Transcript Trilogy International Partners in Haiti

Keith Bocian
Josh Ho
Kate Kennedy
Paul Marshall
Stacy Roth
Haiti

Extreme Poverty
 149th of 182 countries on
Human Development Index
 Nearly 80% of population lives
on $2 a day or less

Devastated by earthquake on
January 12, 2010
 230,000 people killed, 300,000
injured, 1 million homeless
 250,000 residences and 30,000
buildings collapsed or severely
damaged
Trilogy International Partners
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Bellevue, WA based
company
Holds a portfolio of
international cell phone
companies
Pioneer of introducing
wireless in emerging
markets
Purchased Voila, the
second largest cell phone
provider in Haiti in 2005
Wyclef Jean, Voila Spokesperson
Project Overview

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“Create a copper-free Haiti”
Invest $100 million to rebuild
Haiti’s telecom infrastructure
No landlines to be built – network
to be entirely wireless
Project success is contingent on
government acceptance of key
conditions
 Undo previous mobile phone
privatization efforts
 Allow Trilogy to obtain majority rights
to the available mobile spectrum
 Put a moratorium on new licensing
Return on Investment Potential

Market Growth
 Only 32% of Haitian have cell
phones
 10% use internet regularly
= Lots of room for growth

Economic Growth
 International aid and private
investments may help revive
Haiti’s economy
 Abundant low-cost labor may
make Haiti one of the “last
frontiers” for manufacturing
investments
Cumulative Return Over Time If
Investment Was in United States
40,000,000.00
30,000,000.00
20,000,000.00
10,000,000.00
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(10,000,000.00)
(20,000,000.00)
Project Value Over Time
(30,000,000.00)
Risk

Project Risk
 Need Power, but Infrastructure is severely damaged
 Construction might be delayed

Political Risk
 Widespread corruption; Ranked #168/180 countries
 Consistent history of violent uprisings and natural disasters

Regulatory Risk
 Regulatory changes likely and unpredictable
 Time inconsistent preference problem
How valuable is a guarantee from the Haitian government?
% Change GDP, as Correlated with Events
Haiti Percent Change GDP, constant prices
15
10
USA & UN
Sanctions
due to coup
Political
turmoil
Natural
Disasters
destroy 80%
of crops
5
-5
-10
-15
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
0
Risk
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Currency Risk
 Consistent Devaluation of Haitian Currency (Gourde)
○ 2000-present: 17 Gourdes/USD to 40 Gourdes/USD
 High inflation
○ Central Bank: Targets Price Stability & 10% inflation
○ But: Actual inflation averaged 20% from 2002-2007

Economic Risk
 Despite recent debt forgiveness:
 Consistent twin deficits
 Limited Opportunity for foreign investment:
 Low Productivity: Infrastructure Destroyed
 Low Purchasing Power Adjustment to GDP
Recommendation

Upsides
 Opportunity to leverage existing
investment and grow market share
 Lots of room for growth in the
Haitian market
 Possibility of Haitian economy
recovering and growing

Risks:
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Political - Unstable
Regulatory – Time Inconsistency
Project – Construction/Infrastructure
Currency – Consistent Devaluation
Economic – Few Signs of
Improvement
We recommend that Trilogy does not make this additional investment in Haiti