The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known Cable Bahamas shareholder doubts whether the Government would award the company a cellular licence to compete against the Bahamas Telecommunications Company (BTC), while giving cautious backing to its $65 million Florida expansion.

Praising the BISX-listed communications provider’s willingness to expand beyond the Bahamas as “refreshing to see”, given that most Bahamian companies tended to look inwards, Dionisio D’Aguilar acknowledged that this market’s relative “maturity” made such a move almost inevitable.

And the continuing uncertainty over the Christie administration’s communications industry policy, Mr D’Aguilar said, meant Cable Bahamas could not count on its main growth opportunity in this nation - liberalisation of the cellular/mobile phone market.

Yet he added that Cable Bahamas’ Board of Directors would have to justify to investors the wisdom in taking on more debt, given that $111.101 million in such liabilities were on its balance sheet at end-March 2012.

The company is proposing to finance the acquisition of Macro Island Cable and NuVu LLC, plus Summit Broadband, from a combination of new and existing bank credit facilities, plus the issuance of ordinary shares to the latter company’s owners and a preference share offering to Bahamian investors. The credit facilities, and preference share issue, are likely to push Cable Bahamas’ debt somewhere beyond the $150 million mark.

Nevertheless, Mr D’Aguilar told Tribune Business: “It’s refreshing to see a Bahamian-owned company finally expand beyond our borders. We are generally inward looking, conservative and companies are very cautious and frightened about expanding beyond our shores. It’s good to see Bahamian companies expanding into markets beyond this jurisdiction.

“I’m very unfamiliar with these [Florida] markets. The Board of Directors is going to have to explain to shareholders why this is a good deal, and why it’s worth taking on more debt. It’s not abundantly clear at this time, but I’m sure they saw value there.”

Cable Bahamas’ balance sheet as at March 31, 2012, showed the company’s $111.101 million in long-term liabilities consisted largely of $60 million in preference share debt and $44.875 million in long-term bank borrowings.

The Florida transactions seem likely to increase the latter two figures significantly, but Cable Bahamas’ balance sheet will remain in good health. Its total assets of $220.264 million were, at March 31, 2012, some way ahead of the $137.378 million in total liabilities. Current assets, though, at $26.755 million were only just ahead of $26.277 million in current liabilities.

Aware of the Bahamian market realities, Mr D’Aguilar, Superwash’s president and a former Chamber of Commerce head, said: “To a certain degree, the Bahamian market, if not matured, is soon going to be a mature market for Cable Bahamas.

“If they want to expand they’re going to have to move out of this jurisdiction. I just hope it’s a prudent and wise expansion. There’s no doubt that Cable Bahamas is going to mature.”

Mr D’Aguilar, though, expressed concern about whether the Government would go through with existing plans to liberalise the Bahamian cell phone market by 2014. While 2016 is a more realistic deadline for the second licensee to go head-to-head with BTC, failure to follow through on this would take away Cable Bahamas’ main growth opportunity.

“It [Cable Bahamas] can’t rely on the Bahamian government lurching in one direction, then lurching in another direction, with regard to cellular. The second cellular licence is going to be a bumpy ride,” Mr D’Aguilar told Tribune Business.

“They’re not a liberalising markets type of government; they’re a ‘maintain the status quo, renationalise BTC’ type of government, and I certainly think they’re going to slow down, if not grind to a halt, the sale of the second cellular licence.

“For some stupid reason, they think it’s better to maintain value in BTC and not allow competition into the market and improve cellular service. That’s the only way to do it, but they’re not into that and don’t believe in that.”

Mr D’Aguilar added: “Even though Cable Bahamas is 30 per cent owned by the Government [via the National Insurance Board chiefly] and 70 per cent by the public, my gut tells me the Government is not anxious to let Cable Bahamas have a cell phone licence.

“I don’t know why. It’s a natural move for them. They’ve earned it, and deserve it. They offer a good cable TV, broadband Internet and telephone product. Certainly they have a little problem here and there, but by and large they’re a lot better than similar services in other countries.

“The cellular licence auction is two-three years away. Cable Bahamas said: ‘Let’s not wait around for that. Let’s keep growing in other markets’.”