Sunday 15 December 2019

Digicel debt dips despite earnings decline

Digicel founder Denis O'Brien
Digicel founder Denis O'Brien

Denis O'Brien's Digicel reported a 1pc drop in underlying earnings to $249m (€226m) in the second quarter of the year and net leverage fell to 6.9 times earnings before interest, tax, depreciation and amortization (ebitda).

Reported ebitda was slightly higher at $250m, again 1pc lower than the prior quarter, Bloomberg reported yesterday.

Privately-owned Digicel does not have to publish quarterly financial data, but it does share the information with bondholders.

The latest numbers show cashflow from operating activities up 9pc and cash of $180m at quarter end, it is understood. But the business is lumbering under an almost $7bn debt pile.

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Digicel's income is in the many local currencies of the markets where it operates but its debt is in US dollars so depreciation in emerging market currencies versus the dollar has hurt its debt profile.

Rating agency Fitch warned last week of an "imminent refinancing risk" to the business.

The next significant debt repayment is $1.3bn of bonds falling due in April 2021.

The company struck a refinancing deal with bondholders at the start of this year.

Net debt, on a rolling measure based on earnings across the past two quarters, has fallen to 6.9 times from 7.3 times in the first quarter of the year, but remains stubbornly high.

Further asset sales or bond buy-backs could potentially reduce debt.

The latest results are understood to show a 4pc increase in underlying service revenues driven by Digicel's key markets of Haiti, Papua New Guinea (PNG) and Jamaica.

Irish Independent

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