07 September 2009

Digicell Prepares to Break TT Monopoly

Dili Tempo Semanal Edition 54 30 August 2009 The following is an interview on 27/08/2009 with Frank O'Carroll, the Business Develo­pm­e­nt Director of Digicel's South Pacific operations.

Q: This time you started contributing today to East Timor's activities and celebrations and you have contributed to this, and how sig­nificant is this contribution?

A: Yeah, we've contributed to the first East Timor bicycle race, the Tour de Timor, and Digicell has committed to funding it to the tune of US$100,000, and then there's been additional costs which we've borne ourselves, in terms of our marketing materials, t-shirts and hats, and then there's been all the branding along the route. There's been a significant contribution by Digicell, but we're fully committed to the market in Timor Leste.

We think the initiative of having the race is fantastic for the country, not just for the people of Timor Leste but for people outside the country how it's been viewed by people outside the country also. It's amazing to talk to some of the cyclists we've met in the last few days, to hear their comments on how beautiful the countryside is, and they will all be ambassadors for Timor Leste when they to home to their home countries and tell people how beautiful the country is, how friendly the people have been, and I'm very, very confident that the Tour de Timor will become a huge event next year, and even bigger in the years ahead.

Q: It seems likely that Digicell is very committed in investing in this country's telecommunication market. Do you have any idea when it's going to start?

A: It is probably difficult to estimate when it will start. Digicell has been visiting Timor Leste for the past three years designing our network, working on our business plan, looking at the existing operator and looking at where the opportunity might be.

We've also spent a lot of time presenting to government ministers, senior figures in government and a number of business people. As you are aware, we've opened out initial office in Dili. We're employing at the moment 12 people from the Dili region who've helped design the network for us and to go through the initial phases of setting up our business.

In terms of when the licence will come, the government has be­en committed for the last 18 mo­nths in terms of looking at the wh­­ole process of libereralisation and we are aware that the draft telec­oms policy paper has been completed and this is being handled at se­nior levels within government. The whole process now is that the exclusive concession that was granted to Portugal Telecom or Timor Telekom a number of years ago, that needs to be looked at. The government needs to extract itself from that exclusive concession that was granted to Portugal Telecom, or Timor Telecom, a number of years ago, that needs to be looked at. The government needs to extract itself from that exclusive concession which is certainly damaging the country in terms of development, has damaged the country in terms of telecommunications infrastructure which is very poor and among some of the highest rates in the world and if we look at broadband and internet connectivity for people within their own homes, for small businesses and even for large businesses in the country has been very damaging.

So we hope to see the process in the next six months will have accelerated. We know that there is a huge determination in government to see the process of liberalisation implemented and to see the entry of a new competitor into the telecommunications market.

Digicell would obviously like to be a company selected for a new licence in Timor-Leste; however we know that the government are going to go through a very detailed and transparent process to select the best company who fits best for the country and who give the best proposals for Timor-Leste.

Q: As the President of the Republic has told the public here, after the meeting in Suai, he came out and criticised badly Timor Telekom and it seems as if he's advertising Digicell. It seems as if he wants to see by the end of next year the telecommunications market to be liberalised, and he's hoping that Digicell is committed to invest millions and millions of dollars. For the first year, to have about 80% of the population having access to a phone connection in this country. What would you say to that?

A: I suppose I'm very biased because I've worked with Digicell for a very long time since it started its operations in the Caribbean. I'm wholeheartedly a big believer in Digicell and I've seen firsthand what it has done for developing economies quite similar to Timor-Leste around the world: from our very first operation in Jamaica through to the English-speaking, French-speaking and Dutch-speaking Caribbean, more recently into Central America and then into South America. We came to the Pacific region in 2006, and to date we have existing networks that we own and operate in five markets: in Fiji, Vanuatu, Samoa, Tonga and Papua New Guinea. We're about to launch our sixth network in the Pacific region, which is in the Republic of Nauru. So Digicell I wholeheartedly believe is the best fit for a country the size of Timor-Leste in terms of its economic development and in terms of where its telecommunications market is. I know we've received enormous support from the Government and we're very thankful for that, and we've received even bigger support, overwhelming support, from the people of Timor-Leste who quite frankly have been robbed of an affordable and accessible telecommunications service since Timor Telekom were given their exclusive concession.

We've travelled through the region extensively through the past couple of weeks in preparation for the Tour de Timor, and we were inundated talking to people who constantly complain about the fact that they haven't had access to telecommunications – for people who have, how expensive it has been and how unreliable it has been. So we know that because of this feedback we've received from the time that we've been in Timor-Leste and we're constantly receiving this feedback from people right throughout the country. So as a result there is a big commitment to make sure a new entrant is introduced. People who will know Digicell—our philosophy, our culture, and how we've performed in other markets—will know that we're a very good fit for this economy. As I said, we've launched in markets that have had one operator—a monopoly—for years, we've driven prices down, we've increased the range and quality of services. As you mentioned, our commitment is to launch with 80% population coverage on day one, which has been unheard-of in the landscape here so far, and we will guarantee that we will make telecommunications affordable and accessible to the vast majority of people in Timor-Leste within the first two to three years of our operation.

But our commitment is to launch by building a state-of-the-art network to give 80% population coverage and grow it from there. So we're not just interested in cherry-picking the big population centres; we think it's a basic human right that every individual should have access to affordable telecommunications. When you look at our operations in Papua New Guinea, Digicell has been awarded a humanitarian award last November for making telecommunications services available and affordable to people of Papua New Guinea. We've seen how our investment in that country has transformed the economic development of that country, not just in Papua New Guinea, but in every other market in which we've operated as well. We currently operate in 31 markets with over 10 million subscribers; our shareholders have invested US$3.5 billion in Digicell around the world, and we employ in the region of 5000 people. So Digicell is a company that reaches many countries around the world and has a vast experience in its 10 years of experience, and we know we're a very good fit, and we're very confident that the Government know we're a very good fit for this marketplace.

