Business

Digicel Jamaica falls to No 3 spot in group

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Friday, February 28, 2014    

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CURRENCY movements and lower call rates resulted in Jamaica dropping one spot to the third highest revenue earning territory for the telecoms group Digicel.

Concurrently, the group earned US$36.9 million ($3.9 billion) net profit for its December 2013 quarter, reversing the loss in the prior year's quarter.

Over nine months net profit totalled US$61 million which reversed a whooping US$215-million loss in the comparative period the year before.

Haiti remained the top territory, followed by Papua New Guineawhich surpassed Jamaica over the quarter, financials indicate.

"Revenues in Jamaica decreased by 16 per cent to $104 million for the quarter ended December 31, 2013," explained Digicel in its financials. "Compared to the quarter ended December 31, 2012, the Jamaican dollar has depreciated by 13 per cent."

In fact, the top three territories all earned less revenues in the December quarter but Jamaica tumbled the fastest, followed by Papa New Guinea, which was down four per cent to US$117 million, and Haiti, down 3.9 per cent to US$122 million.

Digicel added that even at constant currency basis revenue in Jamaica dipped six per cent to US$117 million.

The Jamaica revenue decline comes in the context that the group is relocating key management to Ireland.

The group in 2012 opened an 11-storey office in Kingston Jamaica describing it as its "global headquarters".

However last June, five managers from the Digicel Group relocated from Jamaica to a new corporate office in Dublin, Ireland. Digicel reportedly will establish a corporate base in Dublin from where Group CEO Colm Delves, Chief Financial Officer Lawrence Hickey, Head of investor relations Brian Devine, and a couple other senior members of the management team will oversee the group operations.

The move raised questions as to whether Digicel's corporate base in fact remains in Jamaica, where the group has called home since its start-up in 2001.

"Local currency depreciation, relative to the US dollar, particularly in Haiti, Jamaica and Papua New Guinea, which adversely impacted revenues in those markets," the telecommunications firm explained. "In constant currency, against the US dollar, Group service revenues increased by three per cent to US$694 million for the quarter ended December 31, 2013, and reduced Mobile Termination Rates in French West Indies, Jamaica and El Salvador, which negatively impacted reported service revenues in those markets by a combined US$10 million."

The group earned US$305 million before interest, tax, depreciation and amortisation (EBITDA) for the quarter, which represents an EBITDA margin of 46 per cent of service revenues, an increase of one percentage point from the prior year period.

Subscribers increased by five per cent from 12.8 million subscribers at December 31, 2012 to 13.4 million subscribers at December 31, 2013, financials indicated.

The 404,000 net additions were recorded in the quarter with growth across a number of markets "including Haiti, Jamaica, El Salvador and Papua New Guinea," Digicel added.

Last December, Digicel announced that its subsidiary, Digicel Asian Holdings Ltd, signed an agreement with Ooredoo to develop, construct and lease telecommunications towers in Myanmar.

It also announced that the group entered into a share and asset purchase agreement with Global Caribbean Fiber to acquire certain submarine assets in the Eastern Caribbean region.

The proposed transaction is subject to regulatory approval and is expected to close in the coming months.

Digicel group's cash on hand at December 2013, amounted to US$1.5 billion. The group recently issued an additional US$500 million of the existing 8.25 per cent DGL senior notes due 2020, which brings the total amount outstanding of the DGL 2020 notes to $2 billion, financials stated.

Calls to Digicel for clarity on the financials in relation to Jamaica went unanswered up to press time.

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