A carrier’s success story: establishing network services in underserved countries

Edgar Geidans is an internationally experienced CTO who puts his customers first. That has been the key for Trilogy International Partners to become a strong player in its chosen countries, along with deploying capex sensibly to maximise return on investment.

A smart carrier is one able to offer excellent services to its customer base, understand its strengths and weaknesses and ensure good returns to its investors. And Trilogy’s solid heritage and experience have helped this mid-sized company to keep its promises and continue expanding.

TowerXchange: Edgar, please tell us about Trilogy International Partners, its operations and plans for the future.

Trilogy was founded in 2005. However, our heritage dates back to the nineties with our first venture, Western Wireless Corporation, founded by John W. Stanton and Theresa Gillespie in 1994.

Western Wireless was a mobile network operator that offered telecom services in 19 western US states and several foreign countries under the brands Cellular One and VoiceStream. VoiceStream was then sold to Deutsche Telekom, now known as T-Mobile USA.

While Western Wireless was focusing on the domestic US market, Western Wireless International offered mobile services in Austria, Ireland, Slovenia, Latvia, Bolivia, Haiti, Iceland, Croatia, Georgia, Ghana and Cote d’Ivoire, counting almost two million subscribers in its portfolio.

When Alltel acquired Western Wireless, some of Western’s founding members and executives went on to create Trilogy International, by acquiring several of Western Wireless’ operations in Haiti and Bolivia from Alltel. So, although new, Trilogy has a very strong pedigree in wireless both in the US and internationally spanning over 30 years.

Today Trilogy is active in New Zealand, under the brand 2degrees, and in Bolivia and Dominican Republic as Viva. Voilá, our Haitian brand, was sold to Digicel in 2012.

Trilogy is an entrepreneurial business and as such, we like to seek opportunities in emerging markets where we feel we can put our expertise to work. As markets shrink due to consolidation, there are less possibilities to expand but most of those opportunities will be in underserved countries where we see the most potential for growth. We would also investigate other opportunistic ventures should they present themselves.

As part of our commitment to the growth of these countries, Trilogy is also involved in social responsibility programmes. In 2009, Trilogy was granted the “Award for Corporate Excellence” by then Secretary of State Hillary Clinton for our efforts in Haiti.

TowerXchange: Can you introduce us to the telecom market in Bolivia, its main characteristics and key challenges you face?

We started operating in Bolivia in the late nineties and we have been active there for over 15 years. To date, we count over 2 million subscribers and our offering has evolved from GPRS and Wimax to an ever growing national 4G coverage.

Our plans in Bolivia are to keep growing our network and focusing on enhancing our range of offerings. As the market becomes more mature and penetration grows, including data adoption, we will be ready to extend our services. For now, the Bolivian mobile penetration has been under-performing compared to the rest of the region, at approximately 77%.

TowerXchange: Can you introduce us to the telecom market in the Dominican Republic?

We have been active in the Dominican Republic since 2006, when we acquired 100% of Centennial Dominicana from Centennial Communications, a wireless communication company which operated in North America, Puerto Rico and the US Virgin Islands.

In Q4 2013, both Tricom and Orange were sold to the Altice Group, a multinational cable and telecommunications company. So, as I mentioned earlier, market consolidation continues even in our served markets, there will be just three active carriers in the DR. So for now we are just watching how the consolidation unfolds.

TowerXchange: Please introduce us to Trilogy’s operations in New Zealand.

We started operations in New Zealand in 2009, thanks to our partnership with the local spectrum holder, Hautaki Trust. The local market used to be led by two dominant players, Vodafone and Telecom New Zealand, which both sat in a comfortable duopoly and didn’t provide compelling offers to their customers.

Since our entry in the market, we have been able to provide a variety of options and fair prices to our customers, and we have been extremely successful. You could say we liberated the market by creating a more competitive environment and in three years we have acquired over 1.2million subscribers and changed the status quo. This has been for us a tremendous accomplishment in a very mature market with over 120% penetration. We are now planning our LTE launch, scheduled in 2014, and offer a high quality 4G network.

TowerXchange: Tell us about Trilogy’s tower strategy.

Trilogy has always been and are very open and willing to co-location and infrastructure sharing. In fact, back in the United States, we frequently used to share our infrastructure and lease tower spaces where we operated as Western Wireless.

However, the culture is different in Latin America and other carriers are rarely open to infrastructure sharing. There is a perceived advantage still felt by carriers owning their infrastructure and we haven’t had many opportunities to agree to such tower sharing deals. However, we are curious to see what happens with the consolidation of Orange and Tricom in the Dominican Republic, as this might open up discussions regarding infrastructure sharing. We would start discussions with the passive side, then possibly move to the active network.

Towards the end of 2013, there have been renewed discussions between Trilogy and another Bolivian operator about the possibility of active and passive infrastructure sharing. But for now, these are just exploratory talks.

It’s important to underline that in Bolivia and Dominican Republic, there isn’t an existing regulation in favour of infrastructure sharing. Therefore, for now, carriers are not really pushed to seek this option. As a result, we typically own 95% of the towers we operate. We adopted a very classic model of leasing land space via long term agreements and building our own steelwork, power plants and antennas. We currently own over 95% of the 500+ towers we operate in the Dominican Republic and of the 700+ we run in Bolivia.

TowerXchange: Have you ever considered selling your passive infrastructure?

Yes, we did have internal discussions about the possibility of selling our tower portfolios. Trilogy wouldn’t exclude this option under the right circumstances and with a sound business model. We are aware that partnering with towercos is a growing operational model among carriers and we are open to it. The US is a prime example. Being an entrepreneurial company, Trilogy always seek the best option for our growth.

