SOME GOOD news for Denis O’Brien’s Digicel mobile phone group, which this week produced results that show it posted a net profit last year for the first time since its launch in 2001.
A $41 million bottom-line surplus is modest in the context of a company with a net debt of $2.7 billion at the end of last March and which is investing more than $800 million on its launches in Honduras and Panama, but it’s an important step in the right direction.
With 23 markets in the Caribbean and three in Central America, Digicel is clearly reaching saturation point in the region, although Digicel chief executive Colm Delves told me this week that there are a couple of new markets on its radar.
“The Costa Rica market is up for liberalisation possibly over the next 12 months so,” Delves said. “If that opportunity presents itself to us we will certainly have a look at it. That’s currently a monopoly.”
What about Cuba, the only big island in the Caribbean where Digicel hasn’t yet been able to erect its masts? Just 4 per cent of the 11 million population on the communist-run island has a mobile phone. Restrictions on using mobile phone were only lifted about 15 months ago, but usage there is the lowest of any state in Latin America.
“That will depend on what the Cuban government decides to do,” Delves said. “There’s no specific opportunities that we are aware of currently.
“ETECSA, which is a state [owned] business, basically has a monopoly on services there, so while the statements by [US president Barack] Obama [about loosening trade restrictions] are interesting, it’s really up to the Cuban government to decide if they want to bring competition in there. I don’t see anything happening there in the near term.”
Delves did rule out Digicel trying its luck in either Mexico or the US.
“We wouldn’t touch either of them,” he said. “They’re very heavily penetrated markets. We know where our sweet point is and it’s in the tiny markets of 10-20,000 [population] up to 10 or 12 million.”
Delves take on Digicel’s future expansion is a simple one. “There are more significant opportunities for us in Central America.”
