The company has been gradually decreasing their portfolio over a number of years.

Devastating and frequent hurricanes are an unfortunate reality in the Caribbean. When the disaster hits, the buildings, the roads, the utilities are destroyed, and people's lives are lost. Reliable connectivity plays a critical role when a natural disaster hit – rescue operations rely on it in order to coordinate the efforts to deliver the necessary relief to the victims, and individuals need a means to communicate to their loved ones.

In 2017, Hurricane Maria destroyed 75% of Puerto Rico’s telecommunications towers, which deprived 91% of Puerto Ricans of their mobile service. The most immediate effect of losing service was the inability of rescue teams to find or assist survivors. For weeks after the disaster, large parts of the island remained unable to communicate with the rest of the world to tell people about the island’s condition.

The lack of internet and wireless service proved a chronic problem for Puerto Rico as it attempted to rebuild after the hurricane. Businesses were unable to advertise or sell their goods, and people could not coordinate rebuilding projects. Estimates of the total financial cost of the hurricane range from $43 billion to $159 billion.

Unfortunately, this is also the reality for the rest of the Caribbean, making the region heavily dependent on connectivity. Wireless connectivity and internet access after hurricanes is a major region-wide problem. In most Caribbean countries, there are more mobile subscriptions than people. Natural disasters are inevitable, and so much depends on a country telecom system's ability to respond to them and recover their services quickly. Perhaps no factor is as important for recovery as good cellular and internet service.

Satellite connectivity has a clear advantage for the Caribbean, where people in rural areas do not have readily available access to wireless communication and the internet. Satellite services are a viable alternative to traditional services here, because low population density in some locations, combined with very high population density on some of the islands, make traditional wireless and terrestrial broadband solutions not as cost effective for the traditional telcos and towercos.

In July 2022, Dominican Republic became the first Caribbean country to launch commercial satellite broadband services from Starlink. SpaceX confirmed on 28 July 2022, that Starlink, the firm's Low Earth Orbit (LEO) satellite broadband service provider, was now available in the Dominican Republic, following an earlier announcement in May of the same year, that Starlink was available in 32 countries around the world.

Shortly after that, in August 2022, Haiti’s national council of telecommunications Conatel (Conseil National des Telecommunications) approved a pilot satellite internet scheme run by Elon Musk’s venture SpaceX. The project was said to include satellite broadband and IoT services from SpaceX units Starlink and Swarm. Tests were conducted at 20 Civil Protection Directorate (DPC) sites over a four-month period, while a longer two-year trial will be run at five other locations.

After the completion of the initial tests, at the end of November 2022, it was announced that Starlink has received a full licence to operate in Haiti. The company has been registered as Starlink Haiti and is permitted to ‘operate freely in Haiti’ using the Ku-band.

Earlier, in late 2021, another US-based satellite firm, Viasat initiated satellite connectivity projects in the region, notably in Jamaica, where it partnered with an educational provider Intercorp to run community projects to bring satellite connectivity and expand digital and social inclusion in underserved or unserved communities.

Over the last decade, other providers have been conducting proof-of-concept tests and running pilot projects to demonstrate the viability and suitability of satellite connectivity solutions for the countries in the Caribbean. There is a clear need for the increased connectivity for the local populations and the local businesses, and the limited infrastructure, growing yet still insufficient, makes the region an obvious candidate for the satellite connectivity companies seeking to deploy such systems and expand their geographical footprint. However, difficult regulatory approval processes along with the lack of the economies of scale compared to those of the traditional connectivity solutions, mean that we are yet to see the full potential of satellite technologies implemented in the Caribbean.

In addition to the challenge of having to provide stable communications in areas affected by natural disasters, telcos and towercos in the Caribbean have to deal with often unstable economic, political and social situation. Some aspects of working under such circumstances may be familiar to international players, who operate in other countries in Latin America. The fast-changing political situation is a reality in such states as Peru, extreme inflation has been a tremendous burden on individuals and businesses in Argentina for a long time, and companies operating in some parts of Colombia or Mexico have to plan – and budget - for additional security issues.

In the Caribbean, however, the operational environment in some areas can be extremely difficult for operators and infrastructure providers. For example, in November 2022, Digicel Group Holdings has warned that its business is being impacted by current violent public unrest in Haiti. In particular, ongoing disruption to fuel supplies has had a substantial impact on economic activity and Digicel's operations in Haiti, which depend on fuel to operate much of its network. The operator has been working to ensure that key sites are operating as effectively as possible, but as much as 50% per cent of its national telecommunications network has been experiencing disruption at any given time.

Access to reliable power remains a challenge for telecom operators and tower companies in many emerging markets. In the Caribbean, however, it is a matter of urgency. Non-existent to poor grid infrastructure at many tower locations have driven a high dependence on diesel fuel to power such sites, increasing energy costs and carbon footprint for telecom operators.