Carriers are starting to realise that site and tower management operated by tower companies are a positive way forward, as it leaves them to focus on their core business and releases them from the related costs, maintenance and management.

TowerXchange: Moody’s has recently changed the company’s rating outlook to stable from negative in light of the positive indicators in EBITDA and reduced leverage. Can you tell us the key components of Trilogy’s path to success?

Our strategy is working well because we are strongly focused on providing ROI to our investors while ensuring a very high quality of service to our customers.

We have historically provided good returns to our investors and that is a key to succeed. On the other hand, I am aware that we operate in several countries deemed challenging by many investors.

Bolivia is a key market for us; a country with a very strong political structure and a recently nationalised telecom company, ENTEL (nationalised in 2008). We have been active in Bolivia since 1999 and have endured the country politics and policies since then and we work with our investor community to keep them regularly informed.

We have deployed significant capital in New Zealand to enter a mature market with over 120% penetration. It was a challenge, but it’s now giving the expected returns. In fact, our operations in New Zealand have delivered positive EBITDA over the last 5 quarters, a tremendous performance.

TowerXchange: As CTO of the group, what are your priorities in terms of network enhancement and further improvements to each company?

My priority is, and always will be, our customers. Without happy customers, we wouldn’t have good revenues to generate an ROI. This is our core business and has to be the focus of our activities.

I am also focused on ensuring that our networks operate efficiently, exceeding quality criteria by default. It’s very important that our customer base enjoys a good service but at the same time, we have to be cost efficient. Being a mid-sized company, we must keep a very close eye on opex and balance it with the requirements of our core business.

I classify Trilogy as a nimble follower, not necessarily the technology leader. So if our competitors plan to offer certain service, we will very rapidly adapt. We may not be the first but we will respond swiftly to the market needs. And that has been a very successful model for us.

Thinking back to early 3G, I feel that companies invested massive amounts of money to deploy the new technology when the market wasn’t ready. Smartphones didn’t exist and high end devices were prohibitively expensive . We now have a very solid ecosystem of devices in place, available to virtually anyone across the globe. So I can foresee 4G being implemented with much greater and immediate success. With the price point of bundles coming down drastically, the 3G networks began filling up and returns were eventually delivered. But the process was way too slow. With 4G, we have the ability to predict the ROI because devices are already available and people are more aware of their options.

One of our key target groups are the “Millennials”. They are the best equipped in terms of devices. They are the ones we always need to keep happy as they are the future drivers of our financial returns.

TowerXchange: Your Bolivian company, Viva, launched a wireless public telephone service called ”Puntos Viva”. Can you give us more details about it?

We were pioneers in launching Puntos Viva in Bolivia.

Bolivia has its own GDP challenges and many people still cannot afford to own a mobile phone due to lack of electricity, money etc. Over ten years ago, we recognised this reality and provided a custom designed desk telephone, operating on GSM wireless network, in street shops. We offered the devices to the shopkeepers who would top them up at discounted prices and sell calls by the minute to their customers. A margin would stay with the shopkeepers, hence providing an additional source of income. We now have over 50,000 Puntos Viva across the country and, in addition to the income for these small business, we are offering a tremendous service for the portion of the population without access to mobile phone services.

We used to run a similar service in Haiti which is now part of the Digicel offering.

Moreover, this has been an amazing branding opportunity for us as it made our brand highly recognisable across Bolivia and help connect our company with the people of Bolivia.

TowerXchange: How is telecom regulation impacting your international operations?

One lesson learnt in our years of international business is that each country is unique, and we see that at the regulatory level.

New Zealand is a mature market with an independent, high quality regulator, ComCom, which is not only internationally savvy but has a good understanding of dominant market power and internal market dynamics too. So we enjoy a constructive regulatory environment for our 2degrees operations.

The Dominican Republic’s regulator, Indotel, works to keep a level playing field, independence and fairness in the market and strives to replicate successful models such as those found in North America. In my opinion they sometimes lack international exposure to best Regulatory trends and practices, but Indotel generally adopts US FCC recommendations and is a fair player in their activities and market consultations.

The situation is different in Bolivia. We are operating in an environment where the largest telecommunications company was recently nationalised and the government regulator, ATT, is in charge of all the major ICT policies as well as transparency and quality control by telecommunications service providers.

TowerXchange: How would you like Trilogy to look like in 3-5 years?

LTE and LTE Advanced will be a firm reality and data subscriber numbers will grow by the day. We now have LTE trials in planning, but in 3 to 5 years, we will experience mature LTE deployed in most markets. We will live in a highly penetrated world of multi-device users and users with multiple subscriptions.

New advancements will lead to M2M communications being increasingly implemented in the automotive industry. That will represent a tremendous opportunity for wireless operators but also a challenge as networks will need to keep expanding to cover new solutions and applications.

Electronics will play another big role with smart TVs being connected with embedded LTE.

I anticipate continuous growth in the number of devices and volume of data being consumed. So we will need to provide higher quality and bandwidth to an expanding customer base in our markets. In summary “continued rapid data growth”.

TowerXchange: Can you tell us about the group’s experience in raising capital and who are the investors involved in Trilogy?

We have an excellent reputation among the investment community for providing a solid ROI. Thanks to that, we generally have had access capital to when needed.

Trilogy has a long standing relationship with Providence Equity, one of our stronger backers.

On the other hand, it is very important for us to be able to raise capital at a local market level and we’ve been successful in that, too, with local banks and investors. It helps to build our local business relationships and local awareness. I would consider this one of our core commercial strengths.