Digicel’s ongoing scrap with the government of the tiny island nation of Antigua and Barbuda, which wants to confiscate some of its mobile spectrum, is but a sideshow compared to the real issues facing Denis O’Brien’s mobile group.
In his latest barb against the company, Antigua prime minister Gaston Browne has referred to his earlier claim that talks were supposedly held with Digicel about a state takeover of its operation.
This has been strongly denied by Digicel, but Browne still claims that contact has been made directly with O’Brien about a potential 51 per cent sale of the business to the Antigua state.
Whoever O’Brien is or isn’t talking to in Antigua, he should have no hesitation in making himself available for friendly talks with bondholders, to soothe any lingering concerns there may be over a 9 per cent drop in its quarterly earnings.
Bloomberg reported on Friday that Digicel, which has debts of $6.7 billion, has notified bondholders of its latest earnings slide and blamed it on issues including higher acquisition costs.
Whatever the reason, a slide in its earnings of any sort is precisely what Digicel does not need.
About 18 months ago, Digicel struck a deal with holders of a near $1.9 billion tranche of bonds, which were due in 2020, to delay repayment for two years.
This bought Digicel time to cut its costs, restructure some of its operations, and boost its ability to cope with its debt pile from 2022. But its debt-to-earnings ratio, as it stands, appears to be rising slightly, and not falling.
Like many of its global peers, Digicel has spent a fortune on its infrastructure, only to find that much of the financial benefit of this investment has accrued to so-called over the top (OTT) data and communications services, such as the Facebook-owned Whatsapp and Viber.
Digicel has been fighting hard to find its path in the digital and data age. It has much work yet to do, if it is to keep its bondholders happy.
