In affirming its rating outlook for Digicel Group's debt instrument as stable, Fitch Ratings revealed that Digicel Group earned US$417 million (J$29.6 billion) earnings before interest, tax, depreciation and amortisation (EBITDA) from US$1.48 billion (J$106 billion) in revenue for the 12 months to December 31, 2007 from its regional operations.

The rating agency did not give detail on how much of the mobile provider's group EBITDA was earned from Jamaica but said that an "important part of group EBITDA is still linked to the Jamaican dollar" while 63 per cent of service revenues were generated either in US dollars, euros or pegged to these currencies during the last nine months of 2007.

In Jamaica, with the country accounting for approximately 1.8 million of its 6.3 million users, the acquisition by America Movil of Oceanic Digital (Oceanic), Jamaica's third wireless provider, is expected to add competition in the future as Oceanic completes its network deployment. Haiti and Trinidad and Tobago should continue growing their cash flows helping to further diversify the company's cash generation away from Jamaica.

Digicel's total consolidated debt as of December 31, 2007, however, was high at US$2.8 billion and total debt to last 12 months (LTM) EBITDA, considering Haiti and Trinidad and Tobago for the 12 months, was 6.8 times.

Digicel's financial strategy, according to Fitch, "is focused on reducing leverage after a 2007 recapitalisation which resulted in US$1.4 billion of additional debt. Digicel's total indebtedness also has grown rapidly in the past few years as a result of acquisitions and necessary funding for the rapid build out of new markets."

Over the next few years, Fitch expects increased EBITDA generation from Digicel Group to result in a reduction in the ratio of total debt-to-EBITDA to near four times.

Digicel's ratings were supported by an historical strong operating performance, its position as the leading provider of wireless services in the Caribbean (including strong market positions in Jamaica, Haiti and Trinidad and Tobago), its strong brand recognition, and an increasingly diversified revenue and cash flow stream across the Caribbean. In addition, Fitch expects the company to reduce leverage due to future EBITDA growth.

"Concerns regarding DGL's ratings reflect the company's high leverage and medium-term refinancing risk. Growing EBITDA from newer operations, such as Haiti and Trinidad and Tobago, should help to further diversify away its cash flow generation from Jamaica," Fitch added in its report.

"Digicel's operating performance continues to be strong. The company has rapidly gained leading market shares in most of the markets served by successfully executing a strategy of launching operations with extensive initial geographic coverage, good customer service, effective branding and through strong product offerings. The company has leading market share positions versus incumbent operators in most its markets. The wireless penetration level in many of Digicel's markets is high. High wireless penetration rates are the result of low fixed-line penetration, long waiting periods to get fixed-line connections, good network coverage by wireless service providers and substitution of fixed-line services by mobile."

Digicel operates as a GSM-based mobile services provider in 23 markets in the Caribbean including Jamaica, St Lucia, St Vincent, Aruba, Grenada, Barbados, Cayman, Curacao, Martinique, Guadeloupe, Trinidad and Tobago and Haiti among others, as well as El Salvador.

Digicel's operating assets are owned by Denis O'Brien. In addition to Digicel, Denis O'Brien owns Digicel Central America and Digicel South Pacific