Business Irish

Tuesday 21 November 2017

Digicel will be valued at €9bn following listing in New York

West Indies Nets Session In Antigua...ANTIGUA, ANTIGUA AND BARBUDA - APRIL 11: Phil Simmons (2R) the head coach of West Indies during the West Indies nets session at the Sir Vivian Richards Stadium on April 11, 2015 in Antigua, Antigua and Barbuda. (Photo by Michael Steele/Getty Images)...S
West Indies Nets Session In Antigua...ANTIGUA, ANTIGUA AND BARBUDA - APRIL 11: Phil Simmons (2R) the head coach of West Indies during the West Indies nets session at the Sir Vivian Richards Stadium on April 11, 2015 in Antigua, Antigua and Barbuda. (Photo by Michael Steele/Getty Images)...S
John Mulligan

John Mulligan

BUSINESSMAN Denis O'Brien will retain voting control at mobile operator Digicel after a planned flotation on the New York Stock Exchange that could give the telco an equity value of as much as $5bn (€4.5bn).

Its enterprise value, which includes debt following the flotation, will be close to $10bn (€9bn).

It's likely to see Digicel raise between $1.8bn to $2bn (€1.6bn and €1.8bn).

The share debut could happen within days, or it may take a few weeks. Bermuda-headquartered Digicel, which was founded by Mr O'Brien in 2000, filed updated documents with the US Securities and Exchange Commission yesterday, stating that it expects its shares to be priced at between $13 and $16 each.

It intends to sell just over 124m shares. It has also granted its underwriters an option to purchase an additional 18.6m shares at the flotation price.

If all those shares were sold it could result in Digicel raising as much as $2.3bn.

However, it's thought that the amount raised will be between $1.8bn and $2bn, based on the 124m shares being sold.

Those shares will represent about 39pc of Digicel's equity.

But it's not expected that Mr O'Brien will receive any of the proceeds.

"We do not expect that any proceeds will be used to fund dividends to common shareholders," said Digicel, whose chief executive is Colm Delves.

Digicel - which has operations stretching around the Caribbean, to Central America and across the Pacific - intends to use between $1.2bn and $1.3bn of the initial public offering (IPO) proceeds to cut its $6.5bn in gross debt.

The company said it has not yet determined which tranches of debt it will repay.

The remaining proceeds will be earmarked for capital expenditure and acquisitions, as well as general corporate purposes.

The IPO plans are being handled by UBS, Credit Suisse, JP Morgan, Barclays, Citigroup and Deutsche Bank, with Irish stockbroking firm Davy acting as the lead manager.

Digicel generated revenue of $2.8bn (€2.5bn) in its last financial year, an operating profit of just under $708m (€636m), and a net loss of $157.6m (€141.7m).

In the three months to the end of June, revenue totalled $760m and it made an operating profit of $165m. Its net loss in the period was $31.4m. Digicel, which sponsors champion sprinter Usain Bolt and the West Indies cricket team, is either the biggest or second- biggest operator in almost all the 31 markets in which it offers mobile services. It has a total of 13.6 million subscribers in those countries. Digicel also offers TV and broadband in some markets and has a suite of business services.

Mr O'Brien has made a huge amount of money from Digicel since it was established soon after he sold Irish mobile operator Esat to BT in 2000 for €2.4bn. He's reckoned to have made about €317m from that sale.

He secured a mobile operating licence in Jamaica the following year. Mr O'Brien has received close to €1.6bn in dividends from Digicel over the past seven years.

The business generates a significant amount of cash. Its operating free cash flow was $548.5m in the 12 months that ended in March, representing 19.6pc of revenue.

Digicel spent $1.6bn in the past three years on networks, sub-sea cables and services across all its geographies.

Irish Independent

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