Globally, according to IFC, International Finance Corporation (IFC), the largest global development institution in the world and a member of World Bank, over 90 percent of the 1 million off-grid and bad-grid sites are powered by diesel generators, emitting over 45 million tons of CO2 per year. The mobile industry has made a commitment to achieve net-zero greenhouse gas status by 2050. However, the transition to renewable energy has been slow. The number of bad and off-grid telecommunications sites is expected to grow by 22 percent over the next 10 years, from 611,000 to 745,000 sites.

One of the most promising and of innovative solutions for telecom sites located in areas with no access to electricity or substandard access is the emerging role of the TESCO market globally. TESCO, or a telecom energy services company, is an emerging type of a company, that offers sustainable access to energy to the telecommunications companies through replacing diesel powered solutions with hybrid renewable options. TESCOs control the power equipment at nearly half (47 percent) of all renewable energy powered sites globally, which makes them a key partner to accelerate the green transition in the telecom industry. The penetration of renewable energy solutions at bad and off-grid sites will increase from 10 percent today to 30 percent by 2030, helping to bridge the digital gap and boost the livelihoods of the most underserved populations.

One of the wireless infrastructure companies that's been looking to offer energy-as-a-service solutions to its clients in Latin America and the Caribbean, is Phoenix Tower International (PTI). As the main independent towerco in the Caribbean, the company has been betting on the growing demand for energy-as-a-service here, to offer next generation, sustainable energy solutions that can also help save the operators costs – not an insignificant point amidst the astronomical rise in energy prices globally in the last few years.

PTI has expanded its services portfolio in the region, to help operators focus on their core business needs. The towerco started providing cost-effective and efficient energy service, working with a number of external suppliers and technology producers, to reduce the operators' capital investment and operating expenses. Energy-as-a-service model also allows carriers to more easily manage and meet their financial and ESG goals – an increasingly important factor in the ability to secure funding in the next decade.

One area of the telecom market that does not yet appear poised for growth across the whole of the Caribbean is 5G. Governments, regulators, and even the mobile network operators have shown that they have little appetite for investing in 5G opportunities at the present time. Network expansion and enhancements remain concentrated around improving LTE coverage. Until the economies and markets stabilise, there is unlikely to be much momentum towards implementing 5G capabilities at scale in the region.

However, things are different in the in French overseas territories in the Caribbean. In December 2022, the French regulator Arcep has named the companies planning to bid in its upcoming auction of 5G-ready spectrum in the French Guiana, Saint Barthelemy and Saint-Martin, where the spectrum in the 700MHz and 3.4GHz-3.8GHz bands will be made available (along with the additional airwaves in the 900MHz and 2.1GHz bands in Saint Barthelemy).

Four firms have applied to bid for 5G spectrum in Saint-Barthelemy and Saint-Martin: Dauphin Telecom, Digicel, Free Mobile and Orange Caraibe. The regulator will be reviewing the applications before finalising the details of the auctions, with the licences expected to be issued by July 2023. With Phoenix Tower International's strong presence in the French Antilles, it is expected that the company will be attempting to increase its market share locally by working together with the winning bidders in the coming years.

Also, in the US territories in the Caribbean, Puerto Rico and in the US Virgin Islands, operator T-Mobile first turned on 5G at the end of 2019 on the 600 MHz band, the first US operator to do so. Since then, its coverage has been extended to all 78 Puerto Rican municipalities. In 2020, in response to devastation of Hurricanes Irma and Maria, T-Mobile received nearly US$44.7 million for the improvement of its LTE service and about US$14.9 million for 5G service, over a three-year period, as a part of the federal support package.

In late December 2021, Altice Dominicana begun deploying its 3.5GHz 5G network in the Dominican Republic. Earlier the year, the Dominican telecommunications institute Indotel (Instituto Dominicano de las Telecomunicaciones) confirmed that its tender of 5G-capable spectrum raised over US$73 million. Altice Dominicana bid US$20.67m for a 70MHz block in the 3.4GHz-3.5GHz band, receiving its licence formally in October of the same year.

On the whole, however, the Caribbean remains the region that is predicted to be one of the last ones globally to embrace 5G technology in the coming decade. In fact, as of today, the majority of the population in the area still use 2G and 3G networks, although in some individual territories, and in Latin America as a whole, the switch to 4G and further to 5G is already underway, albeit at a slower pace comparing to elsewhere in the world. What remains critical, isn't the application of any specific technology or even a business model but ensuring that telecommunication industry as a whole works closely with international funders and local regulators to provide stable, secure and affordable connectivity to the many people in the region who are in the need of such service.

With traditional sources of funding, both private and public, along with the biggest international development banks increasingly emphasising the importance of Environmental, Social and Governance issues in their investment decision-making, local governments and telecommunication companies working in the Caribbean should continue to work together to find ways to serve local populations in the long-term in the most sustainable ways.