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Trilogy International Partners in Haiti

Keith Bocian Josh Ho Kate Kennedy Paul Marshall Stacy Roth. Trilogy International Partners in Haiti. Haiti. Extreme Poverty 149 th 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

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Trilogy International Partners in Haiti

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  1. Keith Bocian Josh Ho Kate Kennedy Paul Marshall Stacy Roth Trilogy International Partners in Haiti

  2. 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

  3. Trilogy International Partners • 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

  4. Project Overview • “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

  5. 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

  6. 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?

  7. % Change GDP, as Correlated with Events Natural Disasters destroy 80% of crops Political turmoil USA & UN Sanctions due to coup

  8. Risk • 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

  9. 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: • 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

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