Digicel in talks to acquire Guyana mobile operator

Digicel, the Caribbean mobile phone group controlled by Denis O'Brien, has examined the possibility of acquiring either of the…

Digicel, the Caribbean mobile phone group controlled by Denis O'Brien, has examined the possibility of acquiring either of the two mobile operators in Guyana, according to one of the companies, writes Arthur Beesley, Senior Business Correspondent

Guyana's president Pharrat Jagdeo said earlier this year that the South American state would issue a licence to Digicel, but it was not previously known that the company had run the rule over the two incumbent operators.

The status of these discussions was not immediately clear last night and Digicel had nothing to say about its interest in Guyana.

However, Pierre Strasser, head of the second operator Cel*Star Guyana, said Digicel had held discussions with his company and with the dominant player, Guyana Telephone & Telegraph (GT&T). He believed the process with his own company, its rival and the government was still open, but said he could not speculate as to its outcome. The contacts were initiated about 18 months ago, he said.

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"They are talking to GT&T and they are also talking to the government about getting a licence."

In spite of Cel*Star's ongoing process with Digicel, Mr Strasser said a legal action his company initiated last year against Digicel last year for $30 million (€23.52 million) was ongoing.

Cel*Star claimed Digicel deliberately hired its staff; Digicel dismissed the claims as "baseless, spurious and malicious".

Digicel's interest in Guyana follows news last month the company wanted to enter the market in Colombia through the acquisition of Colombia Movil. It was later reported that the company had rejected bids from Digicel, Nasdaq-listed Millicom International and Entel PCS of Chile.

Digicel started a service in Haiti earlier this month, a move that followed its introduction in Trinidad & Tobago in April. Haiti was its 17th market, and investment there was in the region of $130 million. The investment in Trinidad was about €200 million.

Mr O'Brien said last month that the company was in due diligence to buy a company in the Caribbean region. He declined to name that target, but said a deal valued at more than $100 million was in due diligence.

Digicel now has more than two million subscribers and Mr O'Brien indicated then that the company would have annual revenues of significantly more than $1 billion by 2010.

Its existing business generated revenues of more than $600 million in the year to the end of March. That excludes the impact of its acquisition for $190 million of Bouygues Telecom in March.

Digicel's annualised profit margin before interest, tax, depreciation and amortisation was in excess of 40 per cent in the year to March. That implies earnings before interest, tax, depreciation and amortisation of more than $240 million.