Digicel to exit from Panama as Claro and Cable & Wireless unite

Mobile network operator Digicel plans to close down operations in Panama following the government’s approval of a merger between competitors Cable & Wireless (CWP) and America Movil subsidiary Claro.
Digicel LTE networkPanamanian government will be a 49 percent shareholder in the merged entity. The merger ensures that 56 percent of the wireless market in Panama will be with Cable & Wireless and Claro.

The merger spells the end of competition in the telecoms market for smaller players, Digicel said in a statement.

Digicel said it was applying for voluntary liquidation. These initiatives included appointing an investment bank to market the business to financial and strategic parties, extensive engagement with authorities about the planned merger and proposals to migrate customers to another operator which were not taken forward.

The exit of Digicel means Millicom-owned Tigo will be competing with the combined CWP-Claro entity in Panama.

“It’s not sustainable for us to continue investing in the market,” Digicel chairman Denis O’Brien said in the statement. Digicel paid out $86 million for its operating license in 2008 and another $575 million on improvements since.

Digicel said it did not expect the announcement to have a material impact on its financial condition.