Radio and telecommunication entrepreneur Denis O’Brien talks to First Edition about the opportunities and the obstacles facing the new generation of entrepreneurs in 2008

Communicorp was established in 1989, when Ireland was coming out of a bad recession. Is this proof that enterprise will find a way, whatever the prevailing economic conditions?

In my view, there’s no bad time to start a business. If you’ve got a business that will be disruptive against entrenched people in a market, then whether you start in good times or bad times doesn’t really matter.
I actually think that entrepreneurs shouldn’t read any economics coverage at all, in any of newspapers, or listen to any on the radio - because the real task here is getting off the ground and not listening to all the background noise about the economic climate.

Of which of your achievements are you most proud?

98FM was the milestone, because it was the first profitable business that we set up, and it has remained a highly profitable business for the last 19 years. Then Esat was a large-scale capital investment business – we invested about €1.2 billion in alternative telecoms infrastructure, both in mobile and in fixed. We laid fibre everywhere. So that was a bit of a milestone too.

And, obviously. Digicel is larger now than the Esat opportunity was. These are three different stages in my life as an entrepreneur. But there are still a lot of strings attached to 98FM, in terms of the emotions, and in terms of the fact that 98FM provided the DNA for every other business. I actually remind people, even new employees out in Vanuatu or Samoa or Fiji, that the DNA of Digicel came out of a radio station on Lower Mount Street.

And how does this DNA replicate across the various businesses?

Being aggressive in terms of getting market share. Getting sales in – the whole company was selling. Quick decision making. Following our instincts. And risk taking. We had a culture of getting it done and moving quickly, while everyone else was writing long reports and assessments of opportunities.

So which do you feel is more important – the idea or the person driving it?

I think the person driving it has to be unusual. Entrepreneurs have a plan or an idea, but then there are the obstacles. You have to reinvent the idea to get over these; if you keep ploughing against the obstacles you will eventually run out of money because your idea was fundamentally wrong.
What I’ve seen with great entrepreneurs is that they raise the money for an idea; they then see that that idea is flawed; so they use their money to develop a different product or service or business.

In terms of potential obstacles, we have a different regulatory regime now than when Communicorp first started. Do you think that the regulatory hoops that operators have to jump through would be a hindrance to entrepreneurs, despite the fact that regulators all claim that their regulations are there to facilitate business?

I think that we’re now totally over-regulated and over-quangoed. For example, we operate radio stations in seven countries, and the regulatory regime that we have in Ireland is probably four times more stringent and more controlled that any other country that we operate in.
That’s not a criticism of BCI – but somehow we now have a situation where, if you get a radio licence, it will cost you €2m to build your studio because you have all these different regulations. They even tell you what size studio you have to build, what sound-proofing you need to use, and all this nonsense. And, to be honest, that doesn’t give anybody a chance, because if you’re coming in against the large, entrenched radio stations, they have an advantage in terms of cost.
So what we have is a template, and if you want to get a licence, you have to follow the template. That, in my mind, is wrong, and it’s a waste of money.
The other thing now is that radio stations aren’t allowed synergies, so if you have two radio stations in a market, you can’t share synergies. And that, to me, is fundamentally flawed and flies in the face of any logical economics. It’s the only business in the world where you are not allowed to get some economics – some synergies – going.
That’s a small criticism of the BCI, but they have regulated the market pretty well and they’ve been brave in the way that they’ve licensed new genres of music. It’s just that we’re now seeing too much regulation, and RTE are scot free.

So is regulation making the next Denis O’Brien’s job that much more difficult?

It’s making it impossible. You should be able to set up a radio station for €150,000, except that new entrants to the market can’t do that because of the regulations. So if you’re spending €2m on a studio, you’re then paying lease payments or equity against that – or you’re borrowing as much money as you can.

Does the current economic climate then make private equity that much more important for new businesses?

I think that there is still plenty of money knocking around. It’s not hard, when compared to 10 or 15 years ago, to raise money. Let’s not fool ourselves – there’s plenty of money around looking for good investment opportunities.

You’re an excellent example of an entrepreneur who found success in the domestic market and then replicated that success on the international stage. Can Irish entrepreneurs afford to be insular, or do they need to be outward looking to operate in a global market?

There are first steps – you need to get a bit of strength going. If you set up a business in Ireland, you need to build your position here first – and then, if you are strong, move outside the country. But there’s no point in trying to build a large global business without having a strong base locally.

And is the Irish Diaspora important if you’re trying to build in international markets?

Only the nuns and priests of the missionary movement. If you go into any emerging market – Africa, Asia, South or Central America or the Caribbean - the Irish priests and nuns have been there since long before. And they have educated all the people who are in power.
Irish companies think that it’s a big obstacle to develop these emerging markets, but actually the doors are wide open because of the historic relationship between Ireland and all these countries. And we (Digicel) have benefited as a company from that in a major way.