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...now and to come.
The opening of the telecommunication market...its early rewards
and the tremendous economic opportunities opened.
Rewards? - The best is yet to come!
----------------------
Denis O'Brien — opening up communication to all
BY MOSES JACKSON
Wednesday, October 20, 2010
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Three University of Technology students are leisurely browsing the Wednesday edition of the Jamaica Observer newspaper. The story announcing the Business Leader Foreign Investor Award catches the attention of the apparent group leader, a business administration major.
Vivified by the eye-catching news, she abruptly takes possession of the newspaper, points to the headline and blurts out: "Digicel mus win dis!"
Denis O’Brien confers with head of communication at Digicel Group, Antonia Graham, during a break from a board meeting at the Ritz Carlton Hotel in Montego Bay last month.
Denis O’Brien (right), is joined by Kingston’s mayor, Desmond McKenzie (centre) and Information Minister Daryl Vaz on a recent tour of the construction site for the new Coronation Market in downton Kingston, being renovate by the Digicel Jamaica Foundation at a cost of $160 million.
Digicel’s chairman, Denis O’Brien, displays a 4G USB modem – the latest of his compay’s offerings. The 4G is a wireless broadband Internet service for Digicel’s customers who have access to a computer. He is joined by Mark Linehan, Digicel Jamaica CEO. They were at a series of Digicel board meetings in Montego Bay last month.
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Denis O’Brien confers with head of communication at Digicel Group, Antonia Graham, during a break from a board meeting at the Ritz Carlton Hotel in Montego Bay last month.
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There is a surprising intensity and purposefulness with which she delves into the article, reading aloud to her indifferent classmates. They quickly learn that the Observer will consider for the award "investors who, over the past decade or so" have been contributing to Jamaica's economic and social development.
Never reticent to volunteer her opinion — especially to a captivated audience of her peers, she sighs ruefully: "Well a guess Digicel won't qualify to be in it; they have been here for decades. Pity!"
Significantly, but not shockingly, the stentorian pronouncement about Digicel's decades-old presence on Jamaica's soil went unchallenged by the other teenagers. Never enthusiastic to begin with, their interest in the subject waned, and they moved right along.
Through the lens of most 19-year-olds, 10 years
seem like an eternity, and in fact represents almost all their sentient life, so the exaggerated time scale of this UTech student is entirely forgivable. In any case, she is by no means the most extreme among Digicel's diehard customers who routinely flatter their telecoms provider with unearned attributes. There are those, for example — among all age groups — who swear that the Irish investors introduced cellular phone service to Jamaica; others remain convinced that it is they who invented cellular technology.
Denis O'Brien, the founder, principal shareholder and chairman of Digicel Group, along with his executives, have obviously made no such claim. They assess their company's impact primarily by the efficiency that its services bring to the island's farming community, to shopkeepers in deep rural Jamaica, independent traders like plumbers and carpenters, and a host of others who are now a phone call away from suppliers, buyers, and generally those on whom they depend for their businesses to flourish.
"We empower a lot of small and medium enterprise people — plumbers, electricians, farmers," declares Harry Smith, Digicel's director of marketing until 2007, and a recent appointee to its Jamaica board. "Farmers can now negotiate directly, plumbers can now be their own entrepreneurs. It was always difficult to maintain contact in rural Jamaica. We gave people peace of mind."
All of that is true. But if there is a deeper insight to be gleaned from the intimation of the UTech student, it must be the cultural and psychological liberation that is evident within the pre-teen and adolescent cohort — hundreds of thousands who now sport their Digicel brand in their pockets, handbags, and on their hips like a badge of honour.
The image of the UTech student, in what must be a Freudian reflex, patting her jeans for self-reassurance that her Digi was safe — even as she continued to read aloud — would have been unimaginable a few years ago.
O'Brien's own account of the decision-making process that ended with the April 2001 launch of Digicel's service in Jamaica, flies in the face of centuries of accumulated entrepreneurial experiences that are codified in marketing theories, and the business texts that grad school students like to reference in their daily conversations.
Unemployed and idle for three months, a friend of the businessman brought to his attention an ad that had been placed by the Jamaican government in the Financial Times in late 1999, inviting tender for two cellular licences that were up for auction. Technology minister, Phillip Paulwell, having passed legislation through Parliament that formally dismantled Cable & Wireless' monopoly, was now in full stride toward introducing de facto competition within the local telecoms industry.
"I did not have dozens of people on the ground in Jamaica conducting marketing surveys," says O'Brien. "I asked only three questions: how many people are there in Jamaica, how many have phones, and how good is the competition."
This jocular Irishman likens himself to the Jamaican serial entrepreneur, "the ones who, you know, when they sell their business and make a lot of money, they have to use some of the cash to start another business".
