Insights into the Dominican Republic and Bolivia

At the 2015 TowerXchange Meetup Americas, Edgar Geidans, Group CTO of Trilogy International Partners, took center stage and shared his views on the status of the Dominican Republic and Bolivian markets as well as insights into the Caribbean industry and its potential for growth.

Edgar was interviewed by Carlos Tilac, COO of Torrecom and TowerXchange reports on major news and insights gathered during the session.

Carlos Tilac, COO, Torrecom: Please share with us some background information of Trilogy

Trilogy was formed back in 2005 and is now active in New Zealand, the Dominican Republic and Bolivia. We used to own a business in Haiti which was sold about one year and a half after the earthquake. To date, Trilogy is licensed to serve around 24mn customers and has a subscriber base of 4mn.

The origins of Trilogy date back to the nineties when John W. Stanton and Theresa Gillespie founded Western Wireless Corporation, an MNO operating in nineteen U.S. states trading as CellularOne and various international markets such as Austria, Slovenia, Croatia, Latvia, Georgia, Ghana, Ireland, Haiti, Bolivia and Iceland.

The group also owned VoiceStream, one of the first companies to introduce GSM services in North America. The company was sold to Deutsche Telekom in the early 2000’s and is now known as T-Mobile - USA. So even though Trilogy doesn’t have yet worldwide known brand, our heritage includes very successful ventures dating back decades.

Carlos Tilac, COO, Torrecom: Could you introduce us to the Bolivian mobile market and tell us about your recent investment of US$100mn in fibre optic and development in Bolivia?  

Bolivia is and has been a great market for us. We have been operating there for over twenty years and have almost 2.5 million subscribers in the country.

The market share in Bolivia is split fairly equally between the three operators, Millicom, Entel and Trilogy’s Viva, who each own roughly 30% of it. Entel used to belong to Telecom Italia and was nationalised in 2008.

The GSM and wireless industry has been expanding rapidly over the past fifteen years. Trilogy has since strengthen its position by developing from 2G to 3G and launching WiMAX and we are now days away from launching 4G LTE.

In terms of our recent investment, fibre optic is the only real option to support the tremendous data growth Bolivia is experiencing. We are still utilising some microwave as the backbone of our network but fibre is capable of carrying huge amount of data and the investment is in line with our growth strategy.

In fact, we started a dedicated plan to deploy fibre into our network about five years ago and today, over 63% of our cell sites are directly connected to fibre, including all of our current LTE sites. In Bolivia, we have invested historically over US$500mn in our network and a considerable portion of it more recently is going towards fibre optic technology.

Carlos Tilac, COO, Torrecom: How do you see the Bolivian market for towercos?

The market has matured much over the past fifteen years. The country’s GDP and GDP per capita have been growing, inflation has been historically low and is now steadily below 5% and these factors contribute to creating a positive business environment for us.

I have recently read an international bank report that indicated that the top three performers in the region in terms of financial growth are Bolivia, Panama and the Dominican Republic. According to the World Bank these countries are very rapidly developing and we at Trilogy do see that reflected in our balance sheets.

With wireless penetration just over 90%, hence lower that the regional standards, the potential for growth is there. Smartphone penetration is also quite low and this is also related to the fact that as a mostly pre-paid market, we cannot subsidise handsets. Internet connectivity is generally exploding and the curve in terms of data adoption is definitely going up. People want data and internet access and all our statistics confirm that.

Both economic and wireless indicators show a real opportunity for the telecom sector in Bolivia however the towerco model hasn’t yet been adopted.

Trilogy is a very progressive and opportunistic company and we have always been very open to infrastructure sharing so we would encourage towercos to take a look at the Bolivian market. If given the right opportunity, we’d definitely consider co-locating rather then building more towers, but in this market, local operators are still very protective of their networks and assets. Our perspective is the one of a progressive operator, inclined to deploy capital into networks rather than infrastructure, therefore we are always looking at how we can control our capex by not having to continuously build new sites.

Carlos Tilac, COO, Torrecom: Please tell us about Trilogy’s Dominican Republic business and experiences in the country.

Last year, we began the process to divest and monetise our tower portfolio in the Dominican Republic. At that time, we had several interested parties and we went through the whole process of information exchange, due diligence et cetera, until we actually shortlisted a couple of potential buyers. However, while working on the commercial conditions, we didn’t reach a final agreement. That said, the process was very informative for us and we still hope we can find the right tower partner to open up the market and create a new wave of infra-sharing in the Dominican Republic.

The ICT sector in the DR has been growing solidly as shown by the recent US$1.4bn investment made by Altice to purchase Orange Dominicana. The market has definitely changed since the last TowerXchange Meetup I attended and there have been considerable foreign investments in the Dominican Republic. Now we are in a consolidation phase with Orange and Tricom merging.

Indicators show that the local telecom industry is pretty lucrative and with around 10mn people and penetration rates just over 90%, there are still considerable opportunities for future developments.

Our brand, Viva, is the third operator and although we retain a small share of the market (approximately 700,000 subscribers) compared to Claro and Orange, our business has been growing steadily and is healthy.

Carlos Tilac, COO, Torrecom: Is Viva planning to launch LTE in the Dominican Republic anytime soon?

I believe we would need to raise considerable capital to launch LTE in the Dominican Republic and divesting our tower portfolio would be an ideal way to do so.

In the future, we will follow companies like Orange and Tricom, which have already launched LTE, in response to the growing need for data and modernisation. We would also need to acquire spectrum so the road to LTE is still ahead.

The process is ongoing and started with the RFP to modernise our network and the search for the right towerco to acquire our tower portfolio.

Carlos Tilac, COO, Torrecom: As we discussed about Bolivia, do you see tower companies expanding in the Dominican Republic in the near future? 

Personally I would say that the opportunity does exist. Teletower Dominicana is the only towerco present in the country and its entrance was very much driven by a deal with Tricom.

Towercos have shown interest in our portfolio and in the country’s tower industry as a whole. However, often towercos are risk averse and need to assess the status of the market very carefully before breaking into it. I see towercos among the audience that are doing business in countries I consider more risky than the Dominican Republic though!

The national GDP was ranked higher than any other Caribbean and Central American country (US$60bn) and it has been growing at a rate of 4% for the past four years. Thanks to its proximity to the U.S. and its overall positive growth indicators, I would have expected towercos to enter the DR market sooner.

Carlos Tilac, COO, Torrecom: I am sure many people in the audience would like to provide companies like Trilogy with energy products in countries like the Dominican Republic… What’s the status of the grid in the country?

The National grid in the Dominican Republic isn’t able to provide power to the entire country at all times. Therefore, we do have blackouts in some areas which can last up to six hours. That said, when available, the grid is pretty strong.

We have looked at a number of technologies to cope with blackouts and we are now quite satisfied with the solution we’ve adopted. Fundamentally, we have decided to use batteries rather than diesel generators during blackouts in order to reduce our dependency on diesel.

I believe there are significant opportunities for energy storage companies in the Dominican Republic and elsewhere in the Caribbean as mobile network operators need to use distributed energy to power their sites.

TowerXchange: Carlos, how would you sum up the broader opportunity in the Caribbean from the tower company’s point of view?

In order for a tower company’s investment to make sense you would need to consolidate various islands or countries – deals for 10-15 towers are not a big enough opportunity. It might need a pan-Caribbean operator like Digicel or Cable & Wireless (LIME) to consolidate tower assets across the Caribbean and into Central America to create an opportunity of the right scale. Even with scale, another challenge would be changing the culture of network planning in the Caribbean.