Editorial

Digicel is having Cash Flow Concerns … High Debt Burden

Minister grange accepting cheque from digi cell“There have been concerns in financial circles that digicel’s business model needs overhaul. Digicel is reported as having a debt of US$6.5 billion dollars which is six times their income.

A Scotia Bank analysis said this was not unusual if you are able to service the debt.

Digicel Responds To Press …

Digicel has rejected this negative outlook, they are not perturbed based on their reaction to the news that they are facing a not so rosy financial outlook. The Irish Times has been the source of much of the information on Digicel.

Jamaica’s Debt

To fully appreciate the size of digicel debt you need to realize that Jamaica with a population estimated at 2.7-9 million, has a debt of just over 3 billion US$3.

Currency

When you operate in diverse markets like Haiti, Papua New Guinea and Jamaica you will experience such uncertainty as there are currency fluctuations due to the strength of these currencies in relation to their regular trading currencies … mainly the US, Canadian, Pound and Euro.

Digicel has been expanding at a rapid rate with acquisitions the main expansion route.

Difference Of Opinion

Dr. Maurice Mc Naughton, of the Mona School Of Business disagrees with the Scotia Bank analysis. “The telecom industry calls for innovation and keeping up to date with technological changes and new customer/market driven trends. There needs to be a look at a new business model”

Locally

Digicel has strong competition in the local market in Jamaica from FLOW which merged with Cable and Wireless recently.

Digicel Philanthropy

Digicel has invested heavily in sports and development of our youths in their target markets. Kickstart programme readily comes to mind. For these positive moves digicel must be commended. Their philanthropy and being a good corporate citizen is well known.

We will watch this latest development within digicel. Digicel has to look at curtailing expenses. This has been recommended by analysts.

Hopeton O’Connor-Dennie is Senior International Correspondent & photojournalist for Vision Newspaper Canada.

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