Inset: Cable & Wireless (C&W) chairman
Richard Lapthorne

BY SHERRY ANN SINGH

Cable & Wireless (C&W) chairman Richard Lapthorne has vowed there will not be a repeat of the Jamaican experience in Trinidad when this telecom market is eventually opened up to competition.

He said the British telecom carrier was caught napping when the telecom sector was liberalised in Jamaica three years ago and the dominant slice of the cellular pie was virtually served up to Irish cellular provider Digicel.

The hard truth — C&W Jamaica was “fat and lazy” at the time.

“We are not gonna have a Jamaica re-run here because we were asleep in Jamaica and we’re not asleep in Trinidad,” he stated last week.

Lapthorne said C&W will manage the situation and help its managers who have grown up in a monopoly environment understand how to deal with new competitors.

He was interviewed at the Hilton Trinidad shortly after delivering a feature address at the Euromoney/Latin Finance Investment Forum. On his request, Lapthorne was accompanied by Sam Martin, CEO of Telecommunications Services of T&T (TSTT) in which C&W holds a 49 per cent interest. The fact that he must consider other interests before speaking about any aspect of the local telecom company’s operations is precisely one of the challenges facing the company.

As he sees it, TSTT’s very ownership structure makes its operations more difficult to manage — it is the only C&W interest in the region in which C&W does not have controlling interest, the majority shareholding being held by the Government of T&T.

Lapthorne said this was almost setting up the company for failure in a competitive environment.

“The key issue however is that TSTT will not succeed if it is facing new entrants who have a very simple command and control structure and we do not have a very simple command and control structure on the operations of the company.”

As an investor, he said, Government had a multitude of agenda items and could not be as clearly focused as a private investor. While they may not be the big ticket issues, he suggests other agenda items may creep into the management process and compromise the ability of the company to compete.

“Government’s agenda is massive and how do they balance everything whilst also focusing on the fact there’s somebody trying to kill them called the new competitor?

“We know with a new incumbent, prices will fall and the market share will change and that’s fine as long as you know how you’re gonna deal with that. But if you then say we can’t do something because there’s this agenda item which has got nothing to do with TSTT, then life just gets complicated.”

A newcomer to C&W, Lapthorne brings a freshness of vision that marks a radical departure from the management style of the past.

“We’ve been running a business which to some extent has been disassociated from what governments are trying to do with their major telecoms supplier as a means of facilitating economic growth.”

He said there was a different conversation to be had to eliminate misunderstanding and build trust.

“This is not the British foreign office, this is not colonial administration, this is working with new countries that have pride and dignity in what they want to do and we have to respect that,” he said.

The about-turn in the leadership style of the C&W management is directly related to the loss of revenues.

Seventy five per cent of the markets in which C&W operates is now liberalised. The Caribbean remains it’s most profitable business area although there has been a constant dip in revenues in markets where C&W monopolies have been broken. For governments, there is also a loss, since the company is now paying half the sums in tax revenues to regional governments than it did in 1999.

Just as British Telecom in the UK, Lapthorne said C&W, as incumbent in the Caribbean, will always be the natural whipping boy.

However, he feels if C&W can engage regional Governments early enough and strategically enough with issues, normal discussions would not be conducted off the back foot.

“There’s a better way of dealing with people and if we fail to recognise that we’re managing a strategic asset when we manage the telco then I think we will lose,” he said.

One way in which he thinks C&W thinks it can overcome the “whipping boy” syndrome would be by changing the ownership structure of TSTT.

“From our perspective we would welcome local participation,” he said.

“If you’re a 100 per cent foreign owned company, I can tell you, you’re seriously the whipping boy and it doesn’t make sense.”

As for the State holding on to its stake in TSTT while having a role in the administration of the telecom sector, Lapthorne said he did not have a problem with that if that’s what they chose.

Applause for Government

C&W Chairman Richard Lapthorne has applauded the T&T Government for not rushing to liberalise the domestic telecommunications sector.

He said the Government has to figure out what it truly wants from liberalisation and was possibly putting more thought into the process than has generally been the case.

“I applaud that. I think that Government thinking about why they want to do it, getting the strategy right in their own minds and then pursuing it as a means to an end and not taking liberalisation as an end in itself which is quite often what it appears to be when the World Bank says you should do it, and that’s exactly the type of approach I would hope to see but which you don’t necessarily always see.”

The Government was among the first in the region to initiate the liberalisation of its telecom sector in 1999 but others are already enjoying the benefits of competition while the process here suffers one setback after another. Despite several missed deadlines already this year, Government is still hoping to grant additional licences for cellular service before the end of the year.

However, Lapthorne said it was worthwhile that the Government consider the larger picture before introducing competition.

“All the information I’ve received suggests that this Government is thinking about it and wants to do it properly.

“We’ve done a lot of research and we share our research about where it’s been done well and where it’s worked, where it’s been done badly and the actual tactics which have been successful and those which have not been successful.”

Need for accountable regulator

An accountable regulator is the single most important factor for the successful transition to a liberalised telecom market, C&W chairman Richard Lapthorne said.

Thus far, C&W has had an excellent relationship with the Government but he suggests that’s only because the environment is not yet liberalised.

“It is the tactics and the actual manner in which a liberalised environment is managed which causes the conflicts and quite too often I think regulators do not do this as they should,” he said.

Lapthorne said regulators must be held accountable and should never act without considering the micro and macro economic consequence of what they’re doing. Even so, they should put this in writing and be prepared to defend their decisions to scrutiny.

“If they can just be arbitrary, then as the incumbent you’ll be killed since all advances go to the newcomer because they give the impression of new funds, new employment etc.”

He said C&W has had a superb employment record in the region, working tediously to become a truly Caribbean company.

But, in some instances, he feels new entrants are given luxuries denied the incumbent and this did not add up to fair competition.

Lapthorne added consistency on the part of the regulator was crucial.

He said even if a company is dealing with the toughest regulator imaginable, it would risk an investment once it could predict how they were going to behave.

“If you don’t know how they’re going to behave it’s quite a problem. You can’t go to your board about building a new GSM network if you don’t know whether this would be a valid proposition in two years time and yet it requires spending money with a 10 or 15 year payback,” he explained.