The Information and Communications Technology Authority has approved a request from Bermuda-based KeyTech Group of Companies, which owns Logic in Cayman, to purchase the parent company of WestStar.
The proposed transfer of ownership was announced last month and was published in the Cayman Islands Gazette to allow for public consultation and for the ICTA to conduct a review of the request.
The deal, which is subject to regulatory approval in Cayman, received consent from ICTA managing director Alee Fa’amoe on Thursday.
In a letter to BOTCAT Holdings Ltd., Mr. Fa’amoe stated “that such consent should not be unreasonably withheld.
“Following discussion of that request at today’s board meeting, the authority consents to that request,” the letter said.
KeyTech released a statement in July announcing its interest in purchasing British Overseas Territory Cable & Telecommunications Ltd.
The company, which would not comment further until the transaction is completed, confirmed “KeyTech is acquiring all holdings in BOTCAT.”
In a response to the transfer request, Cayman’s Cable and Wireless Ltd., which operates as LIME, stated in a letter that “LIME does not object to the transfer per se, but notes that this transaction will raise a number of significant issues that must be addressed first, if sustainable competition is to continue to develop in this country.”
“First and foremost, the authority must address the fact that the combined entity will dominate the market for video distribution services.” LIME expressed concern that WestStar is already dominant on a stand-alone basis.
“…The combined entity will be even more clearly so, controlling an estimated 70 percent of the market, if unlicensed service providers such as Dish Direct TV are included, and a whopping estimated 90 percent of the market, if only duly licensed and authorized ICT service providers are considered.”
LIME estimated that virtually all condos along Seven Mile were served by Logic or WestStar.
“Furthermore, competitors will be locked out of that market for the next couple of years until contracts start to expire. In this context, the potential for abuse of dominance, and therefore harm to consumers and to sustainable competition is high.”
Infinity, which trades as C3, objected to the transfer, saying C3 was under the opinion WestStar was the dominant monopoly.
“If this application were made to the Regularity Authority of Bermuda, it would seem that the authority would not consent to the transfer of 100 percent of the shares in WestStar TV to WestTel Limited, as clearly it would fail as it would not promote Bermudian ownership,” the letter stated.
“When this industry became regulated and competition was introduced to the telecommunications industry, we must assume that the government of the day had a vision for Caymanian participation and ownership. Unfortunately, somewhere along the line this vision has not been realized; licenses have been granted with very loose guidelines with regard to ownership terms such as ‘make available’ were used; this is not as binding as words such as ‘shall’ or ‘must.’ so the industry saw very little local participation.”
In a statement released last month, KeyTech’s Chief Executive Officer Lloyd Fray said, “We are excited about these transactions as they are the right strategic fit for the long-term growth of the company.
“It allows our group to expand and focus its investments in the best interest of all stakeholders, in both Bermuda and Cayman,” he said.