Denis O'Brien's Digicel telecoms company saw both its underlying revenue and earnings rise by 7 per cent on the year in the final three months of 2021, its financial third quarter, as the business continued to recover from the effects of the Covid-19 pandemic.
However, reported earnings fell as a result of the negative foreign-exchange translations into dollars, the currency in which the company reports results. This was mainly a result of a slump in the Haitian gourde amid ongoing civil unrest in the Caribbean nation, which was left reeling in the wake of the assassination of its president and a large earthquake last summer.
Digicel’s underlying revenue rose to $593 million (€534.5 million) for the reporting period, according to figures released to bondholders recently. However, reported revenue was flat at $552 million (€498.6 million), after currency effects.
Earnings before interest, tax, depreciation and amortisation (ebitda) increased to an underlying $268 million (€242 million), but foreign exchange movements drove them down 5 per cent to $239 million (€215.8 million) on a reported basis, the company informed bondholders, according to sources.
Digicel does not publicly publish quarterly financial results. A spokesman for the company declined to comment. The worst of the pandemic had seen revenue and earnings affected by severe restrictions across various markets, hitting tourism and general economic activity.
Net debt
The company's net debt stood at $5.5 billion (€4.9 billion) at the end of December, resulting in a figure that was 5.7 times 12-months ebitda, including leases. The debt burden is on track to fall further in the coming months after the expected completion of the sale of its Pacific business to Australian telecoms giant Telstra.
Telstra agreed last October to purchase the unit, whose business spans Papua New Guinea to Fiji, Samoa, Vanuatu Tonga and Nauru, for an initial figure of $1.6 billion (€1.45 billion) in a deal backed by the Australian government. The transaction includes a $250 million (€225.8 million) earn-out clause, subject to the performance of the business unit over three years, which could increase the overall value of the deal.
Digicel’s creditworthiness remains deeply challenged as a result of two debt restructurings in recent years, with bondholders forced to write off $1.6 billion (€1.45 billion) of its debt in 2020 to prevent likely liquidation. The debt figure had stood at more than $7 billion (€6.3 billion) before the restructuring.
However, ratings firms Fitch and Moody's have put their current deep-in-junk-territory credit grades on Digicel on review for upgrades once the Pacific deal goes through.
Digicel plans to use most of the up-front proceeds to redeem its $1.05 million (€950,000) of senior secured notes that would ordinarily fall due in 2024, as well as most of its $425 million (€383.8 million) senior unsecured notes that are set to mature in 2025.
Broken down by division, Digicel’s mobile underlying mobile revenue rose by 5 per cent in its financial third quarter, while those in business solutions increased by 12 per cent, and its Digital-plus home services unit, including fibre broadband and TV packages, recorded a 9 per cent increase. It had 13.2 million subscribers in 32 markets across the Caribbean and Pacific regions at the end of the period.
