Ja accounts for 67%-Digicel's revenue

[Tuff Gong]

Jamaica accounts for 67% of Digicel's revenue

US$417 million of its US$623 million Caribbean intake
Dennise Williams
Friday, July 21, 2006



A Digicel store on Knutsford Boulevard in New Kingston.

Cellular telephone provider Digicel's latest advertising campaign proclaims that Jamaicans are number one. And rightly so.

Jamaica contributed US$416.6 million or 67 per cent of Digicel's revenue intake of US$623.3 million for the 12-month period ending March 31, 2006. According to the CIA World Factbook (2006), Jamaica's per capita income is only US$4,400 per year.

The Eastern Caribbean markets of St Lucia, Grenada and St Vincent and the Grenadines contributed US$52.4 million while Aruba, Antigua, Anguilla, Barbados, Bermuda, Cayman and St Kitts and Nevis contributed US$154.3 million to the revenue of the company. The average annual per capita income of these islands is US$18,160 according to the CIA World Factbook (2006).

Currently, the company operates in 20 markets with an aggregate population of 14 million people. Bonaire, Curaçao, Dominica, French Guyana, Guadeloupe, Haiti, Martinque, Trinidad & Tobago and Turks & Caicos were added to the Digicel roster after March 31, 2006.

Jamaica, with an estimated population of 2.7 million, represents 19 per cent of the aggregate population Digicel serves. The company states that its subscriber base was 1.9 million across the Caribbean. And as at June 30th, the company states, "we estimate that we have approximately 2.6 million subscribers."

That said, Digicel made an after-tax loss of US$26.1 million. However, for the three months ending March 31, 2006, the company reports that it earned US$27 per customer with 97 per cent of its customers being prepaid customers.

A success story
Digicel's numbers tell nothing short of a success story based on the ability to tap into an underserved market and a recognition of the Caribbean's oral culture (we love to chat).

This success began and continues to grow in Jamaica. The company states, "We launched services in our first market, Jamaica, in 2001 and since then have rapidly expanded." In 2002, the company's revenue was US$92.8 million, by 2003 revenues grew by 167 per cent to US$248.2 million. And by 2004, revenues grew by 33 per cent to US$329.5 and by 2005 revenues jumped by 45 per cent to US$477.5 million dollars.

This expansion could be considered an explosion. "In Jamaica, we believe wireless penetration has grown from 53 per cent in 2002 to over 75 per cent as of March 31, 2006 including a 74 per cent market share in Jamaica, our largest market. We have achieved market share at or above 50 per cent in five of our 20 markets,"

And although the cellular telephone market is considered mature with penetration levels of over one million customers in Jamaica, Digicel has still found growth in Jamaica. The financial statements reveal, "Increases in Jamaica accounted for approximately 28.7 per cent of the increase in revenues."

As to the other islands, the company vaguely states, "All other islands that had launched prior to March 31, 2006 also experienced revenue growth." However, the company states that its revenues increased 31 per cent from 2005's figures of US$477.5 million to 2006 revenue of US$623.3 million.

The company attributes the growth to, "increased subscriber numbers, stronger average revenue per subscriber and increased minutes of use."

Additionally, Digicel has been able to contain its costs through growth in its network.

"The largest components of our cost of sales are interconnection costs, commissions on prepaid cards and topups and subscriber acquisition costs, which for fiscal 2006, amounted to approximately 37 per cent, 22 per cent and 38 per cent respectively."

However, the company is actively working to drive down its interconnection costs. "Our share of all mobile telephone traffic is over 50 per cent in some markets with a high proportion of high margin on net traffic (calls between our subscribers), where we do not need to pay interconnection fees."

The road ahead
Looking forward, the company states, "By expanding our footprint across the Caribbean, we seek to realise further economies of scale and diversify our operational, regulatory and currency risks."

US$150 million bond issue
Digicel's financial statements for March 2005 to March 2006 period were released in conjunction with an offer to participate in its US$150 million 9.25 per cent bond due 2012. The note will bear interest semi-annually on March 1 and September 1 of each year. The first interest payment will be on September of this year. The offer is registered in the United States and is handled jointly by JP Morgan and Citigroup brokerage houses. According to the offer, the note is unsecured and will be used "to make investments in subsidiaries, the cost of expanding our operations in Trinidad & Tobago and Haiti, a potential return of capital to our shareholders and for general corporate purposes, including acquisitions."
Jamaica accounts for 67% of Digicel's revenue

[RichD]

Re: Ja accounts for 67%-Digicel's revenue

more man have cellie

it look like sey di only ones a jamaica who bruk is di government....

[Gen]

Re: Ja accounts for 67%-Digicel's revenue

[ QUOTE ]
more man have cellie

it look like sey di only ones a jamaica who bruk is di government....

[/ QUOTE ]

yuh seet...mi only regret seh mi nevah get in pan the runnings ...early on in the game...

[Hopyoneson]

Re: Ja accounts for 67%-Digicel's revenue

The equation does not add up because people still tend to under estimate the contributions of the invisible Jamaican (the ones in the diaspora) who send the money back home to assist. I swear to Jah next time someboby tell mi seh mi run whe from the island and not fi chat bout it, mi an yuh. 19% of the users providing 67% of your revenue, and local business men did not look to get into the market when the licenses were up for sale, govt paper did too sweet.

