O'Brien raises $150m for Digicel expansion

Businessman Denis O'Brien has raised $150 million (€117.2 million) in a bond issue for his Caribbean mobile operator Digicel as he prepares the rapidly-growing company for its next phase of development. Arthur Beesley, Senior Business Correspondent, reports.

As Digicel makes inroads in new markets such as Haiti and Trinidad & Tobago, Mr O'Brien is known to be exploring a move into the US, as well as a number of acquisition opportunities. Digicel has more than two million customers, roughly three times as many as the 700,000 subscribers in Esat Digifone in 2000 when Mr O'Brien sold that company to BT for £2.5 billion (€3.17 billion).

The bond was backed by Citigroup and JP Morgan Chase. It was priced at a yield of 8.625 per cent, on better terms than a $300 million issue in July 2005, which was priced at 9.25 per cent.

In addition, Digicel indicated yesterday that it secured improved lending rates on $600 million in loans it has with a number of international banks.

The latest fundraising provides fresh capital for Digicel as Mr O'Brien contemplates the company's next move. Access to this money also suggests that a stock market flotation is not on the immediate horizon.

James Seagrave of JP Morgan said the investment bank looked forward to "seeing Digicel further its global expansion efforts" in key markets.

In the US, the company is known to be exploring the possibility of starting a mobile virtual network operator (MVNO) service. If it goes ahead with such a service, it would lease wholesale air time from a network owner and sell it on to individual subscribers.

Mr O'Brien predicted earlier this year that Digicel was on course to take in annual revenues - with profits - of $1 billion in the next two years. However, it is now believed that Digicel's rapid advance in Trinidad & Tobago and Haiti since opening in those markets in April and May lines it up to breach the $1 billion threshold much earlier than expected.

"We will continue to aggressively expand our services in Trinidad & Tobago and Haiti, as we have seen tremendous acceptance by our mobile customers in these markets which, in turn, has led us to significantly increase our investment in both of these countries," said Digicel chief executive Colm Delves.

Within the last month, the company introduced its service in the island of Bonaire and the island groups of Turks & Caico. The addition of these small countries to the Digicel network - their joint population is no more than 32,000 - means the company is now in 20 Caribbean markets.