In his immediate past life, he was founder, executive chairman and a 14 per cent owner of Ireland's number two fixed line and mobile company called ESAT. The Nasdaq-listed firm had a market cap of US$2.2 billion when he sold it to British Telecom in 2000. O'Brien declines to say precisely how much he pocketed from the transaction, preferring to couch it in generalities, like "lots of money". But, conservatively, assuming that he earned no premium on the listed price — an unlikely scenario in these acquisition deals — his personal take would have been US$308 million, minus the relevant taxes, and so on.
So, at 10 pm, in the crapulent, rowdy environment of an Irish pub, whisky and good friends to boot, this frictionally unemployed entrepreneur waited for a telephone call from his representative in Jamaica, to learn if Paulwell had accepted his bid.
"We bid from a bar in Dublin drinking rum," he fondly recalls. "Frank O'Carroll was in Kingston and was representing us at the auction, and we were constantly on the phone."
The next morning, his head a bit clearer, the reality of this new and very bold capital commitment several time zones away from Dublin began to bear down on O'Brien.
"I had risked a substantial amount of my winnings behind the Jamaican licence from a bar on a Friday night," he muses. "The good entrepreneurs never know when to quit the game, like the typical Jamaican businessman who sells his business and immediately starts another one."
O'Brien describes the US$47 million he paid for the licence as "the King's ransom" — money he had spent without having had a single cellular site or any other piece of tangible asset to hold on to.
"There was an urgency for us to do something to make sure we made a return on the investment," he notes.
The next telephone call was to a friend who O'Brien had employed as an executive at ESAT. For the next four years, this man's name would resonate across the telecoms industry within Jamaica.
Like the investment decision, the conversation with Seamus Lynch provided a glimpse into the Irish mindset. It foreshadowed the tough, can-do approach that these resilient investors were about to unleash on a competitor that for years had enjoyed monopoly by fiat, and, as the market would later testify, had grown steep in its complacency.
"I rang Seamus Lynch and told him that 'you are the chosen one'. He packed a single suitcase. He asked no questions. There was absolutely no debate. He simply said 'yes' and was on the next plane to Jamaica."
The deep-rooted antagonism between the Irish and British is the stuff of legends, and with Lynch's arrival as CEO of Digicel, it was about to play out in the Jamaican market. Dominated by a British firm that was not about to yield a single square inch without a fight, the entire industry became an amplification chamber for the historical acrimony.
"One of our biggest advantages was that we had a great competitor," snaps O'Brien. The sarcasm is unsparing.
The unapologetic contempt for the competitor seems to have seeped all the way down the corporate ladder. Just look at what Harry Smith has to say: "We knew that there was discontent with the incumbent from doing our research. Their attitude was that choice was a bad thing. I would have worked with Digicel for free just to help take down Cable & Wireless."
With such untamed passion — no doubt mutually shared — it should come as no surprise that from the get-go, Digicel and Cable & Wireless (now LIME) became locked into a series of internecine and unending battles - ultimately over market share - with an intensity never before witnessed within corporate Jamaica.
First, there were wars over regulatory issues — claims and counterclaims about which telecoms provider was violating the basic tenets of fair competition; arguments over inter-connection fees, unfair pricing, and so on. Then there were the marketing, price, and advertising wars to win over the hearts and minds of the Jamaican public. Some of the hard-fought legal claims and counterclaims have already made their way all the way up to the Privy Council in the UK. There are others in the pipeline destined for the British Law Lords.
But it turns out that O'Brien was lured to Jamaica by more sublime reasons than the opportunity to antagonise the Brits, and to provide telecoms services to the local market, though, by his own confession, he would never pass up the chance to do either.
Those who are responsible for marketing Brand Jamaica abroad should take note.
"Jamaica has an appeal on its own," beams the Irish investor. "When I thought about investing in Jamaica the first thing that came to my mind was an interesting, exotic and artistic country. Bob Marley was huge in Ireland. Jamaica resonated with the Irish people. The Irish feel closer to Jamaicans than they feel to the British. Maybe it is because back in the 1960s Jamaicans and the Irish had to do the hard jobs in Britain."
Down in Jamaica, O'Brien as chairman, with Lynch as CEO, and Smith in charge of marketing, developed a model that estimated the outer limit of the market at 100,000 handsets for the first full year of operation.
Smith believes that the experience he had gained at his previous job at Red Stripe allowed him to hit the ground running at Digicel.
"My first job was to coordinate the name-change from Mossel to Digicel," he says. "We spent lots of time ensuring that we had good coverage. We knew where the blank spots of the competitor were, and we went about covering them. For example, Flat Bridge; we also covered The Hip Strip in Montego Bay. We concentrated on coverage and network."
Early success came with a heavy financial price, the tabs running up exponentially and quickly surpassing the US$100 million that O'Brien had budgeted as his investment outlay for the project.
