Digicel putting C&W to sword

Dennis O’Brien, whose Irish-based company, Digi-cel, is chipping away at Cable&Wireless’ monopoly and profits across the region, says TSTT must face the mucic to know how it will stack up against the competition. The Caribbean is the last place in the world that does not have competition in  its  telecommunication sector,  O’Brien said, in a recent interview in Grenada, the day after his company entered the market. Asked what made his company come to the Caribbean, “It was an opportunity to build a network across the Caribbean and give people a choice that they did not have for years,” he said.

At the launch of his mobile service in Grenada last Friday, where Machel Montano was the headline act,  O’Brien was clear on what he wanted.
“We want to challenge C&W in the Carribbean,” he says. He describes C&W as the “classic monopoly,” a monopoly that is being finally being broken. “If I were an investor in Cable & Wireless, I would sell my shares now,” he says, with a smile. The company has spared nothing to get its message across the tiney island that customers now have a choice. A drive to the airport shows brand new Digicel flags hung up on the lightpoles; for every five Digicel flags, there was one C&W stuck in-between. Eye-catching bill boards are meant to grab your attention. It’s a well-orchestrated marketing campaign. O’Brien has been involved in the telecommunicatiuon business since 1991. Before that he was involved in a radio broadcasting in Ireland and the Czech Republic. His business interests span from real estate, golf and aircraft leasing. This latest business venture, done under the company, Aergo Ltd, involves the leasing of 30 planes to commercial airlines  throughout the globe.

“It’s a good business,” he says. Digicel shareholding looks like this : Dennis O’Brien holds 75 percent, World Bank, 8 percent, Leslie Buckley, 5 percent, and the rest in  management share options. O’Brien describes this as a simple structure. In Trinidad, almost four years ago, the company tried to secure a licence for the provision of a cellular service. It spent US$1 million to do so. But the whole process was scuttled when Caribbean Communication Network (CCN) challenged the award of licences in court, and won. The TT government now says that competition in  the telecommunications sector won’t come until 2005. Had Digicel succeeded in securing a licence,  TT would most likely have been its home bas.e “We were disappointed that we did not get a licence,” O’Brien says. In the meantime, without competition,  C&W/TSTT has upped its charges on domestic, international and and cellular calls. “The Caribbean, particularly TT, has saved C&W from going under  because a lot of their profits come from here,” said O’Brien, who once peddled horse vitamins across the US. “You are saving them,” he says.    

He is unapologetic when he says that, “C&W has been ripping people in the Caribberan for  decades.” Digicel first moved into the Caribbean in 2001, when it paid US $45 million for the licence to set up service in Jamaica, dethroning C&W in the process. “All Caribbean governments realise that this is not what the consumer wants,” he says. In Grenada, Prime Minister Kieth Mitchell, told hundreds who turned out for the Digicel launch that competition was the name of the game and who did not want it could leave. On Friday morning when the company launched its US $15 million cellular telephone service on the island, it became to first company to begin directly competing against C&W. It also put C&W on the defensive, forcing them to slash their cellular rates. In St Georges, the capital of Grenada, Digicel shops were crowded. “It’s so good to have a choice,” one man said, as he scanned the company’s brochures. Others vowed they were going to switch to Digicel. Digicel Group CEO Seamus Lunch told reporters at a press conference a day before that  that within a year, he expects mobile phone users to peak to about 70, 000 in the population of about 100, 000.
“C&W has around 20, 000 customers and we expect to get a majority of the market,” he said, noting that the demand for phones was even greater than in Jamaica. According to Lynch, digicel’s international rates are 41 percent lower than the rates charged by C&W, while its local mobile per minute rates are 20-25 percent cheaper.

With 22 cell sites, Digicel says it has full coverage of the island. Among the features offered are picture-sending and Internet-connecting phones. Digicel already operates in St Vincent and the Grenadines, St Lucia, Jamaica, Aruba with a combined customer base of nearly 1 million, of whom 800, 000 are in Jamaica. To keep in touch with his Caribbean business, O’Brien visits his managers very two weeks. So far, Jamaica is leading the charge.  There are some 55 cell cites in the country, with 440 staff members.  In April 2001, when Digicel launched their GSM mobile service in Jamaica, the company anticipated reaching the 100,000 customer plateau by the end of its first year in operation. Instead, they hit the 100,000 mark a mere 100 days after launch, said the company website. “Never before in the history of mobile telecommunications had such tremendous growth been seen in a network, as Digicel broke record after record on its way to surpassing its major competitor as the mobile provider with the largest customer base in the island,” the website noted. “To give an idea of Digicel’s pace of growth, it took its major competitor approximately 10 years to reach the 400,000 customer mark. In comparison, it took Digicel about 13 months to reach the same figure,” the company’s website boasted. Digicel’s customer base now stands at over 600,000 customers and the company currently commands approximately 65% of the mobile market share.

O’Brien was asked what was responsible for Digicel’s rapid spread throughout the Caribbean. He says while Digicel has been able to bring to the table a very strong technical heritage, it’s been able to build better networks than the incumbent provider, C&W. “Having been the only operators in the market, they had no incentive to do that,” O’Brien says of C&W infrastructure in the Caribbrean. “Everywhere government has waged a war against telecommunication monopolies, but C&W wants to hang on, and on and on,” he says. His voice raises when he talks about “the obstacles C&W uses to try and stop us. “They give silly excuses not to interconnect,” he said. For instance, C&W delayed connecting their cable to Digicel’s, forcing the Barbados telecom regulators to intervene. O’Brien says that C&W share holders are slowly coming to the realisation that the only place the company is making money is in the Caribbean. Told that competition for C&W in TT might still be a long way off, O’Brien says he company is prepared to wait, noting that the TT government knows what it is about. “C&W has attempted to stop us in in all markets by playing games,” says O’Brien, noting that Digicel was determined to suceed against these obstacles. “What the monopoloy has done is sharpen us up,” he says. Asked about how he felt that TT legislation on telecom competition still has to be reworked, he said, “the core legislation is there.” “C&W is fooling nobody,” he adds, noting that customers will not know how good the TSTT/C&W alliance is until it is tested. “They will remain unchallenged until they are tested,” he says. Acknowledging that there has been a slump in global telecommunications and still not on the rebound, O’Brien says Digicel has still been able to thrive in the Caribean.  Apart from offering better service and lower prices, he says Caribbean people have this “pent up demand for competition.” In Grenada, he says Digicel has been able to slash prices on mobile calls by  25 percent and  international calls, 40 percent. “The soooner this happens in the TT, the better for the customers,” he says. Asked how Digicel was able to fare given the global telecom slump, O’Brien says a private company like Digicel does not need equity capital. “We do this with our own money,” says O’Brien. Throughout the region that has translated into  loyal customers.