INTERVIEW - Post-quake recovery may boost Haiti telecoms market

PORT-AU-PRINCE Wed Mar 31, 2010 11:12am IST

A man uses a Digicel wireless phone in downtown Port-au-Prince March 22, 2010. Earthquake-stricken Haiti's telecoms market could double in size in five years if a donor-backed reconstruction effort successfully multiplies jobs and wealth, an executive of the nation's largest mobile phone operator said on March 30, 2010. REUTERS/Eduardo Munoz

A man uses a Digicel wireless phone in downtown Port-au-Prince March 22, 2010. Earthquake-stricken Haiti's telecoms market could double in size in five years if a donor-backed reconstruction effort successfully multiplies jobs and wealth, an executive of the nation's largest mobile phone operator said on March 30, 2010.

Credit: Reuters/Eduardo Munoz

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PORT-AU-PRINCE (Reuters) - Earthquake-stricken Haiti's telecoms market could double in size in five years if a donor-backed reconstruction effort successfully multiplies jobs and wealth, an executive of the nation's largest mobile phone operator said on Tuesday.

Maarten Boute, CEO of Digicel Haiti, part of the Digicel Group, said overseas investors would be closely watching a conference of donors in New York on Wednesday that will commit funds to Haiti's recovery after the devastating Jan. 12 quake.

Digicel Group is the largest foreign investor in the Caribbean nation.

The United Nations-organized meeting is due to back a plan for Haiti's long-term rebuilding that foresees billions of dollars of donor financing to repair and renew Haiti's quake-shattered infrastructure and other business sectors.

Boute said Irish-owned Digicel, which since its entry into Haiti in 2006 has brought mobile phones to the poorer masses there, was well positioned to improve on its dominant local market share, and to exploit opportunities in Broadband Internet and mobile financial services.

Galvanized by Digicel's lower-priced marketing strategy, Haiti's mobile phone users increased in just over three years to 3.5 million from around 600,000. Digicel was the market leader with over 2 million customers.

But mobile penetration, at 37 percent, remained very low for the Western Hemisphere, leaving lots of room for telecoms expansion, provided the post-quake donor-funded reconstruction had a real impact on people's income and buying power.

"If all that money comes in, if jobs are created, yes, there would be more users. That would double the market in five years," Boute said.

But he stressed this would depend on the successful delivery and implementation of the reconstruction financing and strategy to be agreed at the donors conference in New York.

"In the past, a lot of money has been committed to Haiti, but there have been problems spending it," Boute added.

Haiti's government and international development partners are hoping that massive donor financing for a viable recovery plan can haul the country out of its poverty trap and set it on a path of economic self-sufficiency and growth.

Boute stressed the reconstruction should also bring in the private sector by solving bottlenecks and problems, such as land and property issues and past government inability to fully and effectively absorb large-scale aid funds.

"We need large private investors coming in behind," he said, recalling that Haiti was the largest market in the Caribbean outside of communist-ruled Cuba.

HAITI'S BIGGEST TAXPAYER

Competitors in the Haitian market comprised Comcel, a subsidiary of Bellevue, Washington-based Trilogy International Partners LLC, which operates the Voila mobile service, and HaiTel, owned by a Haitian businessman .

Vietnamese military-run company Viettel was also entering the Haitian market, having obtained a contract for fixed line services and other licenses.

Boute said telecoms operators in the country were lobbying the Haitian government to offer more spectrum range for additional expansion.

He also saw the need for a modern fiber optic axle to span the national territory to support wireless technology, a project he said could be funded by big multilateral lenders like the World Bank and the Inter-American Development Bank.

In its position as the biggest foreign investor in Haiti, Digicel was also the country's largest single taxpayer, Boute said, accounting for a quarter of national tax revenues.

"Next year, we will be paying $60 million in taxes," Boute said, explaining the company's overall tax contribution would increase as income tax obligations came into effect.

Digicel, owned by Irish entrepreneur Denis O'Brien, was a leading employer in Haiti, providing around 1,000 direct jobs, but as many as 25,000 more indirectly, for example through vendors of top-up cards for mobile phones.

After the Jan. 12 earthquake, the company donated some $20 million to relief efforts for quake victims, including $5 in free credit to each of its two million customers.

It was also spending $3 million to deliver around 20,000 tents to homeless survivors of the earthquake, helping to rebuild 50 schools and supporting a project to repair and renovate the damaged 19th century Iron Market in Port-au-Prince, a well-known historic landmark.

(Editing by Toni Reinhold)

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