Digicel has slashed capital expenditure in Guyana by 80%

-according to debt offering memo

Over the past three years, Digicel has slashed its capital expenditure in Guyana, moving from investing US$14.3 million in 2016, to US$2.8 million in 2018, a cut of approximately 80 per cent.

This is according to a Digicel debt offering memorandum of September 14 this year.

Over the past year, the debt-laden Irish telecommunications firm has downsized its workforce here by half and reduced its customer care service from 24 hours to 12 hours.

Digicel’s debts are at a whopping US$6.8 billion and credit analysts had previously described the company’s debt levels – when it was even lower – as “unsustainable.” Digicel subsequently initiated a restructuring process last year but in August, asked current bond holders to move into bonds with a later expiration date. According to figures contained in the offer document, Digicel has US$5.5 billion of indebtedness maturing between 2020 and 2023.

“If we are unable to deleverage our balance sheet as planned, it will be more difficult for us to refinance our debt as it becomes due and to continue to meet our debt service obligations under our outstanding indebtedness…” the company said.

According to figures seen by Stabroek News, as of March 31, 2018, Digicel had total indebtedness of approximately US$6.8 billion.

The company said that in the year ended March 31, 2018, it generated total revenue of US$2.4 billion, an operating profit of US$454.1 million, a net loss of US$219.5 million and Adjusted EBITDA (earnings before interest tax, depreciation and amortization) of US$1 billion, representing an Adjusted EBITDA margin of 41.7 per cent compared to total revenue of US$2.5 billion, an operating profit of US$604.2 million, a net loss of US$36.9 million and Adjusted EBITDA of US$1 billion, representing an Adjusted EBITDA margin of 41.2 per cent in the year ended March 31, 2017.

In relation to its operating profit of US$454.1 million for the year ended March 31, 2018, the figures showed that Guyana’s contribution increased by US$6.1 million. “…the contributions to operating profit from Jamaica, the French West Indies, Bermuda, Guyana and the Eastern Caribbean increased by $6.0 million, $20.1 million, $2.1 million, $6.1 million and $6.6 million, respectively,” the company said.

However, figures show that Digicel’s capital investment in Guyana has dropped since 2016 from US$14.3 million that year, to US$9.3 million in 2017, to US$2.8 million for 2018. The figures cover the preceding year up to March of each year.

In other territories, the company has increased its investment while in others, it has dropped but not as drastically as in Guyana.

According to the company, “Digicel selectively deploys its capital in areas that it believes represent attractive opportunities to generate strong returns on investment over time and further increase its cash flow from operating activities.”

Further, Digicel’s financial statement for the year ending March 31, 2018 shows that it has only US$549,000 in “cash and cash equivalents” in Guyana, by far, the lowest cash total of any single Digicel market listed in the document. The figure is also a significant reduction from its available cash reported for Guyana in 2017 which was US$3.695 million.

According to Digicel, it has a 61 per cent share of the mobile market in Guyana with 400,000 subscribers. It said that last year, its revenue generated in Guyana decreased by US$5 million, or 5.4 percent, to US$87.1 million in the year ended March 31, 2018 from US$92.1 million in the year ended March 31, 2017. “The decrease was primarily due to a decrease in international transit traffic revenue,” the company said.

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