Laqtel Eyes Financing Deal by End-Nov, Focusing on Wireless Broadband

Financially troubled Trinidad & Tobago mobile startup Laqtel is confident it can secure financing by the end of November and plans to refocus its business model to concentrate on wireless broadband rather than voice, Laqtel's COO Richard Nixon told BNamericas.

Since being awarded a license in June 2005, Laqtel has encountered difficulties in finding financing and missed several deadlines to launch services.

On Monday (Nov 5) a local court fined Laqtel TT$150,000 (US$24,000) for failing to deposit a TT$4mn concession guarantee in January 2006. Laqtel must also pay TT$10,000 per day for every day that it continues in default on the bond payment.

Speaking on the sidelines of the CariCam Mobile conference in Puerto Rico this week, Nixon said the company had been expecting the fine for several months and so had taken provisions to cushion the impact.

If the company has not launched its services by the end of the year, Trinidad & Tobago's regulator TATT will review the situation and may rescind Laqtel's license. According to Nixon, the court case came just as the company was on the point of signing an agreement with a strategic investor and that the legal problems made the investor back off.

However, Laqtel has other options on the go and providing there are no other hiccups, the company should close a financing deal by the end of November and expects to launch operations in January, Nixon said. The alternative to that is to forfeit the US$35mn the company has already invested in network infrastructure that came from private equity, he said.

The operator is far behind schedule now, having been required to launch domestic mobile service with 50% coverage by June 30, 2006, and international services by September 30, 2006. Laqtel needs financing partners to put up some US$71.4mn.

As a show of good will, Laqtel may make a commitment to have as much as 90% coverage when its operations start, Nixon said, adding that a lot of the network infrastructure is in place and ready to go, they just need to finalize financing for the concession guarantee and further network buildout.

Changing the business plan

According to Nixon, the delays resulting from Laqtel's financing problems have given it time to better analyze the market opportunities. The executive now believes that had the venture launched a year ago its original business plan would have failed given the amount of investment that would have been required to compete with Irish-owned Digicel and local incumbent TSTT. Both these firms are investing millions of dollars in advertising.

"We certainly didn't have that capacity and looking back I think we can thank them for sensitizing the market so well on mobile technology. That has given us the opportunity to see their weaknesses, to do surveys, reevaluate the market and what the customers need, and readjust our strategy to meet those needs," Nixon said.

The executive believes that with the growing popularity of social networking websites such as Facebook and MySpace there is an opportunity to prioritize data services before the competition does. That is not to say that voice will not be a critical part of revenue but it will not necessarily be the main one, he said.

"How do you deal with Skype? How do you deal with chat? Voice is still important but you have to find other ways to generate revenue on your network," Nixon said.

Laqtel's network is based on CDMA 1XrTT 800 Rev A, allowing it to offer cutting edge 3G services.

Despite the many WiMax trials that operators around the region are carrying out, Nixon believes that 3G is the best strategy for Laqtel.

"There are characteristics of the 3.5GHz spectrum that are not ideal for hot tropical climates with lots of heavy vegetation, humidity and rainfall, I think you could have some problems, especially with the 802-16e mobile WiMax technology," Nixon said.

In addition, WiMax requires more cell sites than 3G and that could lead to problems with town and country planners. "That is becoming an issue," he said.

Posted to the site on 9th November 2007