Digicel books 8% drop in EBITDA; offers to buy back bonds

27 Nov 2020

Irish-owned, Jamaica-based telecoms group Digicel Group has reported that its earnings for the three-months to end-September 2020 fell by 13% compared to the same period of last year, the Irish Times writes, citing unnamed sources. The decline was attributed in part to the negative impact of the COVID-19 pandemic on the group’s operations. Underlying service revenue was reported to have fallen by 2% to USD546 million, whilst EBITDA for the period fell by 8% year-on-year to USD229 million. According to the sources, Digicel is expecting service revenue to fall by a further 1% to 2% in the current quarter (i.e. to end-December 2020), with EBITDA for that period to decline by around 5% to 6%.

In a separate development, meanwhile, Digicel has launched an offer to buy back some of its riskiest bonds. Earlier this year Digicel completed what credit rating agencies described as a ‘distressed debt exchange’ that saw its creditors swap their bond for lower valued securities, effectively writing off around USD1.6 billion of the group’s debt. A portion of the new securities – a total of USD203 million of convertible notes – was issued by a new holding company, Digicel 0.5 Limited (DGL0.5), which holds the group’s assets across its Latin American, Caribbean and Asia-Pacific footprint, and are convertible to a 49% stake in DGL0.5 if they remain outstanding by June 2023. Digicel is now offering up to USD10 million to repurchase some of the bonds at a heavily discounted rate of just USD0.2 on the dollar, although this reportedly represents a premium on the USD0.13-USD0.15 range at which the bonds have recently been trading. The offer expires on 17 December and could shave up to USD50 million off of the group’s USD5.7 billion debt pile, and reduce the stake claim of the group of convertible notes to 36.8%.

Jamaica, Digicel Group