Telecoms tycoon: Bermuda is one of world’s top five financial centres

By Jonathan Kent Royal Gazette

Bermuda is one of the top five financial centres in the world and a secure jurisdiction, according to Digicel owner Denis O’Brien.

That is why the Irish entrepreneur, who has masterminded the phenomenal success of the Caribbean region’s biggest cell phone network provider, has incorporated his companies here.

The latest entity Mr. O’Brien has set up on the Island is Digicel (Central America Holdings) Ltd. It joins Digicel Ltd., the original company, founded in 2000, Digicel Group and Digicel Pacific on the Registrar of Companies’ list.

In an exclusive interview with The Royal Gazette, Mr. O’Brien said: “Bermuda is a very favourable environment if you are an investor. It’s very safe and is one of the leading financial centres in the world — in the top five.”

Mr. O’Brien, a former deputy governor of the Bank of Ireland, was ranked on The Sunday Times Rich List 2006 as the eighth wealthiest person in Ireland with an estimated fortune of [EURO]904 million ($1.23 billion). He made a considerable amount in the Irish telecommunications industry before he sold up, created Digicel Ltd. and launched its first service in Jamaica in April 2001.

“We felt there were not any opportunities in Europe any more, because the mobile business was turned on its head by treaty licences and so Europe went out of favour overnight,” Mr. O’Brien said.

“So we looked farther afield, including the Caribbean. The first country to liberalise in the region was Jamaica, so we acquired a licence there and launched in 2001. Within 11 or 12 months we overtook Cable & Wireless as the largest provider and now we have about 77 percent of the market there.”

In its first 100 days of operation, Digicel signed up 100,000 phone subscribers in Jamaica — a goal originally set for the company’s one-year mark.

“From Jamaica, we went island-hopping,” Mr. O’Brien said. “Through getting licences and buying out existing businesses and rebranding them as Digicel we expanded our reach.”

The momentum gained from that remarkable start has continued through the past six years to the point where the company now operates in 22 countries, including Bermuda. And last month’s acquisition of a licence to provide a GSM service in Suriname will make that 23 markets.

Digicel came to Bermuda in late 2005 after it bought out Cingular Wireless’ Caribbean and Bermuda operations. Last year, the takeover of Bouygues Telecom Caraibe helped it to enter the French West Indies.

In addition, Digicel Pacific, a sister company of Digicel Group, has been awarded GSM licences in Samoa, Fiji and Papua New Guineau — a country of 6.5 million people.

Now the company that started out just six years ago boasts four million customers, 3,000 employees and 870 retail stores, and has invested more than $1.5 billion in the Caribbean region.

So had Mr. O’Brien expected such rapid growth?

“I’d say we got an inkling of how it would go after a year,” he said. “By 2002, we were thinking, ‘This is going to be a wild ride’.”

Probably Digicel’s most remarkable success has come in Haiti, the poorest country in the western hemisphere.

“We always aim to give a first-world service — whether it’s in a wealthy country like Bermuda or in a poor country like Haiti,” Mr. O’Brien said.

“We’ve invested more than $230 million in Haiti, where they had elections a year ago and they now have a very progressive administration. In less than a year, we’ve got up to 1.3 million customers.”

The company has looked to places with low cell phone penetration for optimum opportunities, regardless of the wealth of the population. The pre-paid system allows it to avoid the potential pitfall of subscribers in poor countries being unable to pay their bills.

Widespread sponsorship of sports has enabled Digicel to raise its profile. For example, it sponsors the West Indies cricket team and football’s Digicel Caribbean Cup, as well as giving financial backing to both football and cricket competitions in Bermuda. In the Pacific, it is the title sponsor of the world-beating Digicel Fiji rugby sevens team.

“We like to get involved in the communities where we operate and play a role,” Mr. O’Brien said.

Digicel Bermuda has been successful in growing its subscriber base since the Cingular takeover and the Island had proved a “fantastic market”, Mr. O’Brien said.

And he offered support for the Governments proposed telecommunications reforms that would remove restrictions on foreign ownership in the Bermuda telecommunications industry and ease the licensing rules that have limited the range of services a company can provide.

“We would prefer not to be handing our international traffic to another company,” Mr. O’Brien said, referring to the rules which require companies to buy capacity on the Brasil Telecom submarine cable from international carriers Cable & Wireless and TeleBermuda International.

“The Government is taking steps to liberalise that and the policy has to be well thought out. What is happening is probably the right way to do it, but we’d like to see it happen a bit quicker. But the Government is progressive and is trying to change things for the better.”

There were expectations last year that Digicel was about to float on the New York Stock Exchange. It never happened and it is not likely to happen any time soon, said Mr. O’Brien.

“We have no requirements to go to the capital markets and so a flotation is not in our plans,” he said.

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