Sunday 26 May 2019

The billion-dollar Boston mogul who aims to fix Ireland's broadband

Telecoms magnate David McCourt believes he is in pole position to snag Ireland's National Broadband tender

David McCourt:
David McCourt: "I locate my business in Ireland because we're trying to make Ireland the base for everything that we do in Europe. So we are here for the long haul."
Adrian Weckler

Adrian Weckler

David McCourt is the most successful Irish-American tech businessman you've never heard of.

The 58-year-old sits on a telecoms and broadcast empire that has reportedly seen his net worth rise close to €1bn. He has Emmy awards. He has contracts from Mexico to Saudi Arabia. He has a partner who sits on the board of Warren Buffett's Berkshire Hathaway investment firm.

And he has led investment rounds of around €100m into Irish telecoms companies, mainly through the acquisition of 'fibre ring' firm Enet and the regional operator Airspeed.

But now, the man who grew up as one of seven children in an archetypal Irish-American Boston family, is about to take on a different type of challenge: sorting out Ireland's rural broadband problem.

His consortium, centred around Enet, has been shortlisted as one of three contenders for a state contract worth up to €500m, that will hook up some 700,000 rural homes to city-grade broadband services over the next six years.

He and Enet now face two formidable opponents in the last phase of bidding: Eir and Siro, the joint venture between Vodafone and the ESB.

But don't try to tell McCourt that he's the outsider in the process. When I put it to him that Eir and Siro are the perceived favourites for the contract award and that Enet may be a makeweight to suit the Government's competitive tender, he bristles.

"I don't agree with your premise," he says in a 24-carat Boston accent.

"We are now the largest wholesale open-access provider in Ireland. We've put one hundred million dollars into Ireland so far in the telecoms space and expanded the network.

"Since we invested in Enet, the average cost to move bits across Ireland is down by 35pc. We've brought in the best partners. So I think that we have a really strong proposition."

If you haven't come across McCourt before, it may be because of how broadly he has spread himself over the last 30 years.

His main areas of activity have been in backend telecoms and TV. In 2005, he picked up a US Emmy television award for producing a TV series that encouraged children to read. He has also worked on documentaries with the movie stars Michael Douglas and Angelina Jolie. In the telecoms world, he has struck deals in unlikely places. He led Saudi Arabia's first public-private partnership and was also the first person to get onto Mexican billionaire Carlos Slim's huge telecoms network.

Recently, he set up a new venture,, that aims to train people in how to make and produce broadcast-quality television in the world's poorest countries.

In Ireland, McCourt's interests are varied and expanding. In 2013, his principal investment firm Granahan McCourt acquired Enet in a €42m deal.

Enet runs over 90 of Ireland's 'metropolitan area networks', regional rings of fibre that are used by local telecoms operators to provide broadband and other phone-related services.

In 2014, McCourt doubled down on his Irish telecoms aspirations by acquiring another Irish operator, Airspeed Telecom, for an undisclosed sum. In all, McCourt and his associates have sunk €100m into their Irish operations.

McCourt also has personal interests here, with a home in Newmarket-On-Fergus in County Clare.

As such, he is beginning to regard himself as a local. And he doesn't like the idea that Enet is considered to have less expertise than Eir or the ESB when it comes to connecting rural Ireland to broadband.

"The ESB is in the power business, not the telecoms business," he says. "We've built more homes (broadband connections) in the last six months than they have in the years they've had their Siro partnership. They don't have any telecom infrastructure to speak of."

This is partially true. Siro does have fibre services available in six Irish towns, including Sligo and Dundalk, with additional 'passed' towns promised in the near future. However, it won't divulge the number of customers it has actually connected: this is understood to be a small number.

By comparison, Enet has around 30pc of the country's estimated 10,000 retail fibre connections and carries large chunks of mobile and broadband traffic from giants such as Virgin and Vodafone. Eir also has a small number of actual fibre-broadband customers.

The ESB's strategy is to use its electricity cables and poles to carry extra fibre wiring into homes and businesses. McCourt thinks the utility company could use its resources to better effect for Irish businesses.

"We have the third-highest power rates (charges) in Europe," he says. "I do wonder if the state money they have shouldn't be better used to lower the power rates. You can't bring business to a country if you have the third-highest power rates."

If suggestions of the ESB trumping Enet rile McCourt, he will hear none of the theory that Eir benefits from an 'in-it-for-the-long-haul' reputation.

"In recent times, Eir has gone broke and has had three CEOs," he says. "And that's just since I've been following them. So I don't know if it's accurate to say that they're here for the long haul.

"Besides, Eircom was sold, what, half a dozen times? My partner, Walter Scott, who is on Berkshire Hathaway board, has never sold an asset. Ever.

"He has been my partner since 1980 and has been on the Berkshire Hathaway board since the Seventies. So I don't think your premise is accurate. We are here for the long haul."

When asked whether the National Broadband Plan will be rolled out in the timeframe promised - by 2022, with the majority by 2019 - he shrugs his shoulders.

"Do I think it will happen? Yes," he says. "Do I think it will happen on time? Well, things have a way of slipping.

