The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader yesterday said the Bahamas Telecommunications Company’s (BTC) desire to shed another 150 jobs was “not a surprise”, especially given its relatively poor performance post-privatisation.

K P Turnquest, whose party was in office when a majority 51 per cent stake in BTC was sold to Cable & Wireless Communications (CWC) in April 2011, said no Bahamian was likely happy with the carrier’s service over the past four years.

With BTC now seeking to reduce its workforce via a second voluntary separation (VSep) programme, Mr Turnquest said it was likely driven by impending cellular competition and anticipated revenue/profitability reductions, combined with cellular rate reductions and continuing performance concerns.

“The management has realised there is a further real need to get costs in line, and they have to do what they have to do to meet the competition,” the FNM’s finance spokesman told Tribune Business.

Digicel, Cable Bahamas and Virgin Mobile (Bahamas) are the three contenders for the Bahamas’ second cellular licence, which the Government plans to award in May. The new operator is expected to launch services in the main Bahamian islands by October/November, a deadline considered ambitious even by some of those contenders.

Expressing hope that the second cellular operator might pick up some of the released BTC staff, Mr Turnquest said of the company’s timing: “It is quite ironic coming on the heels of the Prime Minister’s rosy predictions on the economy and with regard to employment.”

He conceded, though, that there was no disguising BTC’s performance post-privatisation.

“I don’t think there is anyone that will be satisfied with the way the company has operated since CWC took over, and the performance to-date has been very much in need of improvement,” Mr Turnquest told Tribune Business.

Emphasising that he was not in government when BTC was privatised, and therefore not privy to all the details and decisions, Mr Turnquest added: “CWC, on the face of it, has the technical capacity to be a good partner.

“For whatever reasons they’ve not been able to deliver on expectations to-date. They will have to explain why. Generally speaking, we as Bahamians are very disappointed in the reliability of the network at this stage.”

While CWC has succeeded in stripping out costs, ‘the low-hanging fruit’, from BTC since it assumed Board and management control, it has been unable to grow the carrier’s top-line, which has remained stubbornly stuck around the $360 million mark annually.

BTC has also been unable to increase its market share, given that to-date it has been the Bahamas’ only cellular provider, while its broadband Internet and fixed-line businesses have been dominated and eroded, respectively, by Cable Bahamas.

It is only just rolling out a pay-TV product now in the Family Islands, but has a long way to go to challenge Cable Bahamas’ dominance in this field, too.

BTC, as Tribune Business has banged on about for years, is still effectively a glorified, bloated cellular company, with this market now generating up to 75 per cent of its total revenues. This ‘comfortable’ position will now inevitably be eroded by the arrival of competition, hence BTC and CWC’s rapid move to ‘right-size’ the company to ensure it remains viable and profitable.

Anywhere from 30 per cent to a 50 per cent-plus majority share of the Bahamian cellular market could be seized by the new entrant, depending on how successful they are.

BTC’s figures for the six months to end-September 2014 show the extent of the problem, as it has become ever-more reliant on its expiring cellular monopoly to deliver its profitability.

For that period, cellular/mobile revenues accounted for $126 million, or 73.68 per cent (nearly three-quarters) of its $171 million top-line revenues.

Extrapolated out on an annual basis, BTC earns between $240-$260 million (between $20-$22 million per month) from its cellular/mobile monopoly, again dominating the annual $350-$360 million top-line.

Phil Bentley, CWC’s chief executive, recently conceded in a conference call with investment analysts that cellular competition would likely cut BTC’s EBITDA (earnings before interest, taxation, depreciation and amortisation) by between 15-20 per cent annually.

However, sources close to BTC have suggested the cut might be as much as 40 per cent if the second cellular operator knows their game.

BTC is on track to generate $118 million in EBITDA for its 2014-2015 financial year, based on the $59 million it recorded for the first half. Applying Mr Bentley’s 15-20 per cent figure to the former number would cut $23.6 million off BTC’s annual EBITDA.

BTC’s key performance indicators for its current year’s third quarter showed a mixed picture, with relatively modest subscriber growth, and revenue per customer down in the areas of both cellular and broadband Internet year-over-year.

Cellular subscribers were up, as at December 31, 2014, by 7,000 or 2.2 per cent year-over-year at 314,000 compared to 307,000 the year before.

Broadband subscribers were up 23.8 per cent year-over-year, having risen from 21,000 to 26,000, while fixed-line customers were down by 1,000 - from 104,000 to 103,000 year-over-year

As for average revenue per mobile subscriber, this had fallen from $65.80 to $60.40 in the year to end-December 2014, although the latter was a slight improvement on the $60 at end-September 2014.

Broadband revenues per subscriber had continued to fall, from $67.50 at end-December 2013 to $48.40 some 123 months later.

Fixed-line revenues per subscriber, though, had jumped from $30.70 at end-December 2013 to $37.90 as 2014 drew to a close.