Caribbean hurricanes lead to flat Digicel earnings
Revenue falls 3% at Denis O’Brien firm, which plans to cut a quarter of its staff
Hurricanes held back earnings growth at Denis O’Brien’s telecoms carrier Digicel. Photograph: Swoan Parker/Reuters
Denis O’Brien’s telecommunications group Digicel posted flat earnings in its second financial quarter as the impact of two hurricanes that hit several Caribbean islands in September weighed, according to sources.
Earnings before interest, tax, depreciation and amortisation (Ebitda) for the three-month period to the end of September amounted to $253 million (€214.5 million), though they would have been 2 per cent higher excluding the impact of hurricanes Maria and Irma.
Revenue for the period fell 3 per cent to $597 million year on year as the company exited some lower-margin wholesale business.
Digicel returned to year-on-year growth in quarterly earnings in the three months to March for the first time since early 2015 and is understood to have signalled to analysts in recent days that an ongoing restructuring plan is set to deliver a boost to earnings in the second half of the current financial year.
In February the group outlined plans to cut more than 1,500 jobs, or 25 per cent of its staff, over 18 months as it seeks to reboot earnings and lower the burden of its $6 billion-plus debt pile. The cost-cutting programme, Project Swan, is based around moving functions scattered across its various markets to four regional hubs.
Sources told The Irish Times in June that Digicel booked a $50 million restructuring charge at the end of its last financial year. It is understood that it is more than halfway through its lay-offs plan.
The most recent three-month reporting period saw strong growth in its fledgling cable television business as well as business solutions, while its original mobile business would have recorded a second sequential quarter of annual growth were it not for the impact of the two hurricanes.
It was reported last month that Digicel was preparing to make up to a $50 million insurance claim for damages caused to its network and property across the Caribbean as a result of the hurricanes.
Mr O’Brien set up Digicel in 2001 with a mobile licence in Jamaica. It now operates in 31 markets in the Caribbean, Central America and the Pacific islands.
The company had $234 million of cash on its balance sheet at the end of September, according to the sources. A spokesman for the company declined to comment on the results.