With more than four million customers, of which nearly 650,000 have fiber optics, the Romanian company has become the revelation of the year. A firm commitment to low cost offering the same speeds and capacities of data that its rivals have allowed it to lead month after month in the portability of lines according to data from the National Securities Market Commission. Everything sounds like heavenly music up to this point with an important nuance; the debt rating agencies have doubts about the company’s accounts and its new auditor, KPMG, is not endorsing the numbers presented by the telecom either.
Funding issues for Digi
Risk rating agencies classify countries or companies according to their risk of default. Moody’s has initiated a review of Digi’s rating, currently at Ba3 (Ba3-PD in the rating on probability of default). The following levels can be seen in the following table.
In the event that the rating agency decides to lower its rating, the operator could have financing problems in the market, which would be a setback for its expansion plans. Digi continues to roll out fiber optics nationwide and that requires a lot of investment. Likewise, the operator is shooting up its workload with more than 4,500 employees to absorb its growth, and despite the fact that according to sources in the sector it is the teleco that offers the lowest salaries, it also erodes its income statement.
For now, Digi does not plan to raise prices to improve its balance sheet and that is a problem considering that wholesale costs will foreseeably increase, labor liabilities are on the rise and inflation is also wreaking havoc in the telecommunications sector with a significant cost overrun in energy and other services.
The auditor does not sign the accounts
As published by CincoDías, Digi has been delayed on several occasions in the publication of its audited reports. The operator that currently works with KPMG justifies the delays due to lack of time and not with the quality of the accounts; The reality is that, according to sources consulted, the auditor is not signing the accounts, which could lead the rating agencies to decide to downgrade her ranking. This decision would have an impact on the issue of senior debt of 850 million euros, which the operator has committed to finance its deployment plans.