Denis O’Brien’s Digicel sales and earnings dip on currency woes

Denis O'Brien's Digicel Group said its full-year sales and earnings dipped amid currency weakness in several of its markets across the Caribbean and South Pacific regions against the dollar.

However, stripping out the effects of currency fluctuations, Digicel’s service revenues increased by 3 per cent to $2.73 billion (€2.45 billion) in the year to the end of March.

Earnings before interest, tax, depreciation and amortisation declined 1 per cent to $1.165 billion, amid unfavourable foreign exchange rates. On a constant-currency basis and excluding start-up losses relating to the roll out of fibre-to-the-home services in the Caribbean and a TV service in Papua New Guinea, Ebitda rose 9 per cent.

The negative impact of currency movements has abated in the first eight weeks of its new financial year, chief executive Colm Delves said in an interview with The Irish Times.

The group’s total debt dipped to $6.36 billion at the end of March, Mr Delves said. That’s down from $6.49 billion a year earlier, but up significantly from $4.9 billion in 2012. Digicel had about $190 million of cash on the balance sheet at the end of March, following heavy spending on its networks, he said.

Last October, Mr O'Brien pulled a planned initial public offering of Digicel shares, in which the company was seeking to raise up to $2 billion to help lower its debt mountain, expand its operations and list on the New York Stock Exchange. The group blamed volatility in the US and global markets at the time.

“I think, particularly where markets are at the moment, [AN IPO]is not something we’re planning or anticipating in the near-term,” he said.

While Mr O’Brien said in May that he didn’t expect to make another attempt to float the business for 12 to 18 months, Mr Delves said the company will remain “opportunistic”.

“If it does make sense in 12 to 18 months, we could go for it,” he said.

It emerged in April the Mr O’Brien had started in the second half of 2015 to waive his $10 million-a-quarter cash dividend payments until business improves.

The phone company’s number of subscribers in the last financial year rose by 1 per cent to 13.8 million, mainly due to growth in cable TV, broad band and fixed-line subscribers.

The company, which has no major debt maturities until its 2021 financial year, invested over $590 million to enhance its networks in the year to March. Mr Delves sees the company’s capital expenditure bill coming in $150 million to $200 million lower in its current year.

The group spend about $50 million on acquisitions last year, according to the chief executive. These include: Bermuda Telephone Company, a provider of fixed voice and broadband services; AllcomMCR PNG, a provider of IT and network support in Papua New Guinea; a Carribean financial services firm called Prism Holdings; and Paymaster Jamaica, a Jamaican bill payment services company.

Since then, it bought Sky Pacific, which provides satellite TV to 13 countries in the South Pacific.