The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Digicel will create an estimated 1,300 direct and indirect jobs via its network roll-out and launch if chosen as the second Bahamian mobile operator, as it takes aim at “a sleepy incumbent”.

Frank O’Carroll, the telecommunications group’s head of business development, told Tribune Business that the employment impact split into 1,000 construction jobs and 300 “high quality” full-time posts.

Speaking to Tribune Business after Digicel was confirmed as one of three bidders for the Bahamas’ second mobile/cellular licence, Mr O’Carroll estimated it would require “easily” a $200-$250 million investment to build-out the 200-300 new towers the group would need to deliver nationwide coverage.

While acknowledging that “all stars must be aligned” to achieve the network roll-out targets set by the Government’s Request for Proposal (RFP), Mr O’Carroll said Digicel’s expertise and past experiences, relationships with equipment manufacturers and 18 months of due diligence on the Bahamas would enable it to hit those targets.

Taking a swipe at the incumbent Bahamas Telecommunications Company (BTC), Mr O’Carroll said Digicel’s research had determined from speaking to “tens of thousands” of people that there was a “disenfranchised customer base” in the Bahamas.

And, while it has taken almost 15 years to liberalise the Bahamian cellular market, Mr O’Carroll told Tribune Business that it was “never too late for competition”.

He added that “the biggest winner” from the second licence tender process will be Bahamian consumers, who while benefiting from greater choice should also see improvements in pricing and service quality.

“We’ve been looking at the Bahamas since 2002. If you look at the DNA of Digicel, and what we’re all about, we have a track record of coming into liberalising markets as the second operator,” Mr O’Carroll said.

“We see a sleepy incumbent operator in the Bahamas. We know from talking to tens of thousands of Bahamians that there’s a disenfranchised customer base, and people want better service and they want a better network.”

Now in its fourth post-privatisation year under Cable & Wireless Communications (CWC) control, BTC’s mobile network remains plagued by dropped calls, plus complaints over poor service and lack of choice. BTC/CWC executives, recognising the looming competitive threat from a liberalisation process expected to conclude this year, have pledged improvement is occurring.

But Mr O’Carroll said Digicel’s research showed it was not just Bahamians who were unhappy with cellular coverage standards in the Bahamas.

“We’ve spoken to tens of thousands of people who visit the Bahamas,” he told Tribune Business. “The Bahamas has an amazing reputation internationally from a tourism and sporting point of view, and so forth.

“But so many people are disappointed in terms of the ability to connect back home. They want to share their experiences by mobile updates to Facebook and Twitter, and the majority of people who visit the country are disappointed with that part of the experience.”

Mr O’Carroll said bidding on the Bahamas’ second cellular licence “makes great sense for us”, as this nation remains virtually the only Caribbean territory where it does not have a presence.

Entering newly-deregulated markets as the second cellular operator to challenge a long-standing monopoly incumbent is Digicel’s core business model, and one it has proven successful at.

It has often managed to surpass the incumbent to become the mobile market leader, a feat it has achieved in several Caribbean countries where it faced BTC’s controlling shareholder, CWC.

While conceding that achieving the network roll-out targets set in the Government’s cellular liberalisation Request for Proposal (RFP) will be tough, Digicel’s ‘point man’ in his placing his faith in the company’s due diligence and experience of similar launches to get the job done.

“We’ve literally travelled every square inch of the country,” Mr O’Carroll told Tribune Business. “We know where the towers would be, where we would put the customer care centre, the retail stores, and have identified some of the Bahamian team we’re likely to employ.

“We believe we can roll out and launch the network within six months of the licence being awarded. It certainly will be challenging, there’s no question about that. It’s only through having prepared completely to-date that gives us the element of confidence that it will be completed in six months.

“We certainly need to have all the stars aligned.”