"We thought that the opportunity was much smaller than it turned out, and that it would be wonderful to get to 300,000 customers," says O'Brien. "We planned to invest US$100 million, and within the first few months we surpassed the first year's target."
Digicel almost became a victim of its own unprecedented success. It was signing up new customers en masse, and therefore required massive capital outlay over a relatively short period, forcing its owner into leverage.
What's more, the marketing innovations that were responsible for the exponential growth did not come without a price.
"We brought down the cost of the handset from US$200 to US$20," explains O'Brien. "It was a deliberate strategy to subsidise the phones and it was costing us a fortune each month. We wanted to have a good network, with cheap handsets so that the typical Jamaican could have a phone. We planned to go for the mass market and, eventually, the elite also came.
"But every month Seamus was calling me to pump (US)$40 million more into the company. We had to borrow heavily to keep up with the capital requirements because the business was growing so fast."
The executives in Jamaica translated the broad strategic mission into subtle marketing initiatives that Smith believes helped to endear Digicel to the Jamaican public — not only as a brand, but as a
and conscientious corporation.
"Pre-paid became the core of our service offering," he notes. "We looked at post-paid and pre-paid service as different options for payment, not as a difference in status."
No longer were Jamaicans required to have fixed addresses, upfront deposits, national ID cards, minimum age, or to fill out complicated forms, in order to step into the cellular age. Cellular phone owners would no longer have to pay for incoming calls. No longer would their call-time usage be rolled up to the next minute: they would be charged only for the actual time spent on the phone.
These features are now taken for granted, but back then, they were the marketing tour de force that in one fell swoop awakened Jamaicans to the idea that a cellular phone was no longer the exclusive preserve of the privileged.
Jamaicans across all income levels and social classes began to reach for the handsets, and Digicel was at hand to supply them. At the last count, 2.1 million of them were signed up with the Irish cellular service provider. It has taken US$800 million in investments, and 1,100 direct Digicel employees to keep so many Jamaicans talking on this network.
A US$800-million investment is not a small risk for an entrepreneur who was cautioned against investing in Jamaica by none other than his bankers.
"Certain financial institutions advised Denis against investing in Jamaica," according to Mark Linehan, CEO of Digicel Jamaica. "Some people even thought he was mad to go to Haiti."
O'Brien had an inalterable vision of what he wanted to do in Jamaica: he would set up headquarters here, and use the country as a beachhead from where he could launch attacks on the monopolies that were being dismantled as regional governments followed Jamaica's lead.
It is hard to find anywhere, another case of a corporation that has been so faithful to its original business plan.
What is also interesting is the fact that, in the pursuit of this model, O'Brien has created upstream and downstream local partnerships that have themselves become major businesses and employers of labour.
Take the case of the retailer, Fi-Mi Wireless. Its principal, Bernard Henry, joined Digicel in 2000 as its director of sales and first local employee, before jumping ship within months to reach for a bigger opportunity that Digicel was opening up for him and some of his friends who became his partners in the retailer.
"Digicel provided the opportunity for me to get into entrepreneurism," says Henry.
Fi-Mi Wireless opened its doors in April 2001 — on the same day that Digicel officially launched its service in Jamaica -- their exclusive dealer for the telecom, selling its handsets and services.
Today, there are nine branches across Jamaica, employing 60 workers. What's more, Fi-Mi Wireless followed Digicel into some of the markets to which it began expanding once it had Jamaica locked up: Guyana, Haiti, El Salvador, and Honduras. Fi-Mi Wireless established its presence in these jurisdictions through a series of associated partnerships, and can count the 300 workers in these countries among its employees.
Arguably, no other partnership exemplifies the synergy that integration with local capital can create, like the relationship that O'Brien forged with Facey Commodity in 2001.
Facey was already a major player in the country's distributive trade when O'Brien, fed up with what he says was the "mess that the American company" had made only months into the contract, turned to Desmond Blades, Facey's owner — who passed away two years ago.
"Our relationship with Digicel started with a handshake," says Dr Nigel Clarke, Facey's recently-appointed CEO. "Digicel, at the time, needed a quick solution and needed a nimble distribution partner that could respond immediately with deep resolve and commitment. We took up the challenge, leveraged our distribution infrastructure and capability to provide logistics and distribution services to Digicel in Jamaica and have never looked back. It is one of the best business decisions we have ever made."
Facey is the exclusive distributor of Digicel's mobile handsets, airtime, and all its related products, not just in Jamaica but across all 32 markets in which the telecom has a presence.
Clarke says that the partnership with Digicel introduced Facey to countries that it had never been before, and that it has been able to leverage this arrangement to expand its other offerings to these markets.
