Less than two years after picking up the assets of the former OneLink cable system in the greater San Juan area, Liberty de Puerto Rico announced Wednesday its intention to buy the only other cable provider left on the island, Choice Cable in Ponce.
If the $272.5 million transaction is approved, Liberty will become the only company left on the island providing cable television services, competing against Claro’s IPTV service and satellite companies DirecTV and Dish Network.
In an interview with this media outlet, Naji Khoury, president of Liberty de Puerto Rico, talked down immediate concerns expressed through social media outlets after the announcement about a potential monopoly on services by the carrier.
“The definition of monopoly is that you’re eliminating a competitor and reducing options for consumers,” Khoury said. “We’re not reducing the number of choices that customers have. It’s the other way around. We’re sort of leveling the playing field.”
“DirecTV, Dish and Claro are everywhere. So now Liberty is everywhere,” he added.
Liberty expects to complete the transaction by the first half of 2015, when it will expand its footprint even further by taking over Choice’s territory that covers the municipalities of Quebradillas, Isabela, Aguadilla, Moca, Aguada, Rincón, Añasco, Las Marías, Mayagüez, Hormigueros, Cabo Rojo, San Germán, Lajas, Sabana Grande, Guánica, Yauco, Guayanilla, Adjuntas, Peñuelas, Ponce, Jayuya, Juana Díaz, Villalba, Coamo, Santa Isabel, Salinas, Guayama, Arroyo, Patillas, and Maunabo.
While Liberty did its required due diligence prior to offering to pick up Choice’s assets, Khoury was unable to say Wednesday how much it would need to spend on its would-be new property.
“Choice is a very well-run and operated network that spent a lot of money in the operation,” he said. “It’s not like we’re going to go in there and yank everything out. We have a bit of a different strategy, different options for our television product, and more bundling with other services.”
“We have an analysis to do in terms of pricing. There will be changes for sure, but I don’t suspect there will be massive changes,” Khoury added.
It was in February 2012, when Liberty officially took over ownership of the former OneLink cable system in San Juan, after a protracted legal battle with Claro de Puerto Rico in court and before the Telecommunications Regulatory Board.
This time, Khory expects the deal to close in a less tumultuous manner.
“I expect some scrutiny as always, which is good because it keeps you straight. But I suspect and I hope that it’s going to be a much shorter and an easier process because we told the world two years ago that we were going to do A,B,C, and D with OneLink, and we feel we delivered,” he said.
Liberty expects to file the paperwork for the transaction before the board in one or two weeks, he said.
Proposed acquisition presents opportunities
Meanwhile, TRB President Javier Rúa-Jovet said the proposed transaction could represent opportunities to bring other issues to the front burner, such as expanding broadband and generating enough competitive pressure to bring down prices.
“We have yet to receive any applications, so we don’t know yet if this will be a request for transfer of the franchise license from Choice to Liberty, or if it will be an application for a new license altogether,” he said. “In any case, mine is one of five votes by a Board that will see this process through.”
Rúa-Jovet said that as part of that negotiation for a license, the agency could include contractual obligations requiring broadband providers — such as Liberty and competitors like Claro — to improve pricing to make the technology available to more consumers.
“Right now Choice has the best offers in terms of cost per megabyte, which is below $3. What I’ve seen from Liberty is above the $4 mark. Something like $40 for 10Mbps is a good place to start, and that’s a rate that we currently don’t have in Puerto Rico,” he said. “Part of the adoption problem that we have has to do with costs and with educating people as to why they need broadband.”
The agency, he said, will pursue using the franchise proceeding to establish some sort of policy to that effect.
He also said that it should be “a given” that the rates currently offered to Choice customers be honored or improved upon.
Finally, Rúa-Jovet said the franchise license proceeding could also serve as a way to bring up the issue of net neutrality, by requiring that ISPs, including Liberty, be banned from blocking sites or throttling content.