02 Jun Digicel embarks on Iliad odyssey | Light Reading
Embattled Digicel Group has entered a joint venture (JV) with France-based Iliad Group to lower its cost structure.
According to a brief statement from Iliad, the new JV company will own mobile network infrastructure and active equipment on behalf of the two groups in the French West Indies (Martinique, Guadeloupe, Saint-Martin and Saint-Barthlemy) and French Guiana.
Iliad does not mention assets outside France and Italy in its earnings statements but seems already to have a presence in the French West Indies.
“Both operators will keep their own core networks and frequency licenses and will continue to be fully independent from a commercial perspective,” said the press release.
Light Reading was unable to determine the extent of Iliad’s holdings in the region at the time of going to press.
What is clear is that the JV reduces capex for Digicel, which is creaking under financial strain. Both groups are to “jointly invest” in the company “to significantly increase the number of mobile sites in the region and therefore raise coverage and speeds.”
No financial details of the JV were disclosed.
The Irish press managed to get a prepared quote from Digicel Group CEO Jean-Yves Charlier (Iliad holds a majority stake in Irish incumbent Eir). “A joint venture of this nature is a first for Digicel and allows us to accelerate our digital ambitions,” he claimed.
Despite the financial cloud hanging over Digicel, Charlier expressed an ambitious “common vision of jointly building one of the most extensive networks across the French West Indies.”
Documents sent to the US Securities and Exchange Commission reveal Digicel is slowly being crushed by about $7.4 billion worth of debts a level that Digicel concedes is “unsustainable.” It reportedly filed for bankruptcy in Bermuda last month.
Massive spending splurges on cable TV and broadband networks have apparently come back to haunt the company, founded by Irish billionaire Denis O’Brien in 2001.
Cranking up the financial pressure still further was a subsequent refusal by the overwhelming majority of Digicel bondholders to allow a two-year extension on maturities due in 2023.
Little wonder that rumors about China Mobile circling Digicel’s flagship assets in Papua New Guinea are refusing to go away.
Ken Wieland, contributing editor, special toLight Reading