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Flow fighting OUR over plans to open network to rivals

Cable & Wireless Jamaica, which trades as Flow, is rejecting regulatory recommendations to open up its backend infrastructure to competitors, on procedural grounds.

It comes as tech regulators are trying encourage more internet competition and enhance network speeds.

But Flow Jamaica’s ultimate parent Liberty Latin America says the plan could negatively affect the local telecoms’ earnings.

Flow Jamaica generated a record US$429 million ($66 billion) in annual revenue over the financial year ending December 2022, but the profit from the revenue haul was not disclosed.

“Our operations in Jamaica have already submitted their objections to the Office of Utilities Regulation (OUR) on the premise that due process was not followed leading up to the promulgation of these new infrastructure-sharing rules,” said Liberty Latin America in market filings.

“Our operations in Jamaica are resolved to challenge the process, ultimately to the courts, for changes to be made to any adverse provisions of the new rules or to revoke them entirely. The process of such a challenge is likely to be long, and we cannot at this time determine the possibility of a successful outcome.”

The OUR has recommended to the technology minister, Daryl Vaz, that he approve the promulgation of ‘The Telecommunications – Infrastructure Sharing — Rules 2022’ that would require dominant telecoms licensees to share infrastructure with third parties, including dark fibre, ducts, subsea cable landing stations and mobile network towers, with an effective date of February 1, 2023.

Those third parties would include rival telecoms.

Liberty Latin America said, however, that it anticipates the rules will not become operational for some time as there are specific actions, including the application of a prescribed costing methodology that will take considerable time to complete.

The OUR didn’t immediately respond to requests for comment on the issue.

Flow Jamaica falls under Cable & Wireless Communication’s regional network, which is owned by the Liberty Latin America communications group.

Liberty, in stating its objection to the new rule, said Jamaica was one of several markets in the Caribbean faced with increased oversight of various aspects of internet services, a development it linked to “the increasing importance of high-speed broadband”.

That push for high-speed internet is linked to the continuing push towards digitalisation of economies and the trends towards e-commerce and remote work.

Liberty said any decision to grant access to its network infrastructure could strengthen its rivals by granting them the ability to access its network to “offer competing products and services without making the corresponding capital-intensive infrastructure investment”. In addition, the telecoms stated that any resale access granted to competitors on “favourable economic terms” that are not set by the free market could adversely impact Liberty’s ability to maintain or increase its revenue and cash flows.

During 2022, Liberty Latin America booked a US$555-million impairment of goodwill within its C&W Caribbean segment, citing economic pressures for the loss in value.

“This impairment was driven primarily by macroeconomic factors, including higher interest rates, that drove an increase in the discount rates used to value these reporting units,” Liberty said.

Flow Jamaica’s annual revenue rose by 6.7 per cent last year, and is 12 per cent higher than pre-pandemic levels. The company, led by General Manager Stephen Price, generated revenue of US$402 million in 2021, US$375.5 million in 2020, and US$383 million in 2019.

Flow Jamaica reported 741,100 revenue-generating users up to December, most of whom were internet users, followed by fixed-line and then video consumers. Additionally, its mobile phone subscriber base was estimated at 1.19 million.

Other Caribbean territories in the Liberty network reporting increased revenue for the year included Panama, Costa Rica, The Bahamas, Trinidad & Tobago, and Barbados. The net effect for the region was record results.

The declining markets included Chile and Cura?ao.

Overall, Liberty Latin America generated US$4.81 billion in revenue for the financial year, which was flat relative to the previous period.

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