Jamaica was looking for a competitor to the established Cable & Wireless (C&W) franchise at the same time as the global industry was entering a deep decline. It looked like a hard job for an island with a reputation not merely for political problems but also for persistent economic turbulence. The chances of attracting in big players, who might at one time have enjoyed the risk but were now engaged in downsizing, looked remote.

So when an Irish-controlled group with a very ambitious plan and deep pockets put in a bid for the island’s mobile phone licence, there was relief in Kingston, the island’s capital. Their company, Digicel, was looking to play in the whole Caribbean market, but an early foray into Trinidad had been stymied by political changes on that island. So its owners were persuaded by the Jamaica Promotions Organisation (Jampro) – Jamaica’s export and investment agency – to make a bid for Jamaica where an auction for licences was in progress.

Success breeds success

The Irishmen were Denis O’Brien Leslie Buckley and Ozzie Kilkenny. Mr O’Brien is a swashbuckling entrepreneur who had made a fortune in the telecommunications, leisure and media sectors, largely in Ireland, and enjoyed defying established opinion. He was supported by Leslie Buckley, an industrial operator and by Ozzie Kilkenny a rock group manager of legendary bands such as U2, Oasis and Van Morrison. All were successful in business, were entranced by the region’s prospects and believed in their own nose for an opportunity.

Three months after putting their toe into the Jamaican water, the three men had agreed to stump up $47.5m for a licence lasting 15 years and covering the 900kHz and 1900kHz bandwidths. A $175m investment is planned over the coming two to three years to finance the building of a 270-strong mast network and a retail structure. In fact, the project exceeded projections and Digicel expects to invest an additional $60m. The total of $235m makes Digicel’s contribution to Jamaican FDI one of the most significant for a number of years.

Where there’s a will...

They had no support from local and international banks who looked askance at Mr O’Brien’s project and refused to back him. Chief operating office Seamus Lynch says the financial community did not believe the island had the spending power to buy phones; they were also influenced by reports of violence in the capital Kingston, and they were worried about the political risk. The company’s ability to compete with a very large player in C&W who had a well-established position in the market and Digicel’s inexperience in the Caribbean were further disincentives.

Digicel was well aware of these problems, says Mr Lynch, but he argues that the political problems are overstated, too little attention is paid to the island’s growing economy, and the potential of a rural community badly served by landline operators has not been appreciated.

Sole backer

The sole support for Mr O’Brien came from the International Finance Corporation (IFC), which came in with $45m, while telecommunications giant Ericsson stumped up $35m to finance the equipment. The local National Commercial Bank was also supportive, says Mr Lynch.

But banking support was clouded by concerns that the business plan was over ambitious. Some pessimists among the banks even said the company should restrict its mast network to the commercial hub of Kingston, and not build in rural areas.

When the system was launched in April 2001, banking caution was quickly shown to have been ill advised. Within a year of paying for the licence Digicel’s mobile phone service was launched with bright advertising, attractively packaged phones, and sponsorship agreements for a series of events such as a carnival and a horserace.

The marketing push was celebrated by the Jamaican media, which realised something new had landed. The people warmed to the Irish enthusiasm, and the rate of subscription doubled its initial estimates. After three months, the number of subscribers had topped the target of 100,000 for the first year, and no less than 200,000 are expected to have signed up by April 2002.

Expectations for usage, based on research using the famously garrulous Irish, have also been exceeded. During the summer, the company had to stop taking on new subscribers, to allow it to boost its capacity, but according to Mr Lynch, this was “a problem on the positive side”. Funds are being sought from the IFC, Ericsson and international banks to fund this investment.

The new project has won approval not just from the local population but also from the island’s government who have applauded its employment policy. Mr Lynch says its initial Irish contingent of engineers and marketers were given the brief of finding local Jamaicans to replace them as quickly as possible so they could move on to other jobs in the organisation.

Cross-cultural training

Training was required to introduce the Jamaican staff to the Irish business culture, but the effort was worth it. Mr Lynch says: “The idea was to get the Jamaican team in and get them working in the same type of culture that we were used to working with. We had to change their mindset because a lot of business is conducted in Jamaica in a very old fashioned way. It is very bureaucratic and very hierarchically structured. This slows you down in a business context.

“So we decided to keep the structure flat and very flexible and everyone is encouraged to make decisions. That was all totally new to a lot of the Jamaican staff. We brought people in very quickly, and we trained them on the job.”

Young at heart

Young people have taken most of the jobs at Digicel, and the company boasts average age of 35 for the management team. Digicel’s suppliers have also made a point of employing local people, says Mr Lynch, and he singles out Ericsson, the supplier of its handsets, as a particular beneficiary of Jamaican labour. “Every job we have created has produced another six somewhere else in the economy,” he says.

This pleased Jampro, says Mr Lynch, which acknowledged its moral rather than financial support. He adds: “Jampro does not have all the incentives available to it that some of the other industrial development authorities have. But I think that what it lacks in terms of incentives, it makes up for in terms of hard work. It has tried to help us whenever possible and we have found the support it has given us actually helped us to cut through some of the government’s red tape.”

The ability of such an unlikely group of entrepreneurs to win over Jamaica may seem puzzling to those who seek formulae for successful FDI. But Mr Lynch suggests an unexpected element in the Digicel management mix. “We understand Jamaica because we are Irish. We are used to operating on a small island on the edge of Europe, and we understand the island culture. A lot of the big telecom companies do not want to come to the Caribbean because all they see are small islands.

“But Jamaica has a lot of similarities to Ireland, so once you understand the island culture and how people tick you can always buy into that.”

Looking further afield

Having put down its roots so successfully in Jamaica, the company now wants to return to its original plan and win other franchises around the region.

“We are getting a bit more aggressive with some of those other islands,” says Mr Lynch.

Digicel is considering acquiring sites on other islands where it has the best chance of winning licences. The Jamaican experience will be a strong card in its hand as it moves out into the wider Caribbean. The Digicel entrepreneurs appear to have the luck of the Irish, as well as an appetite for well-judged risk.