Denis O’Brien may wait up to 18 months before trying to float Digicel again
Businessman might look, instead, in the near term at opportunities to refinance its debt
Digicel founder Denis O Brien: not “hung up on an IPO but we wouldn’t rule it out”. Photograph: Cyril Byrne
Businessman Denis O’Brien has said it may be another 12 to 18 months before he looks again at trying to float his emerging markets-focused telecommunications company, Digicel.
Speaking to reporters on the fringes of the World Economic Forum annual conference in Davos on Wednesday, Mr O’Brien indicated that he may look, instead, in the near term at opportunities to refinance its debt, after securing a lower interest rate last week on about $1 billion of term loans from its bankers.
The value of Digicel’s $2 billion of bonds that fall due for repayment in late 2020 rose this month above the price at which they had been issued for the first time since Mr O’Brien pulled a planned initial public offering (IPO) of the company in October 2015.
The recovery in the value of the bonds, amid rising market demand for high-yield debt and signs of a turnaround at Digicel, have opened up new opportunities for the company to look at refinancing medium-term debt with longer-term borrowings, according to market observers.
“We are watching the markets,” said Mr O’Brien. “We’ll look at this as an option but we’ll be opportunistic about it, but no imminent plans.”
Addressing the prospect of another attempt at an IPO, he said he was not “hung up on an IPO but we wouldn’t rule it out”, adding that he would prefer to hold off for another “year or year and a half” as valuations of publicly-listed peers were “not great at the moment”.
Digicel, which operates in 31 markets across the Caribbean, Central America and Asia Pacific regions, returned to year on year growth in quarterly earnings in the three months to March last year for the first time since 2015. Last year, the group set about cutting more than 1,500 jobs, or 25 per cent of its staff, in an effort to reboot earnings and lower the burden of its $6 billion-plus debt pile.
Mr O’Brien said he believes Digicel had returned to sustainable earnings growth, as the impact of dollar strength against the currencies of some of its main markets has reversed, and investment in new technologies, markets and product offerings pay off.
He said that he sees the company’s “good margin” business-to-business suite of services growing from about 8 per cent of group revenue to 20 per cent over time, while cable TV and its entertainment solutions were “going really well”. While mobile voice revenues were coming down across the industry, he said Digicel was trying to increase its data revenue to meet the shortfall.
As Wall Street shares reached new highs this week as the International Monetary Fund raised its global growth outlook for this year and next to 3.9 per cent, Mr O’Brien said now was “probably the time to reduce” stock investments. The Dow Jones Industrial Average in New York has hit new record highs on more than 80 occasions over the past year. “You meet guys from Wall Street and they’re all rocked up,” the businessman said. “It reminds me of 2000 [before the dotcom bubble burst].”