Former Digicel CEO discusses telecom’s growth strategy

Colm Delves stepped down from the top job at telecoms provider Digicel at the end of February, but he has not left the firm, staying on as a board member and having agreed to an arrangement that will see him handing over the reins as group head to his successor, Alex Matuschka, during a one-month transition in March.

Matuschka, who worked with another global telecoms provider Veon as its chief performance officer, is no stranger to Digicel, having work with the company for some 18 months, helping to drive Digicel’s transformation programme.

“I think he is the right person to bring Digicel to the next stage,” said Delves, giving a vote of confidence to his successor during an interview with the Financial Gleaner. “I am still staying involved in the company, so I ought to be part of the future,” he added, noting that “at 52, I still have a few years in me”. Indicating that he has no immediate professional plans beyond Digicel, Delves said he will continue his relationship with Digicel from his home base in Ireland.

He described his tenure as group chief executive officer since 2005 for the company that has expanded rapidly from its base in Jamaica, as “exciting and a tremendous journey”. As part of his legacy, he is proud of having grown revenues from about US$500 million in 2004, when he joined the company as group chief financial officer, to near US$2.5 billion now.

This performance resulted from acquisitions and Digicel rolling out its business in 31 markets in the Caribbean and Pacific region. Delves recalled that the company made business in markets previously written off as unviable such as in Haiti, where Digicel now has 4.5 million customers, having entered the market when just about 300,000 residents had a mobile phone.

Rewarding growth story

He has put Digicel’s total global investments in Jamaica since it started operations here at approximately US$5 billion, of which some US$1.5 billion has been invested in Jamaica.

Seeing these fruits of the labour on the part of the company, its leadership and staff has been rewarding, Delves said. The Digicel growth story was also a demanding experience for the former group CEO.

In discussing the growth strategy pursued by the company, Delves said the global build-out was informed by an analysis of the level of service existing in the particular market, which was typically underserved, overpriced and lagging behind in technology. “Then we would build a business case to see if it made sense for us to enter the market.” Once the analysis of a particular location came out positive, Digicel’s business approach has been to build nationwide networks rather than going the route of phased service introduction. Delves said Digicel has always believed in its own conviction that once they provide a first-class telecoms product “people will come”.

“That has served us well,” Delves noted, while acknowledging that some markets have been challenging, with Honduras probably having been top of the list. Digicel eventually sold its Honduras business to rival Claro and bought Claro's struggling Jamaican operation.

"We probably, in hindsight, did not have the appropriate spectrum to be able to compete effectively with the incumbent in that market," he reflected.

He credits Phillip Paulwell, the then technology minister with the former P.J. Patterson-led administration, with having led the charge for liberalisation, giving rise to the Irish businessman Denis O'Brien making the move to enter the Jamaican telecoms market, from where his company has expanded globally.

Delves does not agree with the view that Digicel expanded too fast, resulting in the company becoming heavily leveraged as its debts rose. "The international debt markets were an effective form of capital for us as we were expanding our networks, so we utilised that, and we have a very good relationship with the capital markets," he explained.

He pointed to last year's oversubscribed refinancing of Digicel's debt and what he said was a downward repricing in January. Last year, the company went into the market to raise a loan of US$935 million but ended up with US$1.2 billion, both to pay off old debts and to finance business and technological expansion.

Ready to deleverage

"The ultimate goal of Digicel at this juncture is to reduce that leverage, and that is something that we are in a position to do," Delves asserted. "We invested up front so, therefore, as we get the returns on those investments, the company will naturally deleverage over time."

Delves is proud of the stimulating impact which Digicel and the technologies the firm has brought into Jamaica have had on Jamaican businesses, the economy and the society.

"We are still rolling out our LTE network across Jamaica. In countries like Jamaica, which has a higher reliance on mobile than fixed (telephone service), we will be a catalyst for further development," he explained, noting that with the heavy investment in technology the firm has now expanded into fixed line, broadband and entertainment.

Noting that its fibre network in Kingston and St Catherine is comparable to what Google is rolling out in the United States, Delves said this has resulted in superior service for Digicel's household and business customers. "We are seeing a lot of growth in our business solutions and products. This area is growing at about 30 per cent per annum," he added.

He is very upbeat about the economic improvements in Jamaica over the years and says Digicel intends to be part of the ongoing development in Jamaica and its other markets.

The former group CEO has retired with the 'Digicel 2030' restructuring exercise he has led "pretty well advanced" by his reckoning. This overhaul includes an organisational redesign, network expansion and greater use of digitization. Delves wants to correct the view that Digicel 2030 is purely a cost-cutting exercise, although the process involved staff shedding through voluntary separation in a number of markets. "We had to restructure to be more effective and nimble," he said.

What is his and Digicel's main accomplishment? In a phrase, the democratisation of telecommunications, making the service available to the entire public as distinct from being the exclusive purview of only the better off in societies. He referenced Digicel's founding CEO Seamus Lynch's signal achievement of adding two million Jamaican customers in three years following the company's launch here in 2001 and efforts Delves himself led to grow the Haitian market from 300,000 telecoms customers to Digicel's 4.5 million clients there today.

Main disappointment? "Probably not having listened more to our customers, especially as it relates to 'pain points', including rates and bundles which provide more data." He says Digicel is now taking corrective action with new offerings.

Delves and his family will miss the Jamaican arts scene, the music and the "overwhelming friendliness of the people".