"Today, nine years later, Facey operates in the telecom distribution, consumer distribution and technology distribution sectors with operations in over 30 countries in the Caribbean, Central America, Europe and with a joint venture in the Pacific," says Clarke. "Our growth and expansion over the past decade has been inspired and enabled, in large part, by our business with Digicel. Today our telecom distribution business has physical offices and warehouses in 23 countries, and we sell into another six countries where we do not have a physical presence."
Everybody has a different perspective on Digicel's impact, and the bases of its phenomenal success.
"O'Brien has changed the Jamaican landscape by bringing technology to Jamaica that we were not exposed to and by driving down the price of communication," says Henry. "He has opened up access so that the common man, who did not have access prior to Digicel, can now get connected."
As an exclusive Digicel dealer, Henry has also been able to experience firsthand, other dimensions of the corporate ethos that have enabled this man and his company to dominate Jamaica's cellular service market.
"O'Brien pushes his core value which has the customer at the centre all the way down to the retailers," he says. "He is passionate about his work and he pushes his team to perform and to deliver to customers. They are very aggressive and push their partners to look outside the box. That has made a difference."
For seven years, Harry Smith had a front-row seat to observe the genius in action. "He is a hard-driving chairman who is very hands-on and very detailed at board meetings," says Smith. "He always wants things done faster and for less cost. You never start a conversation with him by saying you can't, and if you make a commitment that you did not meet, you become very uncomfortable at the meeting."
Smith was part of what Henry describes as "the great team that O'Brien put together that was led by Seamus Lynch, and they were extremely hard-working guys who pushed people like me to heights I never thought I could reach".
O'Brien also understands how to ensure esprit de corps among the senior ranks, and how to enlist the loyalty of members of staff and align their interests with those of his corporation.
So, for example, Smith and other executives who bought into the Digicel vision, joined the company at below-market salary, opting instead for what he describes as the opportunity to share in the future success.
"I, along with the other directors, took a gamble and worked for a small upfront salary to benefit at the back-end," he explains. "We thought we could buy into the success of the company. We made the sacrifice and reaped the benefits."
Smith is reported to have secured a titanic golden parachute when he left Digicel in 2007, so much so that he has been able to opt out of the daily hustle and bustle of the corporate world. He subsequently accepted an executive-in-residency at the Mona School of Business that takes him to the institution twice per week.
In July 2006, O'Brien opened up the opportunity for profit-sharing to all employees when he announced the company's share option scheme.
Linehan, as current CEO, cites himself as an example of how O'Brien also makes it possible for internal upward mobility to be part of the corporate culture.
The Irishman was employed by Seamus Lynch in 2002 as a project manager, and thereafter went on an extensive island hopping as general manager — St Vincent, St Kitts, St Lucia, Trinidad & Tobago, Haiti, Guyana - before being called to the headquarters in Kingston to replace David Hall as CEO of the Jamaican operation.
"This is a story of great organic growth," he beams. "There are others, too, who have got grounding in other operations to become stronger managers."
For its 2009 financial year, Digicel posted group turnover of US$2.2 billion, and reported subscriber base of 10.8 million. More recently, O'Brien sent a clear message that his company was in Jamaica for the very long haul when he broke ground in Downtown Kingston for the mega-building that will serve as the Digicel Group permanent global corporate headquarters.
Despite these bankable indices of success, the chairman as well as his Jamaican CEO would like to believe that their company's more lasting legacy will be the charitable work it continues to pursue.
Most of the charitable giving is funnelled through Digicel Foundation Jamaica — and the foundation that is set up in each country where the telecom does business.
The conviction about the value of charity was captured in remarks made by O'Brien as he launched the Digicel Foundation in Papua New Guinea: "A core belief of Digicel," he declared, "is that as we grow our communities should grow with us."
In Jamaica, Digicel Foundation has contributed $681 million to 140 projects since its formation, placing it within the ranks of the island's most generous charities. The $160 million that the foundation is now spending to build proper facilities for vendors and shoppers at the current location of Coronation Market in Western Kingston, is not included in this calculation.
"Part of his success is due to the fact that he looks for people's needs and sees if they are being met," says Fi-Mi Wireless' Henry. "He looked at what the monopoly was not doing and very quickly focused on that."
While no one doubts that this approach has brought O'Brien and his company unqualified success, Linehan's view is that a truer picture of the inner man emerges when one looks at the needs that he sets out to meet by the millions he spends on projects like the Coronation Market.
"He was amazed at the Coronation Market and saw the need for refurbishing," says the CEO. "He was not asked. He knew that if he could improve the facility it would generate more activity for them and improve the lives of thousands of Jamaicans."
Moses Jackson is the co-founder of the Business Leader Award programme, the founding and former editor of the Business Observer, and a member of the Business Leader Award Selection Committee. He may be reached at moseshbsjackson@yahoo.com.
http://www.jamaicaobserver.com/busin...to-all_8070721
The opening of the telecommunication market...its early rewards
and the tremendous economic opportunities opened.
