UPDATE 1-Irish cellphone entrepreneur banks on a smarter Haiti
By David Adams
PORT-AU-PRINCE Jan 16 (Reuters) - When Irish billionaire Denis O'Brien set about building a cellphone company in the western hemisphere's poorest country, there was no shortage of skeptics.
Six years later O'Brien's company Digicel is the largest private investor in Haiti and has 4.8 million users, about half the population. It is a rare beacon of entrepreneurship in a country still struggling to rebuild after the 2010 earthquake.
O'Brien's ambitious plans for Digicel are part of his bullish vision for Haiti which stands in sharp contrast to the usually gloomy forecasts for a nation crippled by perpetual political turmoil and natural disasters.
Promotion of homegrown entrepreneurship is rare in Haiti, where the government and banks have done little to stimulate investment and a small business elite has traditionally profited from import monopolies that stifle local production.
On a typical whirlwind visit shortly before Christmas, O'Brien, 54, flew into Haiti from New York on his corporate jet for a monthly Digicel board meeting. He then hosted a gala celebrating Digicel's 'Entrepreneur of the Year', a televised event he imported from Ireland to inspire small business.
Six feet tall with white hair and ruddy cheeks, O'Brien is easy to spot among the crowd of mostly local business people and dignitaries, including President Michel Martelly.
"Haiti needs more people like you," Martelly said. "If it wasn't for Denis, we'd all be sitting here alone."
PHONES FOR THE POOR
The Digicel Group is a privately-held company founded by O'Brien in 2001 and headquartered in Jamaica, with 13 million customers in 31 emerging markets, mostly in the Caribbean and Pacific regions.
O'Brien holds 94 percent of Digicel shares and made Forbes' billionaires list last year (No. 205) with a net worth of $5 billion. He models himself on Sudanese-born British billionaire Mo Ibrahim, founder of Celtel, an Africa-wide cellphone network, and India-based Sunil Mittal, founder of Bharti Airtel.
Ibrahim sold Celtel in 2005 for $3.4 billion and now runs the Mo Ibrahim Foundation to encourage better governance in Africa, while Mittal also runs his own foundation.
"They proved the concept that you can have people with very little disposable income in real terms, but who want a phone and they'll pay you for it, and you can afford to build up quite a large network," O'Brien told Reuters.
Digicel is now looking to enter Myanmar, a country of around 60 million people that has one of the lowest mobile penetration rates in the world, with only 3 percent of the population owning a phone in 2011, according to the World Bank.
Digicel says it had revenue of about $2.5 billion in the year to March 2012, with Haiti leading the way, generating $439 million.
O'Brien, who is nonresident in Ireland for tax purposes, is not without his critics back home in Ireland where he launched his first mobile phone company and also is the main shareholder in the country's largest media company.
His purchase of an Irish mobile phone license in the 1990s led to a lengthy public inquiry that found "beyond doubt" that a government minister had imparted substantive information to O'Brien in securing the licence.
O'Brien has said the 14-year-old inquiry was fundamentally flawed because it was based on the opinions and theories of one judge and his legal team. He later sold the company, Esat Telecom, before launching Digicel.
The company's arrival in Haiti in 2006 was a rare example of foreign investment in a country more used to dependence on foreign aid handouts. Digicel's shiny headquarters was inaugurated a year before the 2010 quake and was one of the few big buildings to withstand it virtually intact.
Two existing cellphone companies which offered spotty, more expensive services were quickly overtaken as Digicel invested in a national infrastructure and offered handsets for as little as $7 with low rates for its mostly pre-paid customer base.
"Denis revolutionized the communications sector. Before cellphones were a luxury and now they are a must," said Haiti's tourism minister, Stephanie Villedrouin.
O'Brien's investments in Haiti go far beyond telephony.
Last month, he broke ground on Haiti's first Marriott hotel and Digicel's charity foundation is spending millions to build 150 schools across the country for 90,000 students.
His approach has won acclaim from the likes of former U.S. President Bill Clinton, who heads the Clinton Global Initiative (CGI) and is also the United Nations special envoy to Haiti.
