Camilo Thame, Business Reporter

Digicel Group pulled out of the bid for a controlling stake in Colombia Movil on Thursday, leaving Luxemburg-based Millicom to grab controlling stake in the South American debt-ridden mobile firm for US$478.5 million.

Digicel Group head of public relations, Maureen Rabbitt, said in a press release that the company decided against bidding on the firm, referred to locally as Ola, to focus on its regional expansion.

"The possibility to take a majority 50.1 per cent stake in the operation was an opportunity which Digicel has chosen not to pursue, given other expansion projects under way," said Rabbitt.

"Digicel will continue to follow an aggressive growth strategy, which includes acquisitions and bids for new licences throughout pan Caribbean region."

But another likely reason for the pullout was the final terms of sale, which included in the price a US$350 million debt overhang that, if taken up by Digicel, would have pushed its debt holdings, currently at around US$800 million, well past the billion-dollar mark.

Additionally, the Colombian firm, which started operations three years ago did not achieve the success of Digicel in Jamaica, when the Irish firm acquired more than half as many as incumbent Cable and Wireless' mobile customers within three months - a result which contributed significantly to it turning a profit within four years of operation, two years ahead of projections.

Market share

Ola now has 2.5 million customers, or nine per cent of the Colombian market, but has failed to make it in the black within its three years of existence.

Digicel Group, which has a total subscriber base of 2.6 million across regional markets that have 15 million people making up the full demography, has been on an acquisition drive in the Caribbean since 2005, when it purchased Cingular Wireless' Caribbean and Bermuda operations.

Since its entry in the Netherlands Antilles, where it purchased Bouygues Telecoms for euro155 million (nearly US$200 million), Digicel has been invited by the Government of Guyana to establish a GSM network there and advised by the Government of Suriname of eligibility for a full cellular licence following a successful application process in August 2006.

The company has also committed more than US$200 million to build out networks in Trinidad & Tobago, where it launched service in April; and Haiti, where it started operations in May.

- camilo.thame@gleanerjm.com