Digicel’s outgoing CEO in T&T, Niall Dorian, says the Irish-owned company, which is headquartered in Jamaica, has delivered “significant, double-digit growth” in both top and bottom lines in the last four to four-and-a-half years. In an interview on Thursday, Dorian said: “We are very, very pleased in terms of the progress we have made financially over this period. In my mind, we are beating the competition on all fronts: financially, market share, customer service and the quality of our network. “We very much live up to our mantra of being the bigger, better network.” Dorian joined Digicel’s local operations as its CEO in August 2007 and left on Friday to take up the position of interim CEO in Panama for six months in order to ensure that that hotly-contested, four-telecom-player market finds and inculcates the right Spanish-speaking CEO. Dorian said he can justify the statement that Digicel is beating TSTT financially because in the year ended March 31, 2011, TSTT’s Ebitda was down 29 per cent and its net profit declined significantly.
“We are delivering significant double-digit growth year-on-year for the last four years in both revenues and EBITDA. They have not, despite investing millions upon millions in new services and technology and they are growing no revenue whatsoever.” Financial results for the Digicel Group, for the six month period ending September 30, 2011, indicate that T&T operations generated US$102 million in revenue in the period—an increase of 13 per cent. For the third quarter 2011 (July 1 to September 30), Digicel T&T’s revenue grew by 17 per cent, its average revenue per user by ten per cent and the number of its subscribers by six per cent. On the issuer of beating TSTT on market share, Dorian says the company has 51 to 52 per cent of the mobile market, which Digicel has achieved on what is “not a level playing field,” because of the Government’s ownership of 51 per cent of TSTT. “We talk about T&T being a liberalised market, but you cannot have a fully liberalised market when the Government continues to own 51 per cent of TSTT. To my mind, if the Government is serious about the development of the whole telecommunications and ICT areas, then they cannot continue to support a badly-performing TSTT.
“If you look at the size of the Government business within T&T, it is a very significant proportion of the total business in the country. We have been able to deliver success while getting very little of that business.” He said for the “betterment” of the market and for the development of competition in technology and the development of the ICT sector, the Government’s 51 per cent ownership of TSTT cannot continue. “The Government has to make a brave decision and allow privatisation to proceed.” Asked if the sale of the Government’s 51 per cent stake in TSTT was something that Digicel was calling for, Dorian said: “I would very much call for that. It is the right thing to do for a liberalised market. Market conditions and market efficiencies would allow competition to thrive, but when the pitch is slanted in one direction....” Given the small percentage of the market of the State and State-owned companies that Digicel controls, Dorian says that Digicel’s success has been based on its dominance of the general corporate and consumer markets. “What underpins them is the State-owned/Government business,” he said. “The time is right for those types of decisions. I was delighted to see that the Government had in the last budget talked about privatisation. They had talked about First Citizens and a flotation and I would encourage them to accelerate all of the strategies, including TSTT, because it is for the betterment of the market.”
He said he would call for the full divestment of the Government’s 51 per cent stake in TSTT and not just the sale of two per cent “as government has no place in business. Government is a facilitator of business. Market forces would dictate the success or failure of businesses and the Government would reap the benefit of that success.” He made it clear that Digicel was not afraid of competition and a company would have to be “brave” to enter the local market at this point. Asked whether Digicel should acquire Cable & Wireless Communications, the company that owns 49 per cent of TSTT, Dorian says that the two companies are of a “different breed,” have different cultures and he would not recommend that as a strategy, although it would be a decision for the “boss,” Denis O’Brien.
He defines the Digicel culture as being “young, dynamic, challenging and energetic,” typified by urgent and quick decision-making, while he perceives the Cable & Wireless Communications culture to be “bureaucratic, old-fashioned and slow,” which, he argues, translates into the different financial results of the companies. He says Digicel is making the transition from being a mobile phone service provider to being a full ICT provider. Asked if he thinks there is a possibility that O’Brien will sell Digicel, Dorian sniggers and says: “I will just quote my personal mantra: Everything has a price. I can’t speak to what is in Denis’ head, but everybody has their price point.” Questioned on the sniggering, Dorian says: “I was just laughing in terms of would he sell or would he not sell. It’s an obvious question. Would one of the very significant global operators come in and buy us. Who knows but it is a very successful business. It continues to be a successful business. As I said, I can’t speak to what’s in Denis’ head.”
4G launch in May
Dorian explains that Digicel expects to launch its 4G network by the middle of May and is using technology provided by Ericsson. Asked if it is important to launch 4G before TSTT, Dorian said: “It’s not in my view a race. It’s about satisfying customer demand and that demand is clearly there,” adding that the launch will demonstrate Digicel’s commitment to technology and its support of the Government’s initiatives to make ICT a core pillar of the economy. “Certainly, it’s important that we offer that service well in advance of our competition. While declining to elaborate on the prices of the new Digicel 4G service, Dorian said there will be no “significant” change in pricing for data and that it will actually be cheaper because data will be faster. “The price per megabyte will be reduced.” Questioned about the possibility of a price war with TSTT over 4G, the telecom executive said: “I believe that our pricing will be very competitive. I don’t see that there is going to be a huge need for a price war. In terms of the investment, you obviously have to price it according to the amount of money that has been invested in the infrastructure.”
He made the point that Digicel is being run from a commercial point of view and it is looking for returns on its $140 million investment in the 4G upgrade. While the Digicel 4G offering will have the specifications to deliver speeds of up to 21 megabytes per second, download speeds will depend on how many people are on the network at the same time. “Our network is speced to accommodate between 100,000 and 200,000 people at any one time,” he said.
He said about 20 per cent of Digicel’s customers in T&T currently have smartphones, “but our expectation and our investment in 4G is that that number of converters to smartphones will continue to increase significantly over the coming 12 to 18 months” as their cost declines.
Digicel has already rolled out 4G in Bermuda, the Dutch Caribbean, Panama and Barbados. Jamaica and T&T will launch at around the same time. Asked why T&T is the fifth Digicel country in the region to launch 4G, Dorian said some of the company’s smaller markets were quicker to launch because their size made it easier, citing Barbados, Bermuda and the Dutch Caribbean. Digicel launched in Panama before T&T because its competition (Cable & Wireless, Telefonica and Claro) had launched there. “It’s not a case that those other markets were a priority over T&T. That’s not the case at all.” Digicel is not at a disadvantage, according to Dorian, at not being able to sell Apple’s iPhone to its customers because “there are many, many people on Digicel’s network with the iPhone. Many people buy iPhones overseas and they just put in a Digicel sim card and away you go.” He said Digicel chose not to do a deal with Apple for commercial reasons and he agreed that the relationship between Apple and telecom providers was skewed in Apple’s favour “without question.”