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Digicel bonds trade up as investors react to cost cutting measures

Digicel bonds traded up on Thursday as investors reacted to a plan to dramatically cut costs at the telecoms group.   

The yield, or return investors demand, on Digicel's April 2022 bond fell to 12.1 percent from 12.8 percent a day earlier.This is down from 15 per cent in November.
   
Higher ranked Digicel bonds also traded up. 
   
The company has no major bond debt maturing until 2020.            
   
Ireland's Independent newspaper on Thursday reported that Digicel's financial results due soon for the third financial quarter will be closely watched by investors.
   
They will be looking for signs that a 1.6 billion euro investment programme over the last three years is starting to pay off  in greater customer revenues from higher value added areas like fibre-to-the home as well as data and cable, as traditional voice calls decline. 
     
On Wednesday Digicel, owned by Irish billionaire Denis O'Brien, said it planned to let go as many as 1,500 workers or 25 percent of  its staff - over 18 months as part of  a radical cost-cutting programme. 
   
The business, which operates across 31 different markets, announced the plan in response to a decline in earnings linked to the fallout from the strengthening of  the dollar over the past year and declining income from traditional voice calls. 

Currency swings hit Digicel because it borrows in dollars but its income is in a mix of  local currencies in the markets where it operates, many of  which have weakened compared to the greenback.



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