Digicel’s global operations are not out of the woods just yet, but according to the international credit rating agency Moody’s Investors Service the company’s future remains stable.
Back in February, the telecommunications provider, which has a strong presence in the Caribbean, announced a major restructuring exercise that included cutting its workforce by 25 per cent.
In its latest assessment of the company’s performance for the financial year ended March 2017, the New York-based Moody’s said the company’s cash flow was still under pressure but it projected that Digicel would break even in another three years.
“Digicel generated negative free cash flow in both fiscal 2016 ended 3/31/16 and fiscal 2017 ended 3/31/17 due to elevated capital expenditure,” stated the rating agency, which did not disclose the financial figures.
“Moody’s expects the company to reduce its cash burn in fiscal 2018 (ended 3/31/18) and approach break-even.”
It affirmed a B2 rating for the company and its debt. It said that rating reflects Digicel’s product and geographic diversification, good margins, and leading market position.
Moody’s said the company’s outlook remains stable.
“The stable outlook reflects Moody’s view that Digicel will grow revenues and earnings-before-interest-tax-depreciation-amortization (EBITDA) such that Moody’s adjusted debt to EBITDA will return below 6-times and will be sustained under that level within the rating horizon,” it said in the statement.
Digicel reported a six percent drop in revenue for September to December 2016, and said its debt had reached more than US$6 billion.
It blamed declining profits on currency weaknesses across several of its major markets, and announced an overhaul of its organizational structure, dubbed Digicel 2030 Transformation.
The plan entails moving office functions scattered around its various markets to four regional hubs.