Mr O’Carroll said orders had already been placed with key equipment suppliers such as Ericsson Huawei, plus cell tower manufacturers, enabling Digicel to immediately ‘pull the trigger’ on sourcing and shipping its network components the moment it is awarded a licence.

Digicel is likely to incur a greater ‘up front’ network investment than its two rivals for the licence, BISX-listed Cable Bahamas and Virgin Mobile (Bahamas).

The former will be able to leverage off its existing fibre optic network infrastructure to meet the RFP targets, while Virgin Mobile’s business model is typically to come in as Mobile Virtual Network Operator (MVNO).

Rather than build out its own network infrastructure, an MVNO typically rents space on another carrier’s system to carry its traffic. It is thus effectively a ‘reseller’ of somebody else’s minutes but the advantage in the Bahamian context, again, is that an MVNO operator can get to market quicker and - potentially- beat the RFP’s deadlines.

Under the RFP, when it comes to network roll-out, the winning bidder must provide 75 per cent mobile services to New Providence/Paradise Island; Grand Bahama; Abaco and all its cays; Eleuthera, including the likes of Harbour Island and Spanish Wells; Andros; Bimini (including Cat Cay and Ocean Cay); and Exuma and its main cays within six months of being awarded the licence.

Still, the possibility that Cable Bahamas and Virgin Mobile (Bahamas) may gain extra points and outscore Digicel in this category is unlikely to phase the mobile specialist, which draws its strength from other areas.

Explaining why Digicel was eyeing an initial network roll-out investment of $200-$300 million, Mr O’Carroll said a cell tower located in the downtown Nassau area would cost between $80,000-$100,000 to install.

And a tower located in the Family Islands, once shipping and logistics costs were factored in, would cost around $250,000.

As for the employment impact, Mr O’Carroll told Tribune Business: “If you imagine there’s going to be 200-300 towers constructed right across the country, there will be indirect employment with local construction companies and local electrical companies.

“There will be at least 1,000 jobs created on an indirect basis to support the launch and roll-out of the network. And there will be at least 300 new jobs created; direct, high quality jobs [in full-time operations].”

Mr O’Carroll said it was standard practice for Digicel to partner with local businesses in every country where it operated, and he pledged that the group would install the latest Long-Term Evolution (LTE) technology if selected for the second licence.

“That’s the immediate investment,” he added of Digicel’s network roll-out. “You’re constantly updating your network as you go along, installing new technology at every stage. It’s not a one-off investment. It goes on and on.

“It’s safe to say we’re not going to be investing in old technology. It will be LTE. It’s going to be easy to upgrade to the next level. It’s like building blocks. It’s not simply an old network held together with elastic bands. It will be the most up-to-date network from day one.”

Although the Bahamas is a relative late-comer to cellular liberalisation, Mr O’Carroll said Digicel was neither fazed by this nor the fact it would be competing against an entrenched incumbent if successful.

“There is a bigger demand today for competition than certainly there was when we came in [in 2002],” Mr O’Carroll said. “Penetration then was 30 per cent. Today, it is 100 per cent.

“People have greater experience of telecommunications in the last few years. Demand for competition is far higher, and at its greatest to-date. It’s never too late for competition.

“If you were to look at Digicel in any one of the 32 markets, what are we renowned for? We’re renowned for state-of-the art, world class networks that we deliver on time; the introduction of innovative services which are country specific; and are renowned for excellent customer care and affordable pricing,” Mr O’Carroll said.

“We have to make sure the customer is delighted every time, and people are saying that’s the thing that [they] are missing. A network that operates evey time, and a good quality of customer care.

“We operate in 32 countries today, holding the number one position in the vast majority of them. Our track record shows we come in as the second entrant and become a leader in most markets. We will be a fierce competitor. And the overall winner will be the consumer.”

Digicel currently has 14 million customers spread across 32 markets, as it leverages its ‘home’ Caribbean turf to expand into the Pacific and Asian markets. Its worldwide investments to-date total some $5 billion.