Hema Ramkissoon

hema.ramkisson@cnc3.co.tt

Dig­i­cel T&T is not in fi­nan­cial trou­ble and no re­struc­tur­ing of the com­pa­ny is con­tem­plat­ed at this point in time.

That’s the re­sponse from the com­pa­ny’s cor­po­rate com­mu­ni­ca­tions man­ag­er, Pen­ny Gomez, who told the Sun­day Busi­ness Guardian, that Dig­i­cel’s Caribbean op­er­a­tions re­main sol­id and in­tact.

Dig­i­cel has been in the news re­cent­ly with an ar­ti­cle in the Irish Times rais­ing con­cerns about its fi­nan­cial sta­bil­i­ty and doubts on the op­er­a­tions of Dig­i­cel and its fu­ture prospects in the re­gion. It al­so pre­dict­ed that the com­pa­ny will soon re­turn to the mar­ket with an­oth­er re­struc­tur­ing plan.

How­ev­er, Dig­i­cel’s ex­ec­u­tives are seek­ing to re­as­sure in­vestors and part­ners that the com­pa­ny’s fu­ture re­mains sol­id, es­pe­cial­ly in Caribbean.

In an emailed re­sponse, Gomez in­sist­ed that re­struc­tur­ing was not on the cards. She said: “The com­pa­ny is not hold­ing any re­struc­tur­ing dis­cus­sions.”

The Irish Times claims that, ‘Six months af­ter Dig­i­cel is­sued about US$2.9 bil­lion (€2.6 bil­lion) of new bonds—a deal that ef­fec­tive­ly pushed out debt re­pay­ments and with re­port­ed earn­ings falling by nine per cent in the first quar­ter of 2019 to $210 mil­lion, its much-hoped-for re­turn to earn­ings growth had not ma­te­ri­alised.

“Fol­low­ing four months of ne­go­ti­a­tions, Dig­i­cel saw 98 per cent of the hold­ers of $2 bil­lion of bonds due for re­pay­ment in 2020 agree in Jan­u­ary to post­pone get­ting their mon­ey back from the group in 2020, by swap­ping their hold­ings for notes that ma­ture in 2022.

“Al­most all of the in­vestors in a sep­a­rate $1 bil­lion of 2022 debt agreed to ex­change their notes for new 2024 bonds. Al­most $2 bil­lion of the new bonds that were is­sued stand at the back of the queue to be re­paid if the wider Dig­i­cel Group, which has some $6.7 bil­lion of bor­row­ings, runs in­to fi­nan­cial trou­ble in the fu­ture.

“In­vestors buy­ing in­to the riski­est 2022 bonds are cur­rent­ly de­mand­ing a mar­ket in­ter­est rate, or yield, of 71 per cent, with the notes chang­ing hands at a lit­tle un­der 23 cent on the dol­lar with the 2024 bonds not far­ing much bet­ter, yield­ing 61 per cent. The Irish Times re­port­ed.

But Gomez coun­tered the ar­ti­cle say­ing: “The ex­change of­fer that con­clud­ed in Jan­u­ary al­lowed the Group to ex­tend the ma­tu­ri­ty of $2.9bn of debt by two years, in line with the Group’s strat­e­gy of proac­tive­ly man­ag­ing its up­com­ing ma­tu­ri­ties.”

She said: “These re­fi­nanc­ing ac­tiv­i­ties are not ex­pect­ed to im­pact on the op­er­a­tions of the group.”

So does this mean the busi­ness prospects in the re­gion are di­min­ish­ing?

Gomez said that the op­er­a­tions in T&T con­tin­ued to per­form in line with the com­pa­ny’s ex­pec­ta­tions.

Rat­ings agency Moody’s moved on Ju­ly 12 to down­grade its rat­ings on the com­pa­ny, say­ing, “The risk of Dig­i­cel mak­ing an­oth­er dis­tressed ex­change or debt re­struc­tur­ing with­in the next 12-18 months has in­creased, con­sid­er­ing the still-weak op­er­at­ing re­sults and liq­uid­i­ty of the group.”

So will the com­pa­ny make ad­just­ments to its busi­ness mod­el in at­tempt to shift the out­look?

Gomez said the com­pa­ny was al­ways adapt­ing.

“As we strive to pro­vide the best for our cus­tomers there will be con­tin­u­al re­fine­ments to the busi­ness mod­el to re­flect chang­ing cus­tomer needs and be­hav­iours and tech­no­log­i­cal ad­vances to en­sure that we con­tin­ue to de­liv­er a su­pe­ri­or ex­pe­ri­ence and bet­ter val­ue for our cus­tomers,” she said.

Gomez is seek­ing to al­lay fears on the com­pa­ny’s fu­ture prospects in the Caribbean, say­ing they were com­mit­ted to their cor­po­rate in­vest­ments and iden­ti­ty in the re­gion.

She added, “Dig­i­cel con­tin­ues to be a lead­ing provider of com­mu­ni­ca­tions ser­vices in the Caribbean and, as we jour­ney to­wards be­com­ing a dig­i­tal lifestyle part­ner for our cus­tomers, we are com­mit­ted to con­tin­u­ing to pro­vide a su­pe­ri­or ex­pe­ri­ence and bet­ter val­ue for our re­tail, cor­po­rate and gov­ern­ment cus­tomers across mo­bile, busi­ness so­lu­tions, home and en­ter­tain­ment and oth­er re­lat­ed prod­ucts and ser­vices.”

De­nis O’Brien es­tab­lished Dig­i­cel in Ja­maica in 2001, bring­ing it in­to 31 mar­kets while tak­ing on $6.8bn in debt.