Digicel Group Ltd. has filed for an initial public offering on the New York Stock Exchange. The company has built a subscriber base of more than 13.6 million by island hopping through the Caribbean and South Pacific, selling mainly prepaid cellphone services.
Through the stock offering, according to the U.S. Securities and Exchange Commission filing, Digicel, which is incorporated in Bermuda, hopes to raise capital to continue expansion and pay down its $6.5 billion debt.
The July 31 filing with the SEC did not list how many shares the company will sell or the starting price, but did note that the company wants to raise at least US$200 million in the initial offering. The company will be listed as “DCEL” on the stock exchange.
Local Digicel representatives did not respond to Cayman Compass requests for comment.
From April 2014 through March 2015, Digicel reported a loss of $157.6 million on total revenues of $2.8 billion. The year before, the company recorded a profit of $43.5 million on a little more than $2.7 billion in revenue.
Digicel launched in Jamaica in 2001, founded by Irish billionaire Denis O’Brien. From there it expanded across the region, into the Grenadines, Aruba and Barbados, among other countries. The company launched in the Cayman Islands in 2004 and now holds the number two market spot behind LIME for wireless customers.
Since then, through a combination of acquisitions and expansion, the company has entered 31 markets, according to corporate filings, and holds the number one market spot for mobile phone services in 20 of those.
Digicel also offers service in seven Asia Pacific countries, including Myanmar, Fiji and Papua New Guinea.
The company’s main competitor in the Caribbean is Cable & Wireless, trading as LIME. Operating in 16 markets in the region, LIME has the highest market share for mobile phone customers in the Cayman Islands, along with a portfolio of fiber and traditional copper wire Internet, phone and television services.
In March, Cable & Wireless bought Columbus International Inc. for US$3 billion, solidifying its position in the Caribbean with a new submarine fiber network, connecting the islands to mainland servers for Internet and television service. The acquisition included Columbus’s “Flow” brand television and Internet customers.
Digicel recently lost a dispute with LIME over access to LIME’s fiber and copper-wire infrastructure. The Cayman Islands Information and Communications Technology Authority rejected Digicel’s bid to connect to LIME’s network to offer competing consumer Internet service.
Digicel plans for growth
Company filings point to a strategy focused on improving its infrastructure and growing its “business solutions” unit. The SEC filing states the company plans to expand its faster 4G and LTE networks in areas with denser populations, giving faster speeds and more bandwidth to smartphone customers.
Major hard-wired investments could also be in the cards for future expansion in some areas.
“Where Digicel expands organically, it is not encumbered by any legacy networks and typically invests in infrastructure,” according to the report.
For its business services, the SEC filing notes, Digicel “believes that this is a growing business in its markets where businesses are beginning to see the benefits of increased investment in [information and communications technology]. The mobile markets in which Digicel operates have reached comparable levels of mobile penetration with more developed markets and, similarly, Digicel expects the level of demand for ICT in its markets to increase.”
Despite the company’s growth in recent years, Digicel still faces steep competition from LIME and others. The IPO filing states: “In some of Digicel’s markets, its competitors may have more advanced technology than Digicel, greater coverage area than Digicel, or both.
“Moreover, some of Digicel’s competitors have more extensive engineering, marketing, personnel and capital resources than Digicel does. The level of competition is influenced by the continuous and swift technological advances that characterize the industry, the regulatory developments that affect competition and alliances between market participants.”