Digicel has won a credit rating upgrade from Moody’s as the telecoms group continues to reduce debt under the ownership of bondholders-turned-equity investors. Businessman Denis O’Brien retains a 10 per cent stake following a major debt restructuring in 2024.
Moody’s raised its rating on the group, which operates in 25 markets across the Caribbean and Central America, by one level to B1. That is still four rungs below what is considered investment grade.
It noted that Digicel recently used $100 million in cash to reduce its debt while also repricing a term loan. It also said the group generated $1.8 billion (€1.6 billion) of revenue for its latest financial year to the end of March. This represented a 5 per cent decline on the out-turn for the previous year, according to a previous Moody’s report.
“We expect Digicel to use excess cash to reduce debt and that these initiatives will continue yielding improvements in cash flow generation and credit metrics,” Moody’s said.
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The group aims to reduce its net debt to 2.9 times earnings before interest, tax, depreciation and amortisation (ebitda) from a ratio of 3.2 at the end of March.
“Digicel’s liquidity is good, supported by $340 million in cash as of March 2026, our expectation of positive [free cash flow] generation and a $200 million fully available revolving credit facility available until 2030,” Moody’s said.
Digicel’s net debt stood at $2.75 billion at the end of December, sources familiar with the company’s financial position at the end of its financial third quarter previously told The Irish Times. Digicel’s debt peaked at $7 billion six years ago before it carried out three debt restructurings, culminating in a group of bondholders – led by PGIM, Contrarian Capital Management, and GoldenTree Asset Management – seizing control in January 2024.
O’Brien retained 10 per cent. However, the sources said in March that he is on track to double his stake to 20 per cent, on the back of ongoing improvements in its finances and a pickup in industry valuations.
O’Brien was given stock warrants as part of the restructuring that allow him to acquire up to a further 10 per cent of Digicel within six years, should its equity value reach $1.1 billion.
The sources say Digicel would now comfortably command an equity valuation of $1.25 billion based on the average enterprise valuation multiples of sector players active in the Caribbean and Latin America. A conversion of the warrants into actual shares would most likely take place at the time of a sale of the business, the sources said.
