Snapshot: Is Digicel on the road to recovery?

Caribbean-focused telecom operator Digicel has a new opportunity after a third reorganization process resulted in a cut of US$1.7bn in its debt. 

The company can build a “positive track record” posting an Ebitda margin of above 40% supported by a solid competitive position, Moody’s Ratings says in press release. 

Last week, the rating agency upgraded Digicel International Finance Limited to ‘B3’, with a stable outlook. 

Digicel, founded in Ireland, posted revenues of US$1.9bn for its fiscal year ended March. Ebitda rose 7% to US$766mn, according to the Irish Times. 

As Digicel is a private company, financial results are not made public. 

Moody’s believes Digicel can show positive cash flow driven by no dividend distribution and capex below 15% of revenue. In the fiscal year ended March, free cash flow was US$14mn. 

“The restructuring process significantly changed Digicel's interest expenses and liquidity profile, providing the company with financial flexibility,” Moody’s stated. 

But the company has some risks associated with its presence in emerging markets with a history of instability and exposure to adverse weather events, as well as currency depreciation. 

Digicel recently announced a “multimillion-dollar investment” to fully restore its infrastructure on Carriacau and Petite Martinique, dependencies of Grenada, post-Hurricane Beryl.

“Digicel continues to face a number of challenges that constrain operating improvements, which include difficult economic and operating conditions in some of the company's large markets, namely Haiti, which accounts for around 18% of the company's revenues,” Moody’s added. 

The company operates in 25 markets in the Caribbean and has about 10mn individual and business clients for mobile, cable-TV and broadband services, among others. 

Recently, Digicel announced that has completed Caribbean submarine cable Deep Blue One, connecting French Guiana, Suriname, Guyana and Trinidad & Tobago. “That in turn means we can expand our LTE coverage to more people in more places while significantly improving the LTE experience for existing customers through increased capacity,” said Digicel CEO Marcelo Cataldo when announcing the migration of Digicel Suriname cable into the new submarine infrastructure. 

The telco also launched 5G services in Grand Cayman in June. The network is first available in the West Bay area, parts of George Town and Bodden Town.