Linda Hutchinson-Jafar, Contributor
DELVES
PORT-OF-SPAIN, Trinidad:
DIGICEL'S GROUP chief executive officer, Colm Delves makes no secret that getting a critical stakehold in the Trinidad and Tobago's expanding market would be the plum in the pie for the fastest growing mobile telecommunications company in the Caribbean.
Trinidad and Tobago, with a population of 1.2 million and a GDP per capita of US$10, 500, represents a "significant opportunity" for Digicel, according to Delves in an interview at his Kingston, Jamaica office recently.
In anticipation of securing a large slice of the Trinidad and Tobago mobile market, Digicel has invested US$200 million in setting up infrastructure.
Digicel launched in Trinidad on April 6, after securing an inter-connection agreement with the Telecommunications Services of Trinidad and Tobago (TSTT), in which the government here has a 51 per cent stake and global telecoms giant, Cable & Wireless 49 per cent.
Following a highly competitive bidding process last year, Digicel Trinidad and Tobago Limited, a member of the Digicel Group was successful in an on-line spectrum auction to enable it to operate a mobile network in the twin-island Republic.
FIVE BLOCK LICENSE
Digicel won a five block license with a bid of US$15.8 million while Laqtel, a group of local investors won a 3 block license with a bid of US$9.3 million.
At the end of last year, Digicel, Laqtel and TSTT signed concessions and associated licenses for the start up of business. But this could only be done when the highly controversial inter-connection with TSTT had been established.
Digicel and TSTT have been engaged in a fierce public battle over the inter-connection issue, spilling over into controversy when Digicel signed a lucrative sponsorship deal with the West Indies Cricket Board while Cable and Wireless signed individual sponsorship deals with seven West Indies players, including top cricketer Brian Lara and hard-hitting Jamaican batsman Chris Gayle.
Over the last five years, Digicel has been moving deeper into the Caribbean, securing markets in eight territories; acquiring licences in Trinidad and Tobago and Haiti and purchasing Cingular's Bermuda and Caribbean assets, adding an additional five new markets to its list and spending well over US$1 billion.
Seemingly unfazed by the controversy in Trinidad and Tobago over inter-connection, Delves indicated that Digicel faced similar circumstances when it received licences in markets to operate in which Cable & Wireless was the monopoly provider.
As in many Caribbean islands, Cable & Wireless held the monopoly in the Jamaican market until Irish businessman Denis O'Brien, the man behind Digicel challenged the status quo and entered that market in 2001 with the country's first GSM mobile phone service.
Following government's deregulation of the telecommunications industry in Jamaica, O'Brien identifying a unique opportunity, applied for an operating licence, which he and investors secured for US $47 million.
O'Brien was described in a company bio as one of the world's most exciting and dynamic entrepreneurs, with successful business in Ireland, Portugal, the Caribbean, Holland, Czech Republic, Barcelona and Italy.
He starts a new business every three months on average and in the past ten years, O'Brien has amassed a collection of business, which include golf properties, radio stations and telecommunications companies.
In 1991, he established Esat Telecom in Ireland, which became the first company to compete against the former state-owned telephone company, Telecom Eireann (now eircom) on both land-line and mobile.
The start up of Digicel's business in Jamaica also led to expansion into new markets including St Lucia, St Vincent and the Grenadines, Grenada, Aruba, Barbados, Cayman Islands and Curacao, creating employment for over 1,500 Caribbean nationals directly and over 2000 indirectly while 90 per cent of its directly employed staff are Caribbean nationals.
Delves said in the pre-competition telecoms environment, the monopoly held by Cable and Wireless resulted in poor network infrastructure, limited availability of services, excessive prices for consumers, poor customer service and widespread consumer dissatisfaction.
" Governments throughout the Caribbean, with a few exceptions began pushing through liberalisation in the early 2000s. In many cases, governments were forced to adopt liberalisation measures in order to comply with norms established by the World Trade Organisation (WTO)," said Delves adding that liberalisation in the mobile communications market came late in the Caribbean.
In other instances, governments began opening their markets after noticing benefits in nearby markets resulting in higher penetration levels, lower prices, higher levels of foreign direct investment, greater coverage and introduction of additional services and applications.
He added that Digicel provided service in areas neglected by the monopoly and currently provides over 90 percent geographic coverage in all countries in which they operate.
As they had done in Jamaica, Delves believes Digicel can rival TSTT in Trinidad by providing qualify customer service and care, an area which he said has been neglected by TSTT.
Jamaica's Minister of Commerce, Science and Technology Phillip Paulwell also said his country experienced similar battles between Cable and Wireless and Digicel over the inter-connection issue.
" Well, at first it was war but we were very clear that without inter-connection nothing is going to happen and we have to ensure that the rules were there and that we as policy-makers make obvious to all players that we wouldn't tolerate people's inertia in an area that we were pushing and that once the rules were considered to be reasonable and we deemed them to be so, them we pursued the matter rigorously, " Paulwell said in an interview last week.
On the eve of Digicel's launch in Jamaica, the fiercely fought inter-connection negotiations went into a "tail-spin" which threatened to put off or cancel competition in the telecommunication's sector for a prolonged period.
"We met that night with all the players, Digicel and Cable & Wireless - they got nothing to eat or drink until they resolved the issue and they (Digicel) had a fantastic launch the day after," said Paulwell.
One of the things that the Jamaican government did several years prior to liberalising the telecoms market, was selling off its shares in Cable & Wireless, getting rid of their vested interest in the company.
The government also established a regulatory framework which was the foundation for an emerging competitive environment.
" It also requires some political action on the part of the government directly because regulators are not seen. But I think there has to be political leadership as well because many of these issues can be marred into litigation.
" Many of the issues affecting inter-connection can be tied up in court for many years before resolution..." said the Jamaican minister.
" But if there is a sense on the part of the investors that the minister's office is impartial, that we're really are committed to competition, then you are able to negotiate away some of these difficulties that could otherwise bog you down into inaction for long periods."
Describing the liberalisation of the telecoms market as "quite amazing" Paulwell said prior to Digicel's entry into Jamaica, there were about 70,000 cell phone users. Four years later, the country had a staggering 2.2 million cell phones.
" But more importantly, there were more dark spots in Jamaica than areas where you had coverage. Today 95 percent, closer to 100 (percent) of Jamaica has access to the signals...but all this grew out of a spirit of competition, " he added.
He also saw competition in the telecommunications sector as having a positive impact on the Jamaica's economy.
" Our economy is far more efficient as a result of greater level of competition, " said Paulwell, adding that it will also open up a whole new range of opportunities from voice to data.
