(CMR) Irish billionaire and owner of Digicel, Denis O'Brien, is said to be struggling to refinance the Jamaica-based mobile phone company in the face of its $6.7 billion (€6 billion) debt.
According to the Irish Times, the company was once a cash cow for O’Brien. Between 2012 and 2014 he received dividends totaling $1.1 billion from Digicel, which operates in 31 markets, mostly in the Caribbean and also in Central America and the Pacific islands. Since then the company has been struggling to capture the same revenues it received from its voice services as it transitioned to offering mobile data services. In 2014 Digicel announced that it would be launching its own multi-station television service in Papua New Guinea to transform the mobile company into a broader-based media company. Its initial expansion in the Pacific started in 2006. It also launched Digicel Play is several Caribbean countries.
However, in Cayman, Digicel has seen some reductions in staff compliments offering people voluntary separation packages several years ago. They have also outsourced a number of accounting functions to India. Apparently currency depreciation in the Caribbean region with high-interest rates has also been a significant contributing factor and created negative cash flow.
However, credit rating agency Fitch now says that Digicel faces “imminent refinancing risk” and would have to restructure debt at multiple levels over the next 12 to 18 months because of an unsustainable capital structure. Moody also made a similar prediction in July when it warned of Digicel's increasing risk.
Apparently Digicel has a $1.3 billion bond repayment due in April 2021 along with a series of $3 billion maturities. It is said that O'Brien will have to make some “tough decisions” to stabilize Digicel's financial position. In 2018 the maturities of two bonds worth a combined $3 billion due in 2020 and 2022 were extended by two years, with no haircut on the principle. Experts speculate this may be a possibility and that O'Brien also has the option of injecting fresh capital into the business.
Digicel is a Jamaican based mobile phone company and home entertainment provider that operates in 33 markets across the Caribbean, Central America and Oceania. Launched in April 2001 in Jamaica it gave monopoly provider Cable & Wireless quite a run by acquiring 100,000 in the first 100 days of operation. They now have a market share of over 70% in Jamaica. They are incorporated in Bermuda and has around 14 million wireless subscribers. In 2018 they underwent a major rebranding exercise.
Digicel also owns the Loop news brand.