Rewards? - The best is yet to come!
----------------------
Denis O'Brien — opening up communication to all
BY MOSES JACKSON
Wednesday, October 20, 2010
var addthis_pub="jamaicaobserver";
Three University of Technology students are leisurely browsing the Wednesday edition of the Jamaica Observer newspaper. The story announcing the Business Leader Foreign Investor Award catches the attention of the apparent group leader, a business administration major.
Vivified by the eye-catching news, she abruptly takes possession of the newspaper, points to the headline and blurts out: "Digicel mus win dis!"
Denis O’Brien confers with head of communication at Digicel Group, Antonia Graham, during a break from a board meeting at the Ritz Carlton Hotel in Montego Bay last month.
Denis O’Brien (right), is joined by Kingston’s mayor, Desmond McKenzie (centre) and Information Minister Daryl Vaz on a recent tour of the construction site for the new Coronation Market in downton Kingston, being renovate by the Digicel Jamaica Foundation at a cost of $160 million.
Digicel’s chairman, Denis O’Brien, displays a 4G USB modem – the latest of his compay’s offerings. The 4G is a wireless broadband Internet service for Digicel’s customers who have access to a computer. He is joined by Mark Linehan, Digicel Jamaica CEO. They were at a series of Digicel board meetings in Montego Bay last month.
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Denis O’Brien confers with head of communication at Digicel Group, Antonia Graham, during a break from a board meeting at the Ritz Carlton Hotel in Montego Bay last month.#slideshowtoggler, #slideshowtoggler a, #slideshowtoggler img {filter:none !important;zoom:normal !important}
1/4 There is a surprising intensity and purposefulness with which she delves into the article, reading aloud to her indifferent classmates. They quickly learn that the Observer will consider for the award "investors who, over the past decade or so" have been contributing to Jamaica's economic and social development.
Never reticent to volunteer her opinion — especially to a captivated audience of her peers, she sighs ruefully: "Well a guess Digicel won't qualify to be in it; they have been here for decades. Pity!"
Significantly, but not shockingly, the stentorian pronouncement about Digicel's decades-old presence on Jamaica's soil went unchallenged by the other teenagers. Never enthusiastic to begin with, their interest in the subject waned, and they moved right along.
Through the lens of most 19-year-olds, 10 years
seem like an eternity, and in fact represents almost all their sentient life, so the exaggerated time scale of this UTech student is entirely forgivable. In any case, she is by no means the most extreme among Digicel's diehard customers who routinely flatter their telecoms provider with unearned attributes. There are those, for example — among all age groups — who swear that the Irish investors introduced cellular phone service to Jamaica; others remain convinced that it is they who invented cellular technology.
Denis O'Brien, the founder, principal shareholder and chairman of Digicel Group, along with his executives, have obviously made no such claim. They assess their company's impact primarily by the efficiency that its services bring to the island's farming community, to shopkeepers in deep rural Jamaica, independent traders like plumbers and carpenters, and a host of others who are now a phone call away from suppliers, buyers, and generally those on whom they depend for their businesses to flourish.
"We empower a lot of small and medium enterprise people — plumbers, electricians, farmers," declares Harry Smith, Digicel's director of marketing until 2007, and a recent appointee to its Jamaica board. "Farmers can now negotiate directly, plumbers can now be their own entrepreneurs. It was always difficult to maintain contact in rural Jamaica. We gave people peace of mind."
All of that is true. But if there is a deeper insight to be gleaned from the intimation of the UTech student, it must be the cultural and psychological liberation that is evident within the pre-teen and adolescent cohort — hundreds of thousands who now sport their Digicel brand in their pockets, handbags, and on their hips like a badge of honour.
The image of the UTech student, in what must be a Freudian reflex, patting her jeans for self-reassurance that her Digi was safe — even as she continued to read aloud — would have been unimaginable a few years ago.
O'Brien's own account of the decision-making process that ended with the April 2001 launch of Digicel's service in Jamaica, flies in the face of centuries of accumulated entrepreneurial experiences that are codified in marketing theories, and the business texts that grad school students like to reference in their daily conversations.
Unemployed and idle for three months, a friend of the businessman brought to his attention an ad that had been placed by the Jamaican government in the Financial Times in late 1999, inviting tender for two cellular licences that were up for auction. Technology minister, Phillip Paulwell, having passed legislation through Parliament that formally dismantled Cable & Wireless' monopoly, was now in full stride toward introducing de facto competition within the local telecoms industry.
"I did not have dozens of people on the ground in Jamaica conducting marketing surveys," says O'Brien. "I asked only three questions: how many people are there in Jamaica, how many have phones, and how good is the competition."
This jocular Irishman likens himself to the Jamaican serial entrepreneur, "the ones who, you know, when they sell their business and make a lot of money, they have to use some of the cash to start another business".
