Business World

Tuesday 20 August 2019

Drop in earnings to push Digicel's key debt ratio to 'seven times' in 2020

Ratio: Denis O’Brien’s Digicel has seen its earnings dip
Ratio: Denis O’Brien’s Digicel has seen its earnings dip
Donal O'Donovan

Donal O'Donovan

Digicel's closely watched debt ratio is tipped to peak at more than seven times earnings before interest, taxes, depreciation and amortisation (ebitda), after a sharp drop in earnings.

The closely scrutinised debt metric is expected to slip back to end the firm's current 2020 financial year at seven times earnings, although asset sales or bond buy-backs could potentially reduce those levels.

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Figures released to Digicel bondholders show that Denis O'Brien's far-flung telecoms and communications group saw a 9pc decline in underlying earnings to $230m (€202m) in the three months to March 31.

Earnings were hit by one-off factors, including changes in the accounting treatment of bad debts and of elements of capital spending.

With net debt steady at $6.7bn, that pushed up the debt ratio.

Ebidta is now forecast for mid-single digit percentage underlying growth this year.

Underlying revenues were up 1pc to $595m for the three months to the end of March, though reported revenue fell 3pc partly on currency effects.

Average revenue per user was up 4pc, boosted by a shift to greater data use.

Irish Independent

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