More corporate dividends than social returns

Despite operating in some of the poorest countries in the world Digicel generated operating profits of $754 million last year –a healthy margin of 27 per cent

Irish businessman and Digicel owner Denis O’Brien in Haiti in 2010

Irish businessman and Digicel owner Denis O’Brien in Haiti in 2010

Wed, Mar 26, 2014, 01:00

Last weekend, the UN Broadband Commission for Digital Development met in Dublin at the invitation of Denis O’Brien. His mobile phone company Digicel is a financial backer of the commission and O’Brien was a founding member.

“The long-sought panacea to human poverty may at last be within our reach in the form of broadband networks that empower all countries to take their place in the global economy, overcoming traditional barriers like geography, language and resource constraints,” the Digicel chairman told the two-day conference.

O’Brien accepted that broadband alone would not be sufficient to address the problems besetting the developing world but he said that it could be used a “catalyst” to bring about improved access to healthcare, education and improved inward investment and job creation.

“We believe that access to broadband is a basic human right,” O’Brien said.

This might be stretching things somewhat. Food, water and education for sure but mobile broadband and smartphones?

O’Brien knows a thing or two about bringing technology to the masses in developing countries through Digicel’s activities in 30 markets in the Caribbean, central America and the Pacific islands.

Haiti is recognised as the poorest country in the western hemisphere. It also happens to be Digicel’s biggest market by revenues, having launched there in 2006.

The penetration of wireless communications has risen in Haiti from 5 per cent in 2005 to 59.4 per cent in 2012, according to the 300-page document produced to support Digicel’s latest bond offering.

This was largely on the back of Digicel’s substantial investment in the country. It’s a significant advancement that has no doubt brought certain benefits to the country.

Yet Haiti remains in dire poverty with its GDP per capita a paltry $799. More than half the population is considered illiterate, many don’t have access to clean running water, infant mortality is high by western standards, and parts of the country are inaccessible by road.

The earthquake in 2010 exacerbated the situation. Digicel’s bond document notes that Haiti’s “long-term recovery is dependent on foreign aid, which may not be sufficient to address the country’s needs”.

The country also relies heavily on remittances from expats in the United States and elsewhere, a process admittedly made easier in recent years by Digicel’s technologies.

Digicel has 4.3 million subscribers (roughly one-third of its total customer base) in Haiti and made an operating profit of $102 million on revenues of $528 million last year. Its subscribers pay it about $120 each per annum to use its services. That’s quite a sum of money given the poverty in the country and meagre average earnings.

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