In his immediate past life, he was founder, executive chairman and a 14 per cent owner of Ireland's number two fixed line and mobile company called ESAT. The Nasdaq-listed firm had a market cap of US$2.2 billion when he sold it to British Telecom in 2000. O'Brien declines to say precisely how much he pocketed from the transaction, preferring to couch it in generalities, like "lots of money". But, conservatively, assuming that he earned no premium on the listed price — an unlikely scenario in these acquisition deals — his personal take would have been US$308 million, minus the relevant taxes, and so on.
So, at 10 pm, in the crapulent, rowdy environment of an Irish pub, whisky and good friends to boot, this frictionally unemployed entrepreneur waited for a telephone call from his representative in Jamaica, to learn if Paulwell had accepted his bid.
"We bid from a bar in Dublin drinking rum," he fondly recalls. "Frank O'Carroll was in Kingston and was representing us at the auction, and we were constantly on the phone."
The next morning, his head a bit clearer, the reality of this new and very bold capital commitment several time zones away from Dublin began to bear down on O'Brien.
"I had risked a substantial amount of my winnings behind the Jamaican licence from a bar on a Friday night," he muses. "The good entrepreneurs never know when to quit the game, like the typical Jamaican businessman who sells his business and immediately starts another one."
O'Brien describes the US$47 million he paid for the licence as "the King's ransom" — money he had spent without having had a single cellular site or any other piece of tangible asset to hold on to.
"There was an urgency for us to do something to make sure we made a return on the investment," he notes.
The next telephone call was to a friend who O'Brien had employed as an executive at ESAT. For the next four years, this man's name would resonate across the telecoms industry within Jamaica.
Like the investment decision, the conversation with Seamus Lynch provided a glimpse into the Irish mindset. It foreshadowed the tough, can-do approach that these resilient investors were about to unleash on a competitor that for years had enjoyed monopoly by fiat, and, as the market would later testify, had grown steep in its complacency.
"I rang Seamus Lynch and told him that 'you are the chosen one'. He packed a single suitcase. He asked no questions. There was absolutely no debate. He simply said 'yes' and was on the next plane to Jamaica."
The deep-rooted antagonism between the Irish and British is the stuff of legends, and with Lynch's arrival as CEO of Digicel, it was about to play out in the Jamaican market. Dominated by a British firm that was not about to yield a single square inch without a fight, the entire industry became an amplification chamber for the historical acrimony.
"One of our biggest advantages was that we had a great competitor," snaps O'Brien. The sarcasm is unsparing.
The unapologetic contempt for the competitor seems to have seeped all the way down the corporate ladder. Just look at what Harry Smith has to say: "We knew that there was discontent with the incumbent from doing our research. Their attitude was that choice was a bad thing. I would have worked with Digicel for free just to help take down Cable & Wireless."
With such untamed passion — no doubt mutually shared — it should come as no surprise that from the get-go, Digicel and Cable & Wireless (now LIME) became locked into a series of internecine and unending battles - ultimately over market share - with an intensity never before witnessed within corporate Jamaica.
First, there were wars over regulatory issues — claims and counterclaims about which telecoms provider was violating the basic tenets of fair competition; arguments over inter-connection fees, unfair pricing, and so on. Then there were the marketing, price, and advertising wars to win over the hearts and minds of the Jamaican public. Some of the hard-fought legal claims and counterclaims have already made their way all the way up to the Privy Council in the UK. There are others in the pipeline destined for the British Law Lords.
But it turns out that O'Brien was lured to Jamaica by more sublime reasons than the opportunity to antagonise the Brits, and to provide telecoms services to the local market, though, by his own confession, he would never pass up the chance to do either.
Those who are responsible for marketing Brand Jamaica abroad should take note.
"Jamaica has an appeal on its own," beams the Irish investor. "When I thought about investing in Jamaica the first thing that came to my mind was an interesting, exotic and artistic country. Bob Marley was huge in Ireland. Jamaica resonated with the Irish people. The Irish feel closer to Jamaicans than they feel to the British. Maybe it is because back in the 1960s Jamaicans and the Irish had to do the hard jobs in Britain."
Down in Jamaica, O'Brien as chairman, with Lynch as CEO, and Smith in charge of marketing, developed a model that estimated the outer limit of the market at 100,000 handsets for the first full year of operation.
Smith believes that the experience he had gained at his previous job at Red Stripe allowed him to hit the ground running at Digicel.
"My first job was to coordinate the name-change from Mossel to Digicel," he says. "We spent lots of time ensuring that we had good coverage. We knew where the blank spots of the competitor were, and we went about covering them. For example, Flat Bridge; we also covered The Hip Strip in Montego Bay. We concentrated on coverage and network."
Early success came with a heavy financial price, the tabs running up exponentially and quickly surpassing the US$100 million that O'Brien had budgeted as his investment outlay for the project.
