DENIS O’BRIEN was in flying form yesterday in UCD’s O’Reilly Hall, fresh from having signed up 2.6 per cent of Fiji’s population in the first two days of Digicel’s mobile phone launch there.
O’Brien is seeking to break Vodafone’s grip on that market.
Addressing a gathering of the Chartered Institute of Management Accountants (CIMA), the telecoms tycoon shared details with the bean counters of the $1.4 billion (€1.01 billion) refinancing of Digicel last year, which saw him take full control of the Caribbean and Pacific mobile operator while pocketing about $800 million.
The original plan had been to float on the New York Stock Exchange in 2007. Digicel had effectively been run as a public company in preparation.
By chance, Denis bumped into former BT finance director Robert Brace, to whom he had sold Esat for £2.5 billion in 2000. Brace advised him to follow a “twin track” strategy that saw O’Brien quietly hire investment bankers Rothschild to find a private equity buyer, while still pursuing the IPO strategy.
Three bids came from private equity groups, who asked for bank statements so they could see how much debt Digicel could be loaded with to fund the buyout. Never one to miss a trick, O’Brien decided he could do the same.
The bankers in New York got over their disappointment at not doing the flotation when they realised the size of the commission they would receive from selling the bonds.
O’Brien’s instincts told him the markets were heading south and so the roadshow for hedge funds and bond investors got under way the next day. Though the deal saw Digicel carrying debt of eight times its ebitda at time of completion, that will be down to 3.5 times by next March, O’Brien says.
Despite the slowing global economy, O’Brien said Digicel plans to be operational in 40 countries within 18 months.
O’Brien was followed on stage by Prof Stéphane Garellie from the IMD Business School in Switzerland. He congratulated CIMA on getting Denis O’Brien to speak in a hall named after his arch-rival, Sir Anthony O’Reilly.
Who said the Swiss don’t have a sense of humour?
