Digicel to continue growth strategy, revisit IPO plans next year - O'Brien
Digicel will look to revive its stock market floation plan next year as markets recover, according to owner Denis O'Brien.
He made the comment as one analyst said Tuesday's decision to defer a planned stock market flotation could leave the telecom and communications group's near-term growth ambitions effectively on ice.
David Holohan, the head of research with Merrion Capital, said that the decision to cancel the initial public offering (IPO) "leaves Digicel in a bind".
"The balance sheet remains highly levered and without the injection of fresh equity, Digicel's gearing limits any material acquisitions," he said.
However, speaking yesterday in the US, Denis O'Brien said his business will carry on with its growth strategy despite pulling the planned stock market float on Tuesday.
Digicel is "generating a huge amount of cash" and can pursue its M&A strategy and "really develop our business," Mr O'Brien said.
Speaking to broadcaster CNBC in the US, Mr O'Brien said Digicel, which provides telecommunications services in 31 countries, would return to the market when "conditions are right for the business".
"In our circumstances where you don't have to do an IPO and if you are not hitting your price target you just defer it, or move it out a year," he said.
Digicel generates free cash flow of $814m on $1.2bn of annual earnings, has no major debts falling due until 2021, and had raised money at cheap prices in the bond market over the past 12 months, he said.
The Digicel owner said he and the group's board made the right decision in postponing a planned stock market flotation of the company.
"We didn't need to do it" and it was "a great feeling not to need any funding," he said.
However, David Holohan said proceeds of the planned IPO would have driven the growth plans forward.
"The company will continue to have an annual debt interest bill of several hundred million euro and a revenue line that has struggled to grow in recent years and was dependent on new growth plans that the proceeds of the IPO would have been used for," added Mr Holohan.
Digicel said on Tuesday that it wouldn't proceed with a stockmarket debut that was planned for tomorrow.
It had been expected to raise between $1.8bn to $2bn (€1.6bn and €1.8bn).