Monterrey, Mexico & Chicago-- Nov. 24 2009 -- --Fitch Ratings has assigned a 'B-/RR4' rating to Digicel Limited's (DL) proposed US$500 million senior notes due 2017. Proceeds from the issuance are expected to be used to refinance its existing US$450 million senior notes due 2012 and for general corporate purposes.

Fitch rates Digicel Group Limited (DGL), DL, and Digicel International Finance Limited (DIFL), collectively referred as Digicel, as follows:

DGL

--US$1 billion 8.875% senior subordinated notes due 2015 at 'CCC+/RR5';

--US$400 million 9.125/9.875% senior subordinated toggle notes due 2015 at 'CCC+/RR5'.

DL

--Foreign currency Issuer Default Rating (IDR) at 'B-';

--US$450 million senior notes due 2012 at 'B-/RR4';

--US$510 million senior notes due 2014 at 'B-/RR4';

DIFL

--US$1.15 billion senior secured credit facility, of which US$839 million is outstanding, at 'B/RR3'.

The Rating Outlook is Stable.

Digicel's ratings are supported by its solid operating performance, its position as the leading provider of wireless services in the Caribbean (with good market positions in Jamaica, Haiti and Trinidad & Tobago [T&T]), strong brand recognition, and an increasingly diversified revenue and cash flow stream across the Caribbean. The ratings incorporate expectations for lower capital expenditure requirements over the next few years and management cost control initiatives including lower subscriber acquisition costs. Concerns regarding DGL's ratings reflect the company's high leverage, the economic environment in the Caribbean economies, and medium-term refinancing risk. The latter should be tempered by the completion of the proposed transaction.

Growing EBITDA from newer operations, such as Haiti and Trinidad and Tobago, has reduced the proportion of cash flow generation coming from Jamaica. Nevertheless, Digicel's operations are still concentrated in these three countries, which, in Fitch's view are more economically vulnerable than other countries where Digicel operates.

Liquidity is comprised of cash balances of over US$400 million as of Sept. 30, 2009, an undrawn, not committed revolving facility for US$123 million and current annualized free cash flow (FCF) of US$280 million against maturities of US$159 million for fiscal (FY) 2010 and US$318 million for FY2011 and US$362 million for FY2012. The DIFL facility continues to amortize; however, Fitch does not rule out the possibility of a future refinancing or extension of this facility, as has occurred in the past.

Capital expenditures are expected to decline and stabilize over the next few years, underpinning FCF.

Lower debt levels and stable-to-growing EBITDA should strengthen the company's capital structure and credit profile absent any increased indebtedness. Digicel's total debt has increased in the past few years as a result of acquisitions, necessary funding for the build-out of new markets and the 2007 US$1.4 billion recapitalization. Pro forma for the proposed offering and considering debt as of Sept. 30, 2009, total consolidated debt at DGL approximates to US$3.265 billion, and total pro forma debt to last 12-months EBITDA approaches 4.6 times (x). Also as of Sept. 30, 2009, and pro forma for the proposed notes, total debt to EBITDA for DL and DIFL is 2.6x and 1.2x, respectively.

With regard to Digicel's capital structure and the associated ratings, debt at DIFL is rated one notch higher than the group's Fitch IDR reflecting its above-average recovery prospects. The DL IDR reflects the increased burden the DGL subordinated notes place on the operating assets and the loss of financial flexibility. The ratings of DGL's 2015 notes incorporate their subordination to debt at DIFL and DL, as well as the subordinated notes below-average recovery prospects in the event of default.

DL's outstanding and proposed 2017 senior notes are guaranteed by all existing wholly owned subsidiaries that are guarantors of DL's US$450 million notes due 2012. T&T and Haiti are not included among these guarantors; however, the cash flows from these subsidiaries are available to DIFL to pay its obligations, including its guarantee of the DL notes. The secured DIFL facility has a US$200 million revolving facility of which US$156 million is undrawn, adding flexibility to the company's liquidity position. The DIFL facility is secured by a first priority lien by all shares and assets of Digicel. In December 2007, Digicel incorporated into the restricted group the operations of Haiti and Trinidad and Tobago. To pay the debt of these two operations, which had previously been structured under project finance debt, DIFL's secured credit facility was upsized to US$1.15 billion (including the revolver facility).

Additional information is available at 'www.fitchratings.com'.