2012 Caribbean - Telecoms, Mobile and Broadband

Telcos showing continued investment and confidence in the telecoms sector

In most Caribbean countries the telecoms market has been liberalised, with only a few sectors in some island groups remaining monopoly enterprises. Alternative operators are active in within the full range of telecom services. The Caribbean region has a range of small markets with limited potential for growth, yet the main telcos – LIME and Digicel – have shown considerable confidence in the sector, with a willingness to invest in their fixed-line and mobile networks and so encourage consumer use of high-end data services. As such, their expectation is for future revenue streams to be derived from the migration of customers from 2G to 3G and 4G networks, and from basic broadband services to comprehensive bundled offers.

Most island groups continue to suffer from the economic downturn, with fewer tourists than there were before 2009. Yet recent encouraging figures for tourist arrivals, at least in some countries, promise slowly revitalising economies during 2012. This has been supported by funding from the IMF and World Bank in some cases, and by government efforts at economic diversification. Continuing regulatory developments have also focussed on the few remaining monopolies with a view to encouraging market competition. All in all, the telecoms sector is set to continue being one of the Caribbean region’s major growth industries.

Fixed-line broadband subscribers, select countries – 2010; 2012

(Source: BuddeComm estimates based on ITU data)

Market highlights:

• Regional economic growth has been hampered by continuing pressure on tourist arrivals, principally from the USA and Europe. Nevertheless, some markets have reported a slow yet steady increase in arrivals since 2011. This will be crucial for telcos during 2012 and 2013, particularly in the mobile sector which is considerably supported by tourist spend.
• In terms of the regional economy, the Caribbean has faced a number of difficulties during the last two years. Weak local economies combining with a range of austerity measures have affected many islands. These conditions have contributed to reduced disposable incomes among telcos’ customers. Respite is expected during 2012, largely on the back of the recovery in the number of tourists, though this is likely to be isolated rather than regional.
• The key market players – LIME and Digicel – reported slight declines in revenue in 2011, though this has barely impacted on their ability to maintain investments in their fixed and wireless networks.
• BTC in the Bahamas deployed a commercial LTE network at the end of 2011, complementing its GSM/EDGE and HSPA network.
• BTC’s long awaited privatisation in mid-2011 will shortly lead to the end of one of the region’s remaining monopolies, when the Bahaman mobile market is opened to competitors from 2014.
• Mobile penetration in the region approaches 70%, with tourists accounting for a considerable proportion of SIM cards sold. Active SIM penetration is likely to be a more realistic 80-85%.

Data in this report is the latest available at the time of preparation and may not be for the current year.