Digicel is yet again pleading to investors to sort out debt issues as the company is yet again in the midst of a stark financial situation. The valuation of the bonds that the company needs to repay by March 1, 2023 is stated to be worth US$925 million. Luckily a vast majority of the bondholders have shown restraint approximately 70% of them have voted in favor of the extension.
A Digicel spokesperson states that the bondholders are even willing to extend the period to 90 days if the company enters a restructuring support agreement. If this is agreed upon it would be the third debt restructuring since 2019, at a time when the global market is in a slowdown.
“On February 21st, Digicel Limited launched a consent solicitation relating to the company’s 6.750 percent senior notes due 2023, seeking consent for an initial 30-day grace period which could be extended to 90 days in certain circumstances.
As of the date of the consent solicitation, the beneficial owners of more than 70 percent of the outstanding principal amount of the notes had already committed to the company that they will consent to the proposed amendments.” The spokesperson stated.
Overall, Digicel’s debt is quite extensive, it is valued at US4.55 billion which includes bonds and corporate loans which will mature by the end of 2025.
Strategies and Mishaps
I saw various writers stating that Digicel’s overall unfortunate financial situation is due to various factors such as the Haitian economy for example and other external factors. I don’t buy into it, Digicel’s core problem lies in the company’s inability to innovate in critical infrastructure and technologies that can allow the company to stay afloat.
We are living in a vastly different environment in the telecommunications market than two decades ago and it’s going to take vastly different strategies to compete with tech giants or other deep-pocketed companies.
No doubt, Digicel is essential in the Caribbean and other regions. Still, the numbers reflect that the value of the product offerings is either being commoditized or driven down by other core technologies and market pressure. For example, look at the most cliché example, WhatsApp came in and usurp the entire business model.
Digicel still hasn’t responded to such a change in the market. I have seen notable improvements in its overall internet infrastructure and that’s commendable but there is still more to be asking for.
We live in an age where there is a war for attention, Amazon is not spending tens of billions in the media space for nothing and the same goes for Google, Facebook, etc.
Attention is everything these days and the more attention you have the more you can advertise and make money. It’s a different overall ball game that entails a lot of risks which I doubt Digicel is willing to take.
I am not expecting Digicel to compete with Amazon or any of those tech giants. At the same time, it is worthwhile to study a thing or two from them to adapt certain strategies within the company’s overall vision and drive long-term sustainable growth.