[RichD]

Re: Ja accounts for 67%-Digicel's revenue

i dont think there was anybody local who was in a position to get into it.

although CW has really allowed themself to fall behind.

[RichD]

Re: Ja accounts for 67%-Digicel's revenue

[ QUOTE ]
19% of the users providing 67% of your revenue,

[/ QUOTE ]

jamaica has 19% if the population base...not 19 % of the subscribers

last number i saw was jamaica had about 900,000 digicel subscribers...

[Hopyoneson]

Re: Ja accounts for 67%-Digicel's revenue

[ QUOTE ]
[ QUOTE ]
19% of the users providing 67% of your revenue,

[/ QUOTE ]

jamaica has 19% if the population base...not 19 % of the subscribers

last number i saw was jamaica had about 900,000 digicel subscribers...

[/ QUOTE ]

you are right, after looking again at the information we have almost 50% of the subscribers, so the margin appears more reasonable.

[Tuff Gong]

Re: Ja accounts for 67%-Digicel's revenue

[ QUOTE ]
i dont think there was anybody local who was in a position to get into it.

although CW has really allowed themself to fall behind.

[/ QUOTE ]

Years ago before more man have cell phones, in fact in 1989 I and another Jamaican, who lived in NY drew up a plan for Zone Phones based on the a model I read about in England.

The plans are still at home somewhere. I should have pursued it.


YardPhone offers ‘The Real Alternative’
By Christopher Serju


Fixed line telephone service with all the advantages and convenience of cellular technology at a reasonably price, has been available to Jamaicans since February. Total Telecommunications, a company owned by Jamaicans, has been marketing YardPhone as ‘The Real Alternative’ to traditional landline service. At least two of the company’s principals – Neville Jackson and Thomas Johnson (TJ) – are former Cable & Wireless, Jamaica (CWJ) management executives, each with more than 30 years experience in telecommunications.

Total Communications has entered into an agreement with Oceanic Digital (trading as MiPhone) which allows for the deployment of fixed wireless telephone service using the MiPhone transmission network for the last-mile connection. The new ‘fixed-line’ service is offered over a code division multiple access technology (CDMA) wireless network and supports fixed line telephone features — voice, Internet and PBX applications, with facsimile service to follow soon. The lower cost per line of the CDMA network, the greater base station range and coverage are the two pillars that differentiate the technology and renders it cost-competitive for fixed wireless telephone service.

Features include activation similar to a mobile phone; prepaid service (no billing or collection issues); no installation charge; no rental (customer-own sets) and familiar dial tone, ring tone and busy signal. All these services are provided on a desktop or wall-mounted handset similar to these now in use, with features such as speaker phone, call waiting or call forwarding. The instrument has a built-in power supply and battery backup, with plug-in for a computer terminal, fax or answering machine.

Service is available island-wide to customers wherever MiPhone has coverage. “You just ‘plug and play’,” TJ told the LIVING, in explaining the simplicity of the service. After buying the instrument for J$6,800 inclusive of tax and phone cards (in the usual denominations) the customer takes it home and simply plugs it into a regular electrical wall socket. That’s the extent of the installation! With the instrument activated its all systems go.

The built-in power supply and battery backup make this phone ideal for gardeners, farmers or other persons who out of necessity must be away from their house for extended periods during the course of the day. Just plug out the phone take it with you and all incoming calls will be received with crystal-clear reception. You could even take the phone next door and it would work just as well. While plugged in the backup system is recharged. In fact, the potential impact of this service on construction sites, rural communities beyond wire-line limits and offshore services (boats and ships in harbour), or any other industry requiring temporary service is far-reaching, to say the least.
Once you are assigned a number it never changes, irrespective of how many times you change your address. For example, if you acquired a phone in Kingston and later relocated to Montego Bay, nothing would change. Yardphone will have the service re-activated at the new location. Your number would be same and there would be no relocation charge.

With its full-scale marketing and promotional drive yet to get underway shortly, Total Communications has been steadily building its customer base, with Karen and Trevor Barrett, who operate the Platinum Hotel in Gimme-bit, Clarendon among its first set of customers. Located off the beaten track some 10 or so miles from May Pen, the hotel had some challenges providing the convenience of room-to-room telephone service which somewhat hampered its ability to satisfy some of the needs of customers, now that is likely to change.

The decided advantage of YardPhone service would become apparent during and after natural disasters such as an earthquake or hurricane. Disruption due to fallen telephone poles would not be an issue, with fixed wireless technology providing the means to quickly deploy new telephone lines, should the need arise.

At J$5 per minute to landlines in the United States of America, Canada and the United Kingdom, YardPhone’s international outgoing calling rate is unmatched. In fact, a YardPhone to YardPhone called is billed at $1 per minute, with its cross-network rates still competitive. Calls to cell phones (MiPhone, Cable & Wireless, Digicel) are $9 per minute, while the rate for C&W landline is $4 per minute.

YardPhone offers ‘The Real Alternative’