"We thought that the opportunity was much smaller than it turned out, and that it would be wonderful to get to 300,000 customers," says O'Brien. "We planned to invest US$100 million, and within the first few months we surpassed the first year's target."
Digicel almost became a victim of its own unprecedented success. It was signing up new customers en masse, and therefore required massive capital outlay over a relatively short period, forcing its owner into leverage.
What's more, the marketing innovations that were responsible for the exponential growth did not come without a price.
"We brought down the cost of the handset from US$200 to US$20," explains O'Brien. "It was a deliberate strategy to subsidise the phones and it was costing us a fortune each month. We wanted to have a good network, with cheap handsets so that the typical Jamaican could have a phone. We planned to go for the mass market and, eventually, the elite also came.
"But every month Seamus was calling me to pump (US)$40 million more into the company. We had to borrow heavily to keep up with the capital requirements because the business was growing so fast."
The executives in Jamaica translated the broad strategic mission into subtle marketing initiatives that Smith believes helped to endear Digicel to the Jamaican public — not only as a brand, but as a
and conscientious corporation.
"Pre-paid became the core of our service offering," he notes. "We looked at post-paid and pre-paid service as different options for payment, not as a difference in status."
No longer were Jamaicans required to have fixed addresses, upfront deposits, national ID cards, minimum age, or to fill out complicated forms, in order to step into the cellular age. Cellular phone owners would no longer have to pay for incoming calls. No longer would their call-time usage be rolled up to the next minute: they would be charged only for the actual time spent on the phone.
These features are now taken for granted, but back then, they were the marketing tour de force that in one fell swoop awakened Jamaicans to the idea that a cellular phone was no longer the exclusive preserve of the privileged.
Jamaicans across all income levels and social classes began to reach for the handsets, and Digicel was at hand to supply them. At the last count, 2.1 million of them were signed up with the Irish cellular service provider. It has taken US$800 million in investments, and 1,100 direct Digicel employees to keep so many Jamaicans talking on this network.
A US$800-million investment is not a small risk for an entrepreneur who was cautioned against investing in Jamaica by none other than his bankers.
"Certain financial institutions advised Denis against investing in Jamaica," according to Mark Linehan, CEO of Digicel Jamaica. "Some people even thought he was mad to go to Haiti."
O'Brien had an inalterable vision of what he wanted to do in Jamaica: he would set up headquarters here, and use the country as a beachhead from where he could launch attacks on the monopolies that were being dismantled as regional governments followed Jamaica's lead.
It is hard to find anywhere, another case of a corporation that has been so faithful to its original business plan.
What is also interesting is the fact that, in the pursuit of this model, O'Brien has created upstream and downstream local partnerships that have themselves become major businesses and employers of labour.
Take the case of the retailer, Fi-Mi Wireless. Its principal, Bernard Henry, joined Digicel in 2000 as its director of sales and first local employee, before jumping ship within months to reach for a bigger opportunity that Digicel was opening up for him and some of his friends who became his partners in the retailer.
"Digicel provided the opportunity for me to get into entrepreneurism," says Henry.
Fi-Mi Wireless opened its doors in April 2001 — on the same day that Digicel officially launched its service in Jamaica -- their exclusive dealer for the telecom, selling its handsets and services.
Today, there are nine branches across Jamaica, employing 60 workers. What's more, Fi-Mi Wireless followed Digicel into some of the markets to which it began expanding once it had Jamaica locked up: Guyana, Haiti, El Salvador, and Honduras. Fi-Mi Wireless established its presence in these jurisdictions through a series of associated partnerships, and can count the 300 workers in these countries among its employees.
Arguably, no other partnership exemplifies the synergy that integration with local capital can create, like the relationship that O'Brien forged with Facey Commodity in 2001.
Facey was already a major player in the country's distributive trade when O'Brien, fed up with what he says was the "mess that the American company" had made only months into the contract, turned to Desmond Blades, Facey's owner — who passed away two years ago.
"Our relationship with Digicel started with a handshake," says Dr Nigel Clarke, Facey's recently-appointed CEO. "Digicel, at the time, needed a quick solution and needed a nimble distribution partner that could respond immediately with deep resolve and commitment. We took up the challenge, leveraged our distribution infrastructure and capability to provide logistics and distribution services to Digicel in Jamaica and have never looked back. It is one of the best business decisions we have ever made."
Facey is the exclusive distributor of Digicel's mobile handsets, airtime, and all its related products, not just in Jamaica but across all 32 markets in which the telecom has a presence.
Clarke says that the partnership with Digicel introduced Facey to countries that it had never been before, and that it has been able to leverage this arrangement to expand its other offerings to these markets.
