Fourth mobile telecom provider is not necessarily good news

POSTED: 08/13/14 10:54 PM

St. Maarten – The mobile telecommunications market in St. Maarten is in for a rough ride and an uncertain future after Elwaldo Arrindell’s company Beach Mart NV obtained a concession for the exploitation of a mobile telecommunication infrastructure. With the existing providers – TelEm and UTS – and another party ready to jump on the bandwagon – Brenda Wathey’s Corporate Innovations – the island may soon have four providers competing for the business of the roughly 67,000 mobile subscribers that make up the local market.

The concession Elwaldo Arrindell obtained could spell bad news for the TelEm Group of Companies. TelEm’s endless and indecisive search for a strategic partner that includes a possible merger with either UTS or Digicel (with Lime in the background as another option), could become suddenly more complicated. This is because Digicel now has the choice between a company with a relatively bloated payroll like TelEm and Elwaldo Arrindell’s Beach Mart that does not have any baggage in this respect at all.

Arrindell obtained a business license for his company in August of 2012 from Minister Romeo Pantophlet, just before he left office. Later Arrindell had some trouble obtaining his concession, but in the end, he prevailed.

In July of last year, Arrindell sent out a press release stating that he would start operations by the end of the year – but that did not happen. He said he expected to employ between 35 and 50 people.

Before Beach Mart will be able to offer mobile services, it will have to build a mobile network – an investment that will cost according to industry-observers at least $10 million. For that investment, Arrindell will most likely turn to a third party like Digicel.

Remarkably, there is no cooperation between providers for the investment in infrastructure – every company is building its own. The rise of the smart phone has put pressure on the need for stations that pick up and broadcast mobile signals and tripled their numbers. With four providers, the island could in the future be littered with as many as 120 of those stations.

Elsewhere, like in the Netherlands, mobile virtual network operators piggyback on the existing infrastructure from powerhouses like T-Mobile and KPN. This lowers the costs for end users, but this is a pleasure mobile users in St. Maarten are not likely to experience.

The revenue of mobile providers is under pressure as well, due to techno logical developments and the changed behavior of mobile users who have massively switched from voice to data. This has pushed the average revenue per user downward. This development in turn puts the capability of telecom providers to invest in new technology and in upgrading their network at risk.

That begs the question how many of the four concession holders will be able to survive in the long run and how this translates in prices and service-levels for consumers.

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