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Jamaican acquisition prompts regulatory reform

Jamaica’s Prime Minister has approved the acquisition of Claro’s Jamaican operations by Digicel. As part of the deal, Digicel is transferring ownership of its assets in Honduras and El Salvador to Claro, a subsidiary of America Movil.

Although the Prime Minister has no legal right to impose concessions, regulatory changes are being fast-tracked through parliament over the next six weeks in order to grant the island nation’s regulator greater power to determine and mandate interconnect rates consistent with international benchmarks.

The transaction could yet be blocked by the Fair Trading Commission if it infringes legislation concerning competition. Through the acquisition, Digicel has gained Claro’s licences and was reportedly planning on merging the two networks.

However, since the firm has refused to comply with a voluntary agreement covering issues such as termination rates, the acquisition was approved only if Digicel continues to operate – and meet rollout criteria – for both networks. To achieve this, each network must cover 90% of the population.

This condition will certainly not be welcomed by Digicel, but the fast-track overhaul to the country’s legislation – widely regarded as unfavourable – will be a boon to other market players as it will facilitate competition.