The Irish telecommunications company Digicel has announced a hike in its mobile and data rates for customers in Barbados.
In a statement released on its website, the company also said it would no longer to be absorbing the increase in Value Added Tax (VAT), which was implemented by Government last year.
This after Chief Executive Officer Conor Looney had reported last February that the phone company had seen a rise in its customer base since announcing on January 8, 2016 that it would absorb the additional 4.5 per cent VAT on mobile phone use.
“As you are aware, Digicel has made significant and ongoing investment in our networks to improve our service to you over the past 18 months, including the implementation of 4GLTE and the expansion of our 4G cellular network.
“This investment has been necessary in order to continue to deliver the level of service you both expect and deserve,” the company said in an advisory to customers.
However, while blaming the increased cost of doing business on the island, Digicel said it would be increasing its rates for prepaid and postpaid mobile, as well as for its data services. The changes to the prepaid rates take effect on January 3, 2017 and those for postpaid on February 1, 2017.
“As such, you will notice some increase in rates for mobile calls, data services and plans to reflect our increased costs.
“In addition, in January 2016 Digicel absorbed the increase in VAT implemented by the Government as a gesture of goodwill to our valued customers in recognition of the nation’s Golden Jubilee celebrations. We advise that this concession now comes to an end and as a result the price changes on your bill will also reflect the full VAT amount,” the advisory added.
The move come swiftly on the heels of a report by independent research provider CreditSights which stated that the company was facing an uncertain future due to high debt, currency fluctuations and change in consumer behaviour.
The report, which was published in the Irish Examiner, quoted CreditSights analyst Michael Chakardijan as saying in London that Digicel’s high debt levels of more than $6 billion left little room for manoeuvre.
It also contended that the change in Digicel users’ habits may hamper the company’s ability to increase margins by 24 percentage points by March 2018, while cutting costs by using technology and changing back office functions.
It said the company had been suffering from a decline in phone call revenue as users switch to the likes of Viber, WhatsApp and Skype.
Asked by Barbados TODAY to respond to the report and if there were any implications for the Barbados market, Looney said: “Digicel fundamentally disagrees with the conclusions of the report”.
“Digicel’s outlook remains positive with robust plans to deliver by monetizing our network investment and through realistic cost management initiatives,” he added.
Digicel has said it was focusing on growing its earnings in order to reduce the company’s debt-to-earnings ratio while cutting costs.
As part of its upgrade earlier this year it was reported that by the end of 2016 Digicel would have invested over BDS$100 million in building out a state-of-the-art fibre network.
In November last year it was reported that the company had invested US$100 million in fibre technology and new services in Jamaica.
The UK publication reported that Digicel had two loans maturing in the near future. A $210 million loan it said that was due to be repaid in March 2018 and $90 million in project finance debt on its South Pacific business due to mature in August 2017.
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