Rock Mobile investing $13b in telecom network
Data and broadband priority services
ROCK MOBILE plans to invest US$90 million ($13 billion) over the next few years to build out a network of full-fledged telecom services that will go up against heavy hitters Digicel and Flow Jamaica for market share, but does not intend to compete on voice services.
The company, however, will focus mainly on offering Internet service across Jamaica, Executive Chairman Bruce Bowen said in an interview with the Financial Gleaner.
Bowen will build out his start-up during an economic downturn arising from the pandemic. But he is no stranger to managing a business during crises, having headed Scotiabank Jamaica and steered it through the global financial crisis more than a decade ago.
“Wherever there is crisis, there is opportunity,” said Bowen, reciting a popular maxim.
The company will trade as Rock Connect, the latter part of the name being deliberately chosen, Bowen said, to remove any ambiguity on what services they will offer. Connect could provide all the services offered by Digicel and Flow, but the company doesn’t want persons thinking that they are entering the mobile voice market, he said.
“The whole business model is focused on data and broadband. We are coming to market as Connect,” he said. Bowen said he
and his wife, Suzanne Fernando-Bowen, who is also a shareholder in Rock Mobile, surveyed the region for gaps in technology, which indicated that Jamaica offered an opportunity to grow broadband connectivity.
“What is missing — there’s only 60 per cent of Jamaicans with access to the Internet,” he said, adding that the company aims to lift Internet penetration by 50 per cent.
The demand for data has increased with the onset of the pandemic, as workers and students migrate online and e-commerce activity ramps up. Bowen said data demand continues to grow at 25 to 30 per cent annually, but the infrastructure lags that growth.
Just this week, Technology Minister Daryl Vaz indicated that the Jamaican Government would seek to get more schools connected to the Internet and those already connected would see a reprieve in the cost of coverage.
“Ardenne High was paying US$5,000 a month in order to supply students with a private provider. Now, as of two weeks ago, they are paid zero,” said Vaz in an address to Parliament, and can now utilise
“that additional US$5,000 a month to help offset other costs to improve the educational content,” he said.
Bowen, when asked about the cost of providing Internet service to schools and customers, declined to give specifics at this time, citing competitive reasons, but noted that some schools seemed to be paying a lot.
“It is our plan t o offer an affordable service. Some people in certain communities are getting
decent affordable service, but there are people who are not,” said Bowen regarding school connectivity and the pricing. “Some customers, whether schools or individuals, do not have access today,” he added.
Rock Mobile was the winner of the recent bid to provide Internet service in 200 mostly rural and underserved communities, using wireless technology, including 4th generation cell technology. There are two ways to connect to the Internet – wireless or by fibre, he said. Wireless technology allows the company to cover large distances quickly.
“We can send it to them quickly and affordably by wireless. The cost of putting the fibre infrastructure in place is a different cost,” he said.
Rock Connect plans to officially launch in 2022 with 50 per cent population coverage. Over time, the company will grow that to cover 90 per cent of the population – a target not only incorporated in Rock’s business model, but is also a requirement of its telecom licence.
“Over the first couple of years, we will have a total investment of US$90 million or $13 billion. To date, we have spent about $1.5 billion and are awaiting things to come together before the big dollars are spent on the towers, and so on,” Bowen said.
WORKFORCE
The company currently has 15 staff, but will grow its workforce to 250-300 in two years, inclusive of employees and contractors.
“You don’t need a huge team to deliver the service,” he said.
At the start of telecom liberalisation in the early 2000s, independent players folded in part because of the inability to compete on price with the incumbent provider, Cable & Wireless Jamaica, which owned the fibre-optic ring connecting Jamaica.
Bowen noted that while the incumbent player still holds the bulk of the fibre infrastructure, telecom providers are now operating in a different environment and are more willing to partner to increase the usage of expensive technology, thereby spreading costs.
“I do think that the industry will evolve to a model of more infrastructure sharing. It is one of the stated objectives,” he said.
Rock’s investment reflects a mix of mostly equity and some debt. The financing is from a team of investors, including Bowen, and debt brokered by an investment bank. The company wants to list on the Jamaica Stock Exchange in the future but that is dependent on the growth of the business.
“We engaged an investment bank on the debt side and there’s a team on the equity side. In terms of a listing, absolutely we would want to do that, but I believe the right thing to do is to get set up and established first,” he said.