Q: In terms of financial investment, how much are you going to invest here to make these phone connections available for the people?

A: Sure. Our plans at the moment are confidential in terms of the actual size of what the investment will be, for competitive reasons; however, if you imagine to build a network of that size, it would probably cost in the region of US$65 million to US$80 million. That will mean that we will be erecting our own towers, having a very significant staff and management team of Timorese nationals who will work with our company; making sure that they're trained not just for this market, but we will bring people from Timor after we've trained them to other Digicell markets where our company operates, and to make sure they receive world-class training. And we're very confident from our knowledge of our initial staff base that we've taken on board and from our dealings working with people in Timor, that they're loyal, that they're hard-working, that they're trustworthy, and we know that the Timorese people will make a good effort within the Digicell organisation.
Q: What is the reason that you want to invest in this country?

A: This is a good question. I suppose when we examine any market in which there may be an opportunity, we always look to see how many operators—in terms of telecommunications operators there are in the marketplace; their level of penetration in terms of how many people are using the telecommunications services; we would look at the price of the services and the quality of the services in terms of how up-to-date the technology is.

We examined Timor-Leste a number of years ago. Every box that was on our list was ticked as "this is a good opportunity for us". There was a monopoly provider who had no respect from its customer base: even people who were heavy spenders and heavy users of telecommunications services were hugely critical of the company in terms of its poor customer care and its poor range of services in terms of its pricing; when we spoke to the people who didn't have access to telecommunications services they were obviously critical because they weren't given access, and they wanted to have telecommunications.

So the reason we're investing in this country is we feel it's a great opportunity for Timor-Leste, not only to introduce a state-of-the-art and modern telecommunications network, but to totally change and transform people's lifestyles. One of the areas that we've been looking at recently is mobile banking, with the increase of Timorese people who've opened bank accounts and started saving. Not just older people who are in the employment network, but younger people also who've opened bank accounts. And we've talked to banks who are here, particularly ANZ bank, and they've been very successful in encouraging people to open bank accounts, encouraging people to save money, encouraging people to look towards the future. And then we look at this issue of mobile banking and as we've seen in other first-world countries—and we believe that Timor will absolutely leapfrog from where it is today to being one of the leaders in the world in this area—where people will be able to transact using their mobile phone. So for example, people will be able to walk into a shop to buy their bread, buy their milk, buy their water and whatever other goods they need, and not necessarily use cash, not use a credit card or debit card for that transaction, but be able to take currency from their mobile phone and immediately transfer it to the shop owner. This is the very latest

technology,in terms of some of the most developed countries in the world, but we're confident that this is something that the people of Timor-Leste will understand, and we know from some of the initial tests that we've done that people will want this level of technology in the country.

The other area that we look at is in terms of broadband [internet] connectivity, and we look at—unfortunately—so many schools don't have access to the internet and we believe that this is absolutely and utterly unforgivable, that any telecommunications operator worth anything in the world should be looking at education and the development of the economy from the young people forward, so we're determined to provide high-speed access to broadband into schools to make sure that people can learn not just in their local language, but also in a number of other languages.

I was hugely encouraged by the number of languages that people in Timor can speak, and it's incredible to see how quickly people can switch from one language to another. We know that in local languages books haven't been published in local languages for various reasons, and we're very confident that we can have this leapfrog again where we won't have to have hard-copy books printed but that people will be able to use the internet to educate their students. But as I said those are two areas that we're looking at, and both are huge opportunities for the country.

What's more encouraging is that both fit right into the objectives of the government, because the government, as you're aware, has some huge objectives for this country that are hugely ambitious, but we know that they're determined to change the lives of people in Timor-Leste, and we know by our investment working in parallel with the Government's objectives, that this is going to be good for everybody.

We're absolutely delighted to be part of the tenth year anniversary in such a small way but perhaps in an important way by the sponsorship of the first international Tour de Timor bicycle race. Very much it's Digicell's philosophy that we embrace the culture and everything about a culture that we invest in, and it's been an emotional week for everybody, and I know that our staff and people who've been involved with the Tour have worked tirelessly day and night to make sure that it's been an enormous success, to make sure that it's sent out a phenomenal signal to the rest of the world as to what Timor-Leste is all about and how ready it is to become such a leading country in the region. Digicell is absolutely privileged and totally delighted to be associated with the anniversary and we wish everybody in Timor-Leste every success in the future as well.

Q: In terms of the security stability of the country, regarding the violence and warnings that are at times present, it seems that Digicell have another view on this issue.

A: We have absolutely no fear about the security, the wellbeing in the country. We're absolutely confident that it is a very safe place. We know that people in Timor are passionate about the development of the country moving forward. We've never had any incident where any of our staff members have been in a situation that has made them worry. We operate in some other very difficult countries – Haiti, for example, which has had a huge history of serious security issues and more recently in Honduras which you've seen in terms of the coup; Papua New Guinea which in some of the isolated areas is quite a dangerous country at times; but Timor-Leste has been nothing but positive. As I said, perhaps sometimes people's views about the country from the outside—because of lack of information, because of perhaps ignorance of people from other countries—has had a bad image from time-to-time.

But initiatives like the Tour de Timor in terms of how that sends out such a positive signal about the country is fantastic; but in saying that, Digicell has absolutely no problem in relation to security in the country.(ts)

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