DIGICEL’S operations in Papua New Guinea (PNG) is the biggest earner for the telecommunications company, by at least one estimate.

“Fitch estimates that PNG has become the most meaningful market for EBITDA (earnings before interest, tax, depreciation and amortisation) contribution, followed by Haiti and Jamaica,” said a recent press release by the ratings agency. “Digicel Pacific Limited (DPL), a subsidiary of DGL, has continued to grow and has generated positive free cash flow (FCF) over the past three years.”

DPL, which operates in PNG, where the population is smaller than in Haiti but more than twice the size in Jamaica, contributed to 24 per cent of Digicel’s group EBITDA for the 12 months to December 31, 2012.

The most important contributors to DGL’s EBITDA after the top three are Trinidad and Tobago and the French West Indies (FWI).

Fitch expects value added services (VAS) as a percentage of revenue to continue increasing its share of revenues.

“Positive trends in VAS have supported revenues and EBITDA growth over the past few quarters, offsetting pressures from traditional voice services in some markets due to reductions in mobile termination rates (MTR), tax increases and strong competition,” said Fitch. “In addition PNG growth continues to support operating results.”

Meanwhile, Digicel will know by the end of June if it will get to operate in its largest market yet.

The telecommunications company is going after one of two licences in Myanmar.

The southeastern Asian country has low penetration against the background of limited infrastructure and low income.

It also has a GDP per capita below US$1,000, or similar to Haiti, while almost half of the mobile subscribers in Myanmar are currently located in the country’s two largest urban centres Yangon (with 1.8 million subscribers, or 25 per cent of the city’s population) and Mandalay (860,000 or 12 per cent penetration).

But the country is more than 20 times the size of Haiti in terms of land area, and has more than six times the population size.

“Digicel has high cash balances that are estimated to exceed US$1 billion,” said the ratings agency, which believes the cash can be used to fund the Digicel-led consortium participating in the bidding process for the two licences.

“In the event the consortium is not awarded a licence, the use of cash balances is still uncertain but Fitch believes it may be used for some debt repayment, additional investments in existing markets and special dividends.”

— BO