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Digicel plans to liquidate Panama business after rivals' merger approved

Digicel plans to liquidate Panama business after rivals' merger approved
Digicel plans to liquidate Panama business after rivals' merger approved   -   Copyright  Thomson Reuters 2022
By Reuters

By Elida Moreno

PANAMACITY – Mobile phone operator Digicel said Wednesday it plans to wind down operations in Panama following the government’s approval of a merger between competitors Cable & Wireless Panama (CWP) and Claro.

The merger, in which the Panamanian government will be a 49% shareholder and gives the companies 56% of the market, “effectively spells the end of competition in the telecoms market for smaller players,” Digicel said in a statement.

Digicel said it was applying for voluntary liquidation, having not succeeded in various initiatives after CWP announced in late 2021 it would purchase America Movil subsidiary Claro’s operations in Panama.

These initiatives included appointing an investment bank to market the business to financial and strategic parties, extensive engagement with authorities about the planned merger and proposals to migrate customers to another operator which were not taken forward.

With Digicel exiting the market, there would be only one telecom provider, Millicom-owned Tigo, operating in addition to the combined CWP-Claro entity in Panama.

“It’s not sustainable for us to continue investing in the market,” Digicel chairman Denis O’Brien said in the statement, noting the company paid out $86 million for its operating license in 2008 and another $575 million on improvements since.

Digicel said it did not expect the announcement to have a material impact on its financial condition.