Digicel sales and earnings drop in fourth quarter

Businessman Denis O'Brien's Digicel telecoms group told creditors on Thursday that sales and earnings dropped in its fourth financial quarter to the end of March as the Covid-19 pandemic continued to weigh on the business.

Digicel, with operations in 32 markets across the Caribbean, Central American and Asia Pacific regions, saw service revenues decline by 2 per cent to $538 million (€454 million) on the same period in 2020. Earnings before interest, tax, depreciation and amortisation fell by 3 per cent to $253 million, according to sources.

Revenues and earnings were affected as many of its markets were hit by severe Covid-19 restrictions, hitting tourism and general economic activity. Digicel has a total of 13.1 million subscribers.

Still, company executives told bondholders on a call that they expect underlying service revenues to rebound by 7-8 per cent on an annual basis in the current quarter, the sources said. They forecast that earnings will jump by 17-19 per cent, buoyed by demand for digital bundle offerings that the company has been pushing.

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Digicel’s cash position stood at $445 million at the end of March, while its net debt amounted to $5.36 billion.

Digicel hired Citigroup late last year to advise on a possible sale of its Pacific business, spanning Papua New Guinea to Fiji, Samoa, Vanuatu Tonga and Nauru, after receiving a number of unsolicited approaches for the unit.

However, a potential deal is set to drag into the second half of 2021, as Covid-19 travel restrictions across the region have made it difficult for suitors to carry out site visits, according to sources.

No clues

Mr O’Brien offered no clues on the status of talks on the call on Thursday, saying the Pacific unit was “a highly attractive and strategic business” and that he was “very comfortable” with its current performance and status. He said that Digicel would not be commenting further unless there was a “notifiable event”.

Digicel moved April last year to restructure its then unsustainably high-debt level of $7 billion following years of declines in earnings, resulting in bondholders writing off $1.6 billion of what they are owed.

The transaction involved the creditors swapping their bonds for securities of a lesser value and has been described by credit ratings agencies as a “distressed debt exchange”.

It followed on from another deal struck with some bondholders the previous year to postpone debt repayments.