"Sometimes that's for good reasons, sometimes it's for bad reasons. But things always seem to take longer than they probably should. And we've got some ministers that are probably spending more time worrying about Brexit than I would if I were them."

McCourt thinks that from a business standpoint, Brexit has been over-dramatised. He doesn't think Britain will take the kind of economic hit that some commentators are suggesting.

"I don't think they're going to lose a step, to be honest with you.

"Their government is going to put rules and a new tax structure in place to make sure they (companies) don't leave. Sure, investors and currency traders don't like uncertainty. But London is one of the two top cities in the world. These Goldman Sachs companies are not going to move to Dusseldorf any time soon."

Whether or not he is correct - and there is some evidence that several banks may actually move assets out of London into Germany and other EU countries - McCourt doesn't think Ireland will nab nearly as many companies as pundits speculate.

"I hear people, including government ministers, getting all worked up to steal companies from the UK," he says. "I just don't see that happening.

"I told one minister here that we should stop trying to even think about competing with London. We should be competing with Manchester or Birmingham or Liverpool. We have a big facility in Manchester and we've a big facility in Stockport. And the UK is focused on keeping jobs there and those are the jobs that Dublin should be going for. There are a lot of jobs in those places."

In an era of hyped-up 'start-up city' marketing, this is a stark message. Doesn't it help Dublin's aspirational branding to say that we compete with London and Berlin and Amsterdam more than Manchester or Lyon or Stockport?

"It can be useful, sure," he says. "But there's useful and there's the truth. Facebook didn't come to Dublin because it's the tech hub of Europe, you know. They came here for other reasons.

"You can pretend that it's a tech hub or you can build the entrepreneurial infrastructure you need to create a tech hub. You can do one or the other. One is a short-term solution and the other is a long-term solution."

Building a "long-term" entrepreneurial hub is long and hard, says McCourt. It doesn't happen because a tax rate comes down. Or because we all start using American twangs. Or by claiming to be 'the Silicon Valley of Europe'.

We have to start coming up with ideas of our own. We have to start building things from ideas that we come up with in our own garages.

"The jobs in Silicon Valley will never move to Dublin," he says. "Those jobs are built five, six, seven, eight at a time. And every so often, one of those companies turns into a fifty-person company and then one of those turns into a 5,000-person company.

"But those companies are built at that intersection between what technology can do and what the customer wants. It's like what Steve Jobs was so good at. That's the infrastructure that we have in Silicon Valley and that's not going anywhere."

McCourt may as well be talking about Stripe, the multi-billion dollar online-payments company founded by Limerick twenty-somethings Patrick and John Collison. Or, to a lesser extent, Intercom, which manages to keep most of its design brains in Dublin but still needs to be officially incorporated in California.

McCourt thinks that Ireland has a shot at developing such a culture, but that it will take a long time.

"It's never going to happen in France and Germany," he says. "Never. It could happen in the UK - and it can happen in Ireland.

"But they have to be committed to the long term and doing it the hard way.

"They can't be out saying, 'I need to get someone who's going to bring 500 ready-made jobs here.' You never hear a Silicon Valley story where, overnight, there were 500 guys that moved from Japan to Silicon Valley. It's always two guys in a garage, just like Apple or HP or Intel.

"It's not bringing in 500 people because we've a 12.5pc tax rate. That's what you do for a soundbite if you're running for re-election. But it's not the way to build something long term."

Whether or not McCourt succeeds in winning Ireland's National Broadband Plan tender next year, he is scaling up his operations in Dublin. Granahan McCourt and Enet have outgrown their Dublin 1 offices and are now moving to plusher surroundings in Merrion Square. They will be joined by McCourt's latest enterprise.

"I've been in the content business for 20 years," he says. "We've been pretty lucky at it and we won a dozen or so Emmys. But the old way of doing it has changed.

"People now want mobile, they want short-form. But they want it professionally produced. So we decided we would bring professionally produced content to the local level. And there is a market in the four billion people that we think of as being the underserved people of the world."

Why base ALTV in Ireland?

"I don't need to locate my businesses in Ireland," he says.

"I locate my business in Ireland because we're trying to make Ireland the base for everything that we do in Europe. So we are here for the long haul."

McCourt on Brexit, broadband and jobs

What sort of things do you see happening in a post-Brexit world?

"It's going to scare the shit out of you when you see how low the corporate tax in the UK is going to go. The UK government is going to put rules and a tax structure in place to make sure the companies don't all leave. I don't think they're going to lose a step, to be honest with you. These Goldman Sachs companies are not going to move to Dusseldorf any time soon."

How does Ireland fight for jobs now?

"It's not about talking about it. It's a long-term commitment to building an entrepreneurial innovative hub. Most people and most countries don't want to commit to it."

Will the National Broadband Plan happen on schedule?

"Well, things have a way of slipping. Sometimes that's for good reasons, sometimes it's for bad reasons. But things always seem to take longer than they probably should. And we've got some ministers that are probably spending more time worrying about Brexit than I would if I were them."

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