Digicel, the telecoms group owned by businessman Denis O'Brien, is expected to set a price range for its initial public offering (IPO) this week. The company is planning to raise $1.5 billion to $2 billion in its IPO on the New York Stock Exchange.
The timing of the IPO will likely have been influenced by last week's Federal Reserve announcement on interest rates. Digicel is one of a number of companies with plans to float that is said to have decided to wait until after the Fed meeting – in the expectation that market volatility would calm in the wake of its announcement.
The company will list on the exchange a week to 10 days after it indicates a price range, which could happen as early as today.
Digicel first announced its plans to float in June. The company, which operates in 31 markets, plans to use proceeds from the IPO for capital spending, acquisitions and to pay down debt, which stood at $6.5 billion as of the end of June.
The group reported adjusted earnings before interest, taxes, depreciation and amortisation of $1.18 billion, on revenue of $2.79 billion.
According to a recent update to its filing with the Securities and Exchange Commission, Dublin brokerage Davy Stockbrokers will act as lead manager on the flotation, while Deutsche Bank has also been added to a roster that includes several major institutions, including JP Morgan, Barclays and Credit Suisse.
Mr O'Brien first set up Digicel in Jamaica in 2001, a year after he sold Esat Telecom to BT Group. It expanded first throughout the Caribbean, then adding markets in Central America and the Asia-Pacific region. The group, which is incorporated in Bermuda and employs more than 6,000 people, has recently moved into the cable television business. Cable industry veteran Michael Willner was appointed to the Digicel group board last week.
Speaking in relation to that appointment, Mr O’Brien said the group was continuing its “journey to becoming a total communications and entertainment company”.
Digicel’s near-300-page IPO registration document, published in June, includes 29 pages of potential risk factors that could affect the business in the years ahead.
They include competition from rival Cable & Wireless, in which Liberty Global controller John Malone holds a minority stake. Digicel acknowledges that some of its competitors "may have more advanced technology" and a "greater coverage area" than the company.
The document notes that in the year to the end of March 2015 about 60 per cent of Digicel’s revenues came from mobile voice. While its income from data is increasing, “there is uncertainty as to whether the future growth in such services will be sufficient to replace” declines in mobile voice.
Customer churn is another potential risk to the business, as are currency fluctuations.