Digicel Group Limited, the Caribbean's top mobile company, expects to grow revenues to US$1.47 billion (J$104.4 billion), with Jamaica appeared poised to deliver just under a third of that income, and is estimating profits of US$434 million (J$30.9 billion) on operations at its financial year end March 2008, according to company information released at a Miami conference.

The company refused comment on its net profit position, with a reminder to the Financial Gleaner that it was a private operation.

The estimates are based on the telecom's half-year results to September 2007, when its turnover reached US$733 million and profit on operations rose to US$217 million net of US$11 million of losses sustained in its El Salvador, Guyana and Suriname markets.

If its projections hold, Digicel would have grown revenues by 30 per cent, up from $1.13 billion at year end March 2007; and EBITDA or earnings before interest, taxes, depreciation and amortisation by 97 per cent, up from US$220 million.

Jamaica remains the biggest contributor to revenues, but its share has been slipping.

Evidence of growth

That, according to Digicel Group Chief Financial Officer Lawrence Hickey in his presentation at the Bear Stearns sixth annual Latin American and Caribbean Markets Conference on January 14, was not so much a minus for Jamaica but evidence of the growth taking place across the group.

Hickey's presentation was spun around the company's financials as at September 2007, at which point the Jamaican market was up 12 per cent year on year, though its contributions to group earnings had fallen from 44 per cent to 32 per cent.

Both Haiti and Jamaica were equal at September on subscriber numbers, 1.8 million each, but since then Digicel believes Haiti has pulled ahead. Total subscribers have since grown from 5.7 million to six million.

The Denis O'Brien-owned group now operates in 23 markets spanning the Caribbean, South America and Central America and rolls out in a 24th this year, British Virgin Islands, under a US$15 million plan.

In six of its markets, Digicel shares ownership with minority partners. Its stake in operations in Cayman Islands is 96.9 per cent; Anguilla, 75 per cent; Turks and Caicos, 51 per cent; OECS Limited headquartered in St Lucia, 91.02 per cent; Barbados, 75 per cent; and St. Kitts/Nevis, 70 per cent. The other country operations are 100 per cent owned.

In its first six years, the company's regional investments have reached US$1.9 billion. Its capital outlay in the current period ending March was US$360, not including the cost of the Honduras licence, compared to US$470 million the spend in 2006/07 when its annual spend was heaviest.

It has issued more than US$1.85 billion in corporate debt issue to finance its programmes, and has access to more than US$1 billion of credit, negotiated through St Lucia- based subsidiary Digicel International Finance Limited, including a US$200 million revolving or informal loan arrangement which it can tap in a crunch.

The group, which in December finalised its corporate restructuring to merge its two group operations into one, also has US$192 million of cash at hand.

Debt

The company's total debt, according to Hickey, has reached US$2.86 billion, but the company is "on track to rapidly de-lever the business due to sustained EBITDA growth".

Digicel's leverage or total debt to EBITDA has fallen to 6.59 times at September 2007 from 8.4 times recorded six months earlier at year end March 2007. Hickey said US$296 million of new debt was acquired in late 2007 at LIBOR plus 2.5 per cent, when the DIFL facility was upsized to pay down the debts generated under the May 2006 roll out of services in Trinidad and Haiti.

"Pricing for the upsized DIFL facility was maintained at the same pricing as last refinancing in February 2007 - LIBOR plus 250 basis points", said Hickey's presentation, "which is lower than the current debt finance rate."

In its start-up year in Jamaica, whose licence and operations are registered under the name Mossel, Digicel Group made a US$12 million loss on operations at financial year end March 2002, but since then the group has consistently returned bigger profits in each yearly period, growing an annual 38 per cent, its figures show.

lavern.clarke@gleanerjm.com