LAST week the Jamaica Gleaner reported that Digicel Group’s earnings have been hit by worsening economic conditions in Papua New Guinea.
The newspaper was quoting the British investment bank Barclays’ analysis of Digicel’s recent developments and earnings that showed that revenue fell 7% to $US638 million, while its earnings before interest, tax, depreciation and amortisation declined 14% to $US253 million.”
Papua New Guinea accounts for 14% of Digicel Group’s revenue and is Digicel Pacific’s largest market.
"While we acknowledge investor concerns related to Digicel Pacific given the weak macroeconomic backdrop in Papua New Guinea, we continue to view cash flows from Digicel Pacific Limited as an important source of cash … and believe the operations in the country are close to bottoming-out," Barclays stated.
With lower earnings and pressure from investors, Papua New Guineans can expect to feel a huge squeeze from Digicel.