Microfocus
DIGICEL says the sale of its Pacific business will allow it to give a “microfocus” on the Caribbean as it targets the data market for growth in the next few years.
Oliver Coughlan, CEO of the Digicel Group — which covers the 32 markets in which the company operates — says when the sale of the six entities in the south Pacific is completed “in early March” it will turn to ramping up investments in the Caribbean and Central American markets in which Digicel will remain.
“The plans are, when we say goodbye to our great colleagues in the South Pacific it will allow us to give a microfocus on the 26 markets of the Caribbean. The plan is to invest; we are investing heavily. We have done a lot of capital expenditure in our markets across the globe but now we will just be focusing on the Caribbean,” Coughlan told the Jamaica Observer in a recent interview.
Digicel announced late last year that it is selling its south Pacific business to Australia-based Telstra for US$1.85 billion, inclusive of a three year, US$250-million earn-out and subject to customary post-closing adjustments. Digicel Pacific operates in six markets — Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru. It recorded sales of approximately US$450 million and adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) of approximately US$222 million in the year ended March 31, 2021.
Coughlan, who previously headed the company’s Pacific business ahead of his appointment as group CEO in June 2020, said before China Telecom made an offer for the businesses, there was no plan to get rid of them.
“We didn’t look to sell the business; we were caught up in a geopolitical battle. We were the little piggy in the middle. The Chinese had shown an interest in our business. The Australians didn’t like that and the rest is history. But, we didn’t go out to sell the business. It’s a great business, with great people. It generates good revenues, good cash and so I suppose our main shareholder got a price which he thinks reflects the value of the business and said yes. We were there for 15 years so it wasn’t short term — it was investing in great people in great countries. It’s an absolute sadness saying goodbye to our colleagues in the Pacific, but what it has done is to allow us to focus on our 26 markets in the Caribbean.”
But with that business not expected to be part of the Digicel Group portfolio after next month, Coughlan has already refocused on the Caribbean.
He outlined that Digicel has invested over US$7 billion in its markets since launching in Jamaica in 2001. Of that amount US$1 billion was spent in Jamaica, with a further US$200 million allocated last year to improve network connectivity as the company goes after growth in the broadband market.
“We are increasing the spend on fibre; it’s bringing more LTE sites in our markets. We are expanding heavily in Jamaica, we are expanding heavily in Haiti, and we are expanding fibre in a lot of countries,” Coughlan explained.
By the end of April Digicel expects 99 per cent of its cell sites in Jamaica will be LTE-enabled.
Across the region, Coughlan said Digicel is also eyeing opportunities that come with Guyana becoming an oil-producing nation.
“We are also talking to the oil companies, the rigs offshore to make sure we cover them. We have a dedicated resource whose only job is to support the oil industry,” he said of plans to offer data and other services to that sector. “It’s natural that if we are passing their front door, we give them a knock and let them know what we are offering.”
‘Passing their front door’ is in reference to Digicel’s roll-out of its Deep Blue One subsea cable for which it has signed a partnership agreement with France-based Orange to extend undersea fibre connection from Trinidad to French Guiana.
“That’s about US$80 million in investments. The…money is allocated and the project has kicked off. It’s all about investing for returns.”
But he said the plans at the moment do not include venturing into new markets. Asked about previous attempts to explore opportunities in Cuba, Coughlan replied, “Our main focus is not to be distracted with new opportunities in unserved markets. Our business here is to grow what we have, to serve what we have, and to expand into what we have.”
And signalling the company will be focusing on data, he added, “Data are the new oil now, so you have to invest for it.”
“The potential is enormous. First of all, our speed has increased 300 per cent in the last two years. People before now wouldn’t mind if things were taking their time or when they were buffering. Now people want absolute instant connectivity — and we’ve increased LTE mobile data speeds from averaging 12 Mbps to 40+ Mbps.
“You probably won’t believe it but the people of Jamaica are better connected and have faster speeds than the people of New York, and that’s a fact. But that takes investments. We have seen a phenomenal growth in data. That means we have to grow the network, keep capacity, build the backhaul, put in the fibre, and have the applications that let people grow. We have a digital ecosystem, great TV channels, great music channels, apps like BiP and other calling apps — and they are all growing at a great rate.”
He said the company’s TV offering, Digicel Plus is in double-digit growth across the region. “What the pandemic has done, it has changed people’s behaviour. There are many more people at home and working from home, and we have to service that change. For as fast as we can roll it out, people are signing up,” he said of the entertainment service.
From the company’s latest available financials, that’s for end of September last year, Digicel recorded a 6 per cent increase in mobile revenues, its Digicel Plus revenue grew by 14 per cent, and its Business Solutions revenue increased by 11 per cent on an underlying basis.
“The story is, we are investing. We are back to pre-COVID levels of growth…We are a profitable business, we are a multi-billion-dollar business. We are investing a lot of cash in all of our markets, in particular Jamaica and Trinidad and Haiti, and Cayman and Bermuda and Barbados.”
He concluded by saying he could not divulge more details ahead of a meeting with creditors set for today.