Denis O’Brien’s Digicel to tap markets for €360m

Digicel, the telecoms group owned by businessman Denis O'Brien, plans to borrow more than €360 million from the capital markets to cover general company spending.

The group, which operates mobile networks in the Caribbean, Central America and the south Pacific, said it intends to launch a private placement of $500 million (€362.5 million) in bonds. They will carry an interest rate of 8.25 per cent and will be repayable in 2020, according to a statement yesterday.

“Digicel intends to use the net proceeds from this offering for general corporate purposes, which could include capital expenditures, investments, acquisitions or debt repayment,” the company said.

The group borrowed $1.5 billion at the same interest rate from the bond markets last year and used it to repay some of its existing debt at what it said at the time were more attractive terms. A spokeswoman said that the company would not be making any further comment on the proposed bond issue announced yesterday for the moment.

Digicel recently signed a deal with Burmese tycoon Serge Pun to form a consortium to build and lease a network of mobile phone masts to Ooredoo, the Qatari operator that saw off Mr O'Brien's company in a competition for a licence to operate a mobile service in the far eastern country.

It had joined forces with billionaire currency dealer, George Soros, to bid for the licence offered by Burma, which only recently began to liberalise its telecoms sector, but the company was ultimately unsuccessful. Ooredoo was announced as the winner earlier this year. It is understood that the deal with Ooredoo means the joint venture with Mr Pun, called Digicel Asian Holdings, will carry out a lot of the work needed on the ground to develop the Qatari player's network.

In its latest quarterly results Digicel said it had spent $25 million so far on assembling its network of mast sites in Burma.

Those figures also showed that it paid interest of $104 million on loans and project finance debts of $5.675 billion.
Total group revenues fell by $7 million to $691 million in the three months to the end of September, according to the financial statements, which were sent to the company's existing bondholders two weeks' ago.

Slowing growth in key markets and a slide in the value of local currencies in Haiti, Papua New Guinea and Jamaica against the dollar were the main reasons for the dip in sales, the company said. It pointed out that there was an overall underlying increase of 2 per cent in revenues.

In Haiti, subscribers fell by 6 per cent, while sales tumbled by 11 per cent to $126 million, with a 9 per cent reduction when the effects of currency were stripped out. A fall of 12 per cent in the value of the Jamaican dollar left revenues there trailing by $107 million.