October 6, 2015 / 9:15 PM / 4 years ago

UPDATE 3-Caribbean telecom company Digicel hangs up on IPO

* Cites market conditions in emerging markets

* Co was expected to raise about $2 bln from U.S. IPO (Adds analysts’ comments, IPO market background)

By Rachel Chitra

Oct 6 (Reuters) - Digicel Group Ltd, the Caribbean telecommunications company that sponsors sprinter Usain Bolt and the West Indies cricket team, has decided to withdraw its plans to go public for now, citing “current conditions, particularly in emerging markets.”

The company, owned by Irish billionaire Denis O’Brien, was expected to raise as much as $2 billion from its U.S. IPO.

The Hamilton, Bermuda-based firm said it has seen a number of IPOs listing at a discount to the expected price range. “This is a less attractive route for us,” it said.

Last week, all the five companies that made their market debut, including Surgery Partners Inc, Performance Food Group Co and Edge Therapeutics Inc, cut their offer price below the expected price range.

With volatility across global markets this year, 46 companies withdrew their IPO plans as of Sept. 30, compared with 38 companies last year, according to Renaissance Capital data. (bit.ly/1MXKnRq)

Going forward, some IPO deals may require a 20 percent pricing discount, compared with the benchmark 10-15 percent range, in light of the current volatility, bankers noted at the IFR ECM event held at Thomson Reuters’ offices last month.

Digicel’s balance sheet is very weak, Francis Gaskins, president of research firm IPO Desktop, said.

“It’s a big company that has been losing money since it started,” Gaskins said. “They’ve been growing subscribers at 2 percent a year.”

Digicel reported a loss of $157.6 million on revenue of $2.79 billion for the year ended March 31, compared with a profit of $43.5 million on revenue of $2.75 billion a year earlier.

“”Their revenue is flat, they are losing money, the company is not growing - it would not be seen as the most attractive of investments,” said Jay Ritter, professor of finance, University of Florida.

Digicel, however, reiterated that its growth plans remained unchanged and it would be looking at strengthening its interests in data, business solutions, cable TV and broadband.

The company provides wireless services to 13.6 million subscribers in 31 markets in the Caribbean and South Pacific regions.

Digicel was founded in 2001 in Jamaica by O’Brien, who owns Ireland’s most circulated newspaper - The Irish Independent. He also owns four other national newspapers, 13 regional newspapers and two major national radio stations through media group Independent News and Media. (Reporting by Rachel Chitra in Bengaluru; Editing by Maju Samuel and Don Sebastian)

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