New deals between America Movil and Digicel will see operations from each firm change hands. Digicel is set to acquire America Movil’s Jamaican operations, but will also sell its businesses in Honduras and El Salvador to the Lat-Am giant in a separate deal.
While the terms of the agreements are not yet public, it is understood that Digicel will receive a cash payment once the deals close – they are currently slated to do so in Q2 2011. The deals will need to be cleared by national regulators, which could prove problematic due to the various operations potentially overlapping.
America Movil made “a big marketing splash” in Jamaica but, according to one national newspaper, “failed – in most people’s eyes – to seriously shake the foothold that [Digicel] has cemented on local soil.”
There are concerns that, with the operator’s exit from the country, subscribers would be forced to pay the price for the reduction in competition. With America Movil’s customers, Digicel’s subscribers will reach 2.79 million – leagues ahead of its sole competitor Lime, owned by Cable & Wireless, which has only 757 000.
The merging of America Movil’s Claro operations with Digicel’s business in El Salvador will create a market leader with 3.64 million subscribers, dramatically eclipsing the previous first-place operator Millicom’s 2.73 million subscribers. Millicom will however maintain its lead in Honduras with 4.45 million; Digicel and America Movil’s combined subscribers will total 2.62 million, enough to gain second place in the market.