Re­gion­al telecom­mu­ni­ca­tions provider Dig­i­cel says it "fun­da­men­tal­ly dis­agrees with the con­clu­sions of the re­port" done by Cred­it­Sights debt an­a­lyst Michael Chakard­jian that the group's debt of US$6.2 bil­lion in debt is at "un­sus­tain­ably high lev­els" as it is 6.2 times earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (ebit­da) at the com­pa­ny.

Sev­er­al Irish news­pa­per last week re­port­ed on a pre­sen­ta­tion by Chakard­jian in which he con­clud­ed that de­spite hav­ing 14 mil­lion cus­tomers across 32 mar­kets in the Caribbean, Cen­tral Amer­i­ca and the Pa­cif­ic, Dig­i­cel was fac­ing a pow­er­ful cock­tail of cur­ren­cy risks, eco­nom­ic threats and "cash burn" due to de­clin­ing rev­enues from mo­bile calls and the on­go­ing need to pump cash in­to its fi­bre net­work, as the Irish Times re­port­ed on Sat­ur­day.

Ac­cord­ing to the news­pa­per:

"The an­a­lyst iden­ti­fied four sep­a­rate threats fac­ing the com­pa­ny, which O'Brien tried and failed to float on the stock mar­ket 14 months ago.

"First­ly, Chakard­jian cal­cu­lat­ed there is 'lim­it­ed to no eq­ui­ty cush­ion', with a debt more than six times its earn­ings.

"He is sug­gest­ing here there is cur­rent­ly lit­tle val­ue over and above what it owes lenders. If Dig­i­cel were a house, it would ef­fec­tive­ly be on the verge of neg­a­tive eq­ui­ty.

"Sec­ond­ly, he is scep­ti­cal about the com­pa­ny's plan, dubbed Project Swan, to hack back costs to boost mar­gins.

"The third stick with which he beats Dig­i­cel is its prospects for rev­enue growth. Voice calls ac­count for more than half its in­come but, like the rest of the in­dus­try, are falling fast. Da­ta, fi­bre and ca­ble are cur­rent­ly not grow­ing fast enough to plug the gap.

"Fi­nal­ly, it is sug­gest­ed that some of Dig­i­cel's fate is out­side of its con­trol. Be­yond nor­mal com­pet­i­tive threats that come with op­er­at­ing in risky mar­ket, Dig­i­cel faces enor­mous cur­ren­cy head­wind."

The Irish Times ex­plained that Dig­i­cel's debts are in US dol­lars, but it is try­ing to pay them off in weak­en­ing cur­ren­cies from Haiti, Papua New Guinea, and Ja­maica, which are among its largest mar­kets.

Re­spond­ing to the debt analy­sis, the telecom­mu­ni­ca­tions com­pa­ny said: "Dig­i­cel fun­da­men­tal­ly dis­agrees with the con­clu­sions of the re­port.

"Dig­i­cel's out­look re­mains pos­i­tive with ro­bust plans to delever by mon­etis­ing our net­work in­vest­ment and through re­al­is­tic cost man­age­ment ini­tia­tives. We will not be com­ment­ing on the spe­cif­ic de­tails of our trans­for­ma­tion."

Delev­er­ing refers to re­duc­ing debt lev­els.

The Irish Times re­port­ed at the end of No­vem­ber that Dig­i­cel ex­ec­u­tives had pitched a plan to in­vestors and an­a­lysts ear­li­er that month to cut its debt ra­tio from 6.2 to 4.5 times ebit­da by March 2019 as it sees prof­its fi­nal­ly re­bound­ing in its next fi­nan­cial year af­ter in­vest­ing US$2.3 bil­lion in its net­work over half a decade.