America Movil Entry into Jamaica Will Likely Spark Price War

The entry of Mexico's América Móvil into Jamaica will likely start a price war against the country's existing operators Digicel and Cable & Wireless Jamaica, José Otero, president of consulting firm Signals Telecoms Consulting told BNamericas.

Otero believes AMX will use its financial muscle to heavily subsidize handsets and slash rates for the operator MiPhone.

AMX announced on Thursday (Aug 23) that it had acquired 100% of Oceanic Digital, which operates the MiPhone brand, and expects to close the deal during the fourth quarter.

AMX's market debut will mean an increase in subscriber retention and acquisition costs for Digicel.

In the case of Cable & Wireless, the key will be how it is able to improve synergies between its incumbent fixed line operations and its mobile unit, something it has yet to capitalize on, Otero added.

MiPhone is currently the smallest operator on the island with around 200,000 subscribers as of May 2007.

Digicel leads the market, but does not provide subscriber numbers.

AMX has been stepping up its presence in the Caribbean over the last year. It closed acquisitions in Puerto Rico and the Dominican Republic in March 2007 and December 2006, respectively.

Otero expects AMX to roll out a GSM network for Oceanic, but also continue using the existing CDMA technology for data services.

AMX's increased presence in the Caribbean is likely being watched closely by its regional competitor, Spain's Telefónica, though Otero would not speculate on how it might react.

Posted to the site on 28th August 2007