"Today, nine years later, Facey operates in the telecom distribution, consumer distribution and technology distribution sectors with operations in over 30 countries in the Caribbean, Central America, Europe and with a joint venture in the Pacific," says Clarke. "Our growth and expansion over the past decade has been inspired and enabled, in large part, by our business with Digicel. Today our telecom distribution business has physical offices and warehouses in 23 countries, and we sell into another six countries where we do not have a physical presence."
Everybody has a different perspective on Digicel's impact, and the bases of its phenomenal success.
"O'Brien has changed the Jamaican landscape by bringing technology to Jamaica that we were not exposed to and by driving down the price of communication," says Henry. "He has opened up access so that the common man, who did not have access prior to Digicel, can now get connected."
As an exclusive Digicel dealer, Henry has also been able to experience firsthand, other dimensions of the corporate ethos that have enabled this man and his company to dominate Jamaica's cellular service market.
"O'Brien pushes his core value which has the customer at the centre all the way down to the retailers," he says. "He is passionate about his work and he pushes his team to perform and to deliver to customers. They are very aggressive and push their partners to look outside the box. That has made a difference."
For seven years, Harry Smith had a front-row seat to observe the genius in action. "He is a hard-driving chairman who is very hands-on and very detailed at board meetings," says Smith. "He always wants things done faster and for less cost. You never start a conversation with him by saying you can't, and if you make a commitment that you did not meet, you become very uncomfortable at the meeting."
Smith was part of what Henry describes as "the great team that O'Brien put together that was led by Seamus Lynch, and they were extremely hard-working guys who pushed people like me to heights I never thought I could reach".
O'Brien also understands how to ensure esprit de corps among the senior ranks, and how to enlist the loyalty of members of staff and align their interests with those of his corporation.
So, for example, Smith and other executives who bought into the Digicel vision, joined the company at below-market salary, opting instead for what he describes as the opportunity to share in the future success.
"I, along with the other directors, took a gamble and worked for a small upfront salary to benefit at the back-end," he explains. "We thought we could buy into the success of the company. We made the sacrifice and reaped the benefits."
Smith is reported to have secured a titanic golden parachute when he left Digicel in 2007, so much so that he has been able to opt out of the daily hustle and bustle of the corporate world. He subsequently accepted an executive-in-residency at the Mona School of Business that takes him to the institution twice per week.
In July 2006, O'Brien opened up the opportunity for profit-sharing to all employees when he announced the company's share option scheme.
Linehan, as current CEO, cites himself as an example of how O'Brien also makes it possible for internal upward mobility to be part of the corporate culture.
The Irishman was employed by Seamus Lynch in 2002 as a project manager, and thereafter went on an extensive island hopping as general manager — St Vincent, St Kitts, St Lucia, Trinidad & Tobago, Haiti, Guyana - before being called to the headquarters in Kingston to replace David Hall as CEO of the Jamaican operation.
"This is a story of great organic growth," he beams. "There are others, too, who have got grounding in other operations to become stronger managers."
For its 2009 financial year, Digicel posted group turnover of US$2.2 billion, and reported subscriber base of 10.8 million. More recently, O'Brien sent a clear message that his company was in Jamaica for the very long haul when he broke ground in Downtown Kingston for the mega-building that will serve as the Digicel Group permanent global corporate headquarters.
Despite these bankable indices of success, the chairman as well as his Jamaican CEO would like to believe that their company's more lasting legacy will be the charitable work it continues to pursue.
Most of the charitable giving is funnelled through Digicel Foundation Jamaica — and the foundation that is set up in each country where the telecom does business.
The conviction about the value of charity was captured in remarks made by O'Brien as he launched the Digicel Foundation in Papua New Guinea: "A core belief of Digicel," he declared, "is that as we grow our communities should grow with us."
In Jamaica, Digicel Foundation has contributed $681 million to 140 projects since its formation, placing it within the ranks of the island's most generous charities. The $160 million that the foundation is now spending to build proper facilities for vendors and shoppers at the current location of Coronation Market in Western Kingston, is not included in this calculation.
"Part of his success is due to the fact that he looks for people's needs and sees if they are being met," says Fi-Mi Wireless' Henry. "He looked at what the monopoly was not doing and very quickly focused on that."
While no one doubts that this approach has brought O'Brien and his company unqualified success, Linehan's view is that a truer picture of the inner man emerges when one looks at the needs that he sets out to meet by the millions he spends on projects like the Coronation Market.
"He was amazed at the Coronation Market and saw the need for refurbishing," says the CEO. "He was not asked. He knew that if he could improve the facility it would generate more activity for them and improve the lives of thousands of Jamaicans."
Moses Jackson is the co-founder of the Business Leader Award programme, the founding and former editor of the Business Observer, and a member of the Business Leader Award Selection Committee. He may be reached at moseshbsjackson@yahoo.com.
http://www.jamaicaobserver.com/busin...to-all_8070721
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