Digicel revenue falls 6% due to currency weakness
Adjusted revenue for three months to December flat year-on-year at €617 million
Digicel chairman Denis O’Brien. Photographer: Jason Alden/Bloomberg
Denis O’Brien’s Digicel telecoms group, which operates in 31 markets across the Caribbean and Asia Pacific regions, saw its revenue decline 6 per cent in the three months to December due to currency weakness across several of its main markets, according to sources.
Stripping out foreign-exchange movements, revenue for the period, Digicel’s third fiscal quarter, were flat year-on-year at $653 million (€617.3 million), said the sources, based on information distributed to the group’s bondholders on Thursday.
While earnings before interest, tax, depreciation and amortisation (ebitda) rose 1 per cent to $285 million on a constant-currency basis, they fell when earnings from Haiti, Jamaica and other markets were translated into US dollars. The Jamaican dollar has depreciated by 11 per cent against the US dollar over the past two years, while the Haitian gourde has fallen more than 40 per cent.
On Wednesday, Digicel revealed plans to cut more than 1,500 jobs, or a quarter of its workforce, over the next 18 months as it seeks to boost earnings and lower the burden of its $6 billion-plus debt. The group’s debt stood at about six times annualised ebitda in December and it has committed to debt investors to lowering this ratio to 4.5 by March 2018.
The cost-cutting programme, known as Project Swan and based around moving office functions scattered around its various markets to four regional hubs, is one of three parts of a wider transformation programme, dubbed Digicel 2030.
Another element, originally called Project Phoenix, will overhaul how it deals with customers, from simplifying pricing to moving from the use of call centres to communicating directly through online chats on mobile phones.
Thirdly, Digicel has entered a multi-year deal with ZTE, a listed Chinese telecommunications equipment and systems company, to upgrade its network. Digicel’s network investment was running at about $600 million a year in the year to March 2016 and is set to fall to $450 million for the current financial year. It is believed to be planning on cutting such expenditure in each of the next few years under the deal with ZTE.
Digicel’s bonds rose on Thursday as the bond markets digested the company’s restructuring plans and earnings release. The company’s $2 billion of bonds that are due to be repaid in September 2020 rose by 1.8 per cent in value to 89.1c on the dollar – albeit to where they were trading two weeks ago.