Home' Trinidad and Tobago Guardian : January 23rd 2014 Contents BG6 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt
JANUARY 2014 WEEK FOUR
Although its revenue has been increasing,
mobile operator Digicel Group Ltd reported
its first net loss in three years, according to
Jamaica-headquartered Digicel reported a US$198.491
million net loss for its year ended March 31, 2013.
For the same period in 2012, Digicel made a net profit
of US$47.233 million, and in 2011, US$43.158 million. The
company's last net loss was in 2010 and amounted to
US$131.679 million. Fitch Ratings, which did a full rating
report on Digicel, had to release the closely guarded numbers
of privately-held Digicel to investors on January 8, 2014.
Fitch also showed the company's results for the last 12-
month (LTM) period ended June 30, 2013 and for that
period too, a net loss of US$194.22 million was reported.
While Digicel has been reporting net losses, Digicel owner
Denis O'Brien is set to pay himself another US$650 million
in dividends, according to reports by Bloomberg, the Sunday
Times of London, the Irish Times and the Jamaica Gleaner.
Simultaneously, the company is borrowing money via bond
issues "for general corporate purposes," according to a
December 11, 2013, Digicel statement.
O'Brien is to take a US$650 million ( 473 million) special
dividend from Digicel, The Sunday Times reported on Decem-
ber 15, 2013.
"The dividend is expected to be paid within the next six
months. O'Brien last tapped Digicel in June 2012, when
he received US$300 million. The dividend will bring his
Digicel income to US$1.8 billion since 2008," the Times
Asked if O'Brien is cashing out of Digicel, Antonia Graham,
head ofgroup PR at Digicel, told the Business Guardian
on January 16, 2014:
"To be clear, Denis O'Brien has no intention of selling
the company. Further, we do not comment on reports about
our financial affairs."
After the Business Guardian explained that the question
was not if O'Brien is selling the company, but if he is taking
his chips off the table (that is, his investment and profit)
to leave the company operating on "house money," she reit-
erated, "Thank you, but again, we do not comment on
The Digicel Web site has several press releases with
comments on financial matters, including a June 30, 2013,
release on the company's "financial performance for the
year ended March 31, 2013" where the company "reported
revenues of US$2.78 billion which represents an eight per
cent year-on-year increase in revenues."
The release said: "Earnings before interest, tax, depreciation
and amortisation (EBITDA) was up 11 per cent year-on-
year to US$1.2 billion for the full year, with the most recent
quarter contributing US$318 million."
Digicel also said its subscribers increased by one per
cent to 12.9 million across the Digicel Group's 30 markets
The company said "performance has been strong with
revenue growth driven in particular by Haiti, Papua New
Guinea, T&T and Suriname. As Digicel continues to roll out
4G networks based on HSPA+ technology and to expand
the range of smartphones it offers, data and value-added
services revenues stood at 23 per cent of service revenues
---up from 20 per cent for the prior year quarter."
Commenting on the company's performance, Digicel Group
CEO Colm Delves, said: "We are very pleased with the
continued growth we are seeing across our markets and
with the customer response to the rollout of our 4G networks.
We will continue to focus on growing our ICT/business solu-
tions portfolio and on driving data usage across our customer
base. I would like to take this opportunity to say thank you
to our dedicated staff and loyal customers and to assure
them of our continued commitment to best value, service
and network and to growing our communities."
The release listed as "key achievements" in the period:
"The launch of 4G services based on HSPA+ in the British
Virgin Islands, Haiti, Jamaica and T&T -- and LTE in Antigua
& Barbuda; completion of the integration of the Voila business
and network in Haiti; ICT/business solutions revenues
increased by 94 per cent for the year and now represent
three per cent of services revenues; issuance of a total of
US$1.3 billion of Digicel Group Ltd senior notes due 2021
at six per cent with the proceeds being used to refinance
existing notes and for general corporate purposes."
Bonds to cover general corporate purposes
More recently, on December 11, 2013, Digicel via a state-
ment announced "its intention to launch a private placement
of US$500 million of 8.25 per cent senior notes due 2020.
Digicel previously issued US$1.5 billion of its 8.25 per cent
senior notes due 2020 on September 19, 2012. Digicel
Group Ltd is a limited liability exempted company organised
under the laws of Bermuda and owned by Mr Denis O'Brien."
The statement said: "Digicel intends to use the net proceeds
from this offering for general corporate purposes, which
could include capital expenditures, investments, acquisitions
or debt repayment. The notes have not been and will not
be registered under the US Securities Act of 1933, as
amended and may not be offered or sold in the United
States absent registration or an applicable exemption from
In its latest rating on Digicel, Fitch gave the company
an overall issuer default rating (IDR) of B (with AAA being
the highest). For its its unsecured notes (bonds) already
on issue, Fitch has a mix of B and B- ratings.
On Digicel's US$1.5 billion unsecured notes due 2020,
Fitch has a B-- rating. This is the same rating it has on
a US$775 million unsecured notes issue due to mature in
2018. On Digicel's US$1.3 billion unsecured notes due 2021,
Fitch has a B rating. On its US$800 million unsecured notes
due 2017, Fitch has a B rating. On its US$250 million unse-
cured notes due 2020, Fitch has a B rating. According to
the Fitch documents, Digicel, through its various subsidiaries
and parent company, in total, has already issued US$4.625
billion in bonds.
On its balance sheet, Digicel's total debt has also been
exceeding its total assets since 2010 at least. For the year
ended March 31, 2013, total debt exceeded total assets
by US$820 million. In 2012, total debt exceeded total assets
by US$221.9 million; in 2011 by US$308.9 million, and in
2010 by US$604.7 million.
"Digicel Group Ltd's (DGL) ratings are supported by its
position as the leading provider of wireless services in most
of its markets in the Caribbean and its track record of oper-
ational performance," Fitch said in its rating report. "The
ratings are constrained by high leverage and exposure to
low-rated countries, as about 40 per cent of its cash flow
is generated in Jamaica and Haiti." Fitch described Digicel
as a "high leverage and solid operations" company.
Fitch said Digicel's operations are diversified. "DGL has
diversified its cash flow generation and asset base leading
to lower business risk over the past several years. Fitch
Ratings estimates that Papua New Guinea (PNG) has
become the most meaningful market for EBITDA contribution,
followed by Haiti and Jamaica. Digicel Pacific Ltd (DPL),
a subsidiary of DGL, has continued to grow and is now
generating positive free cash flow (FCF)," Fitch said.
Digicel posts US$198m net loss
Digicel chairman, Denis O'Brien
Continued on page 7
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