O'Brien coordinates CGI's Haiti Action Network, whose members have committed more than $350 million to education, infrastructure and business-development projects.
"The CGI program in Haiti is considered one of the best. It's really because of Denis's strong leadership," said Anne Hastings, director of Fonkoze, a micro-credit finance institution in Haiti. "He sets goals and people have to achieve them. That's unusual in Haiti."
His first non-profit investment in Haiti was the capital's historic Iron Market, the heart of downtown commercial activity, which O'Brien spent millions to rebuild after the earthquake.
"All the problems in Haiti are fixable, you just need the right project skills," he said. "You have to harness the people and show them how to do it. There's so much talent here, people who are creative and inventive."
To prove his point, Digicel has moved its call center for the French-speaking Caribbean from affluent Martinique to Haiti.
On his first visit to Haiti, O'Brien was struck by the streets crowded with vendors. "You have all these entrepreneurs all over this city. They are natural-born sellers," he said.
By celebrating enterprise on the TV show, a highly-produced affair with crane-mounted cameras, lighting, and dry ice and confetti for the winner, O'Brien hopes to inspire a new business culture of import substitution. This year's finalists included a coffee milling business, a solar energy company, a fish exporter, and local artisans and fashion designers.
"Hopefully somebody is sitting at home or under a tree and says 'I got an idea,'" he said. "Instead of importing rice, grow rice. Instead of importing chickens, breed chickens. Instead of importing eggs, lay eggs."
O'Brien's next goal: launching a smartphone revolution in Haiti and offering mobile banking to the poor. Digicel is investing in extra bandwidth this year to handle a 4G network upgrade, raising its total investment in Haiti to more than $600 million. "What we're trying to have is a First World telecommunications network in a developing economy, and most of the time that doesn't happen," he said.
Digicel relies on Asian firms such as Samsung to continue lowering prices thanks to cheap Taiwanese semi-conductors. "We can buy a smartphone for $70 today. In 2013 it will be $30," he said, predicting prices would hit $10 within a couple of years.
Since gobbling up its main competitor, Comcel, last year, Digicel admits it has had service issues but says they are being addressed. Some suggest it may have too cozy a relationship with the government, creating a virtual state within a state, rivaling the influence of the United Nations or the World Bank.
Indeed, Digicel is Haiti's largest taxpayer and its main building houses the offices of the mayor of Port-au-Prince as well as the Red Cross. "Digicel's building is where I come to give blood," says Cyril Pressoir, a local businessman whose father owns a travel company. "Should it be like this? Shouldn't we be able to stand on our own feet? Sure, but he (O'Brien) gets things done."
O'Brien, whose mother was a human rights activist in Ireland and who is a father of four, has spent $25 million on development projects through the foundation.
"Our foundation is every bit as important as our technical department," O'Brien said. "Most multi-billion dollar companies rob the country blind. We like to make a good profit but sleep well at night."
His work is dotted all over Haiti. "Denis is always the first to respond if we need help," said Gena Heraty, an Irish woman who has worked in Haiti for almost 20 years and heads a special needs program for poor children run by the charity Friends of the Orphans.
When Heraty told him about a girl who suffered brain damage when a wall fell on her during the earthquake, O'Brien built a house for the girl and her mother and bought a 'tap-tap' - a traditional Haitian pick-up truck taxi - to help out the father.
The morning after the business gala, O'Brien drove out to the rural community of Saut d'Eau for the inauguration of one of the new schools built by his foundation.
The school's nine classrooms, computer lab, auditorium, cafeteria, library and basketball court cost $326,000.
The Digicel Foundation has built 87 schools so far, at an average cost of around $180,000. It does not pay operating costs so is careful to pick communities that are committed to running the school.
Teachers at the Saut d'Eau school earn $60-65 a month and school fees are $10 a year. The school was founded by Paul Calisme, a 59-year-old Haitian ex-pat who runs it with savings from his job at a Connecticut car wash. "I left my town 23 years ago but I had a dream," he said, noting that about 25 percent of local children do not attend school.
At a simple ceremony, children in plaid uniforms sang a welcome song ending with a shout of "Long live Haiti. Long live Digicel."
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