Digicel earnings rise as bondholder talks enter crunch phase

Denis O’Brien’s telecoms group wants bondholders to swap notes for debt with later maturity

Digicel has $6.7 billion in debt. Photograph: Getty Images

Digicel has $6.7 billion in debt. Photograph: Getty Images

 

Denis O’Brien’s Digicel has told creditors that its earnings rose in the three months to the end of September as the emerging markets-focused telecommunications group’s talks with bondholders on delaying the repayment of $3 billion (€2.6 billion) of debt enter a crunch phase.

Earnings before interest, tax, depreciation and amortisation (ebitda) increased by 3 per cent to $261 million on a constant-currency basis during the period, Digicel’s fiscal second quarter, on the corresponding three months in 2017, according to sources.

Subscribers rose by 1 per cent on the year to 14.1 million. While service revenues declined 7 per cent year on year in the second quarter, they increased 2 per cent on the previous three months, to $571 million. These figures included a hit from the dollar rising in value against key markets in which Digicel operates.

“As Digicel enters the monetisation phase of its investment cycle, capex [capital expenditure] and underlying operating costs reduced by 22 per cent and 6 per cent respectively in Q2,” a spokesman said in response to questions on the results. “The group’s outlook is one of continuing revenue diversification.”

Bondholder swap

Digicel, burdened by $6.7 billion of debt, said in August that it was looking for investors holding $2 billion of bonds due in October 2020 to swap their notes for similar securities that would be due two years later. The group also wants holders of $1 billion of debt that matures in 2022 to exchange their bonds for new 2024 notes.

The company said on Tuesday that it had extended the deadline for the bond swap for a fifth time in just over two months as it continued to talks with bondholder representatives on the matter. The current extension is by one week to December 7th, suggesting that talks are not at a critical point, as the previous extension had been for two weeks.