Digicel’s earnings continue to drop

Irish-owned telecoms company Digicel continues to report less revenue while its debt mountain grows bigger.

According to Bloomberg, for the three months to the end of March, its quarterly earnings dropped by 9% to just US$210 million. Digicel now has around US$280 million in cash as it looks to salvation from digital and data services.

Digicel has a whopping debt of 6.7 times earnings and had promised to reduce it to 5.7 times earnings by the end of March this year. Instead, it is now over 7 times earnings.

The group got a reprieve of sorts by pushing back bonds falling due in 2020 by two years, but its bond prices continue to drop with some bondholders now becoming anxious.

“We believe the bonds will continue to trade well below par in the medium term with a significant risk of further price depreciation.”

— Statement from JMMB

Earlier this year, JMMB advised its clients holding Digicel bonds to sell them as the company will face challenges servicing them.

Can Digicel turn things around, reduce its debts significantly and transform itself over the next two years?

Should it look to offload more assets?

Do let us know at Buzz