It’s unclear how the new administration will treat U.S.-Cuba diplomatic and economic relations. President Obama has been making strides to normalize them, and recently President-elect Donald Trump threatened to end those efforts. “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate the deal,” Trump tweeted.
Under Obama’s administration, new Cuban policy regulations, approved by the Treasury and Commerce departments, helped the U.S. telecom industry gain exemptions from the existing embargo to invest in that nation. Now, U.S. carriers can establish infrastructure, including siting towers in Cuba, so they can offer telecom products, including internet service, according to Zacks Equity Research.
In March, 2015, U.S.-based IDT Corp. formed a joint venture with Cuba’s state-run Empresa de Telecomunicaciones de Cuba SA (ETECSA) to provide direct international long-distance service. In September, 2015, Verizon Communications became the first American telecom operator to offer roaming wireless services in Cuba.
Sprint signed the first direct wireless roaming agreement with ETECSA that November. And earlier in 2015, Sprint’s prepaid services division — Boost Mobile — launched an unlimited voice call and text message service plan between the U.S. and Cuba. T-Mobile has an interconnection and wireless roaming service agreement with ETECSA and AT&T offers direct roaming mobile interconnection services to the island nation.
While U.S. telecoms may not see near-term gains in Cuba because of restrictive government regulations in the less-developed market, long-term, they may see a boom as an opportunity to sell products and services to 11 million new customers is appealing, according to Zacks.
As communism’s hold on Cuba weakens and the country becomes more willing to enter the political and economic mainstream, the island nation is poised to become an enticing emerging market. Moreover, Cuba’s geographical proximity to the U.S. bodes well for American telecoms from an operations perspective.
December 2, 2016
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