Digicel Prepares to Fire 1,500 WorkersBy
Digicel eliminating about 25 percent of jobs over 18 months
Denis O’Brien pulled IPO in 2015, citing market volatility
Digicel’s future organizational structure will comprise a number of regional hubs housing centralized functions for the company’s 31 markets, it said in an e-mail statement in Dublin on Wednesday. The reduction in staff will take place over 18 months, with a voluntary program starting next month.
“We’ve seen signs for sometime that revenue and profitability has been under pressure so for bondholders the fact that they are taking action is positive,” said David Holohan, an analyst with Dublin-based securities firm Merrion. “Ultimately, Digicel has to work out how to return to growth in the challenging environment of a strong dollar and where telecoms becomes a commoditized industry.”
O’Brien founded Digicel in 2001 and turned it into a mobile-phone empire with customers spread from El Salvador to Vanuatu, partly on the back of issuing high-risk, high-yield debt. In 2015, O’Brien planned to raise as much as $2 billion in an initial public offering that would have been the second-biggest in the U.S. that year, before shelving the sale, citing volatility in equity markets.
Digicel has also been grappling with currency swings, with adjusted earnings before interest, taxes, depreciation and amortization sliding about 11 percent in the second quarter. The yield on Digicel’s April 2022 bond has risen to 12.8 percent from 11.9 percent two weeks ago, though it’s down from 15 percent in November.
Digicel also said it signed a global partnership agreement with Chinese telecom-equipment supplier ZTE Corp. for an ongoing network upgrade program.
“We are building Digicel for 2030 and beyond,” said Colm Delves, the company’s chief executive, said in an e-mail statement. “Our transformation programme sees us taking the bull by the horns.”
Dubliner O’Brien is worth $5.3 billion, according to the Bloomberg Billionaires Index.