The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company’s (BTC) average revenue per user (ARPU) in the cellular market grew by almost 25 per cent in 2013, despite a market that declined slightly in terms of subscriber numbers.

Data released in the Request for Proposal (RFP) for a second cellular operator, which has been seen by Tribune Business, also revealed that BTC’s mobile data subscriber numbers fell by 12.35 per cent year-over-year in 2013.

The statistics could be interpreted by some as evidence of why the Bahamian cellular market needs the lift that would come with BTC’s first-ever competitor, introducing choice and rivalry that could further improve pricing and service quality.

“Although growth in the Bahamian cellular mobile market has remained relatively flat, and decreased marginally by 0.09 per cent in 2013, average revenue per user (ARPU) increased by 24.75 per cent,” the RFP documents disclose.

“Real change has come in the type of handset technology that has been adopted by mobile customers. BTC recently indicated that in 2011, roughly 30,000 customers were using smart phones compared to 200,000 users in 2013.”

Cellular/mobile penetration, or usage, was pegged at 84.17 per cent of the Bahamian population in 2013, giving a total subscriber base of 302,500 persons.

The market remained dominated by pre-paid customers who, enjoying the flexibility and convenience of determining their communications spend, accounted for 84.82 per cent of all BTC subscribers in 2013 - a percentage that had changed little since 2011.

Noting “a marked uptake”in mobile data usage in the Bahamas since such services were introduced in 2010, the RFP added: “Although the number of subscribers decreased by 12.35 per cent in 2013 from 2012, the number of subscribers (more than 96,000) remains more than five-fold the figure for 2011.

“Uptake and usage of mobile data is expected to remain strong, particularly given the recent (February 2014) launch of an LTE network that is capable of providing data services at much faster speeds than previously utilised networks.”

With cellular liberalisation imminent, given the Christie administration’s intention to award a second licence by April/May this year, little has been reported about the potentially huge consequences for BTC and its financial performance.

BTC’s figures for the six months to end-September 2014 show 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, confirming that despite privatisation and the Cable & Wireless Communications (CWC) takeover, BTC still remains a ‘glorified cellular company’ with little else to its armoury.

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.

The latter has stubbornly refused to grow since CWC acquired Board and management control at BTC in April 2011, and despite the company’s new efforts to get into pay-TV, the entry of a new mobile operator will likely have a major impact on its top and bottom lines.

Taking Cable Bahamas’ seizure of a 30 per cent fixed-line market share within two years as a guide of what the new mobile operator may do, some $80-$90 million of BTC’s annual mobile revenues might be in jeopardy.

This not only demonstrates how lucrative the second cellular licence is as a business/financial opportunity, but the potential consequences for a BTC net income that was $37 million in the six months to end-September 2014.

Meanwhile, the second licence tender documents disclosed that fixed-line subscribers in the Bahamas total around 128,000 a penetration, or usage, rate of 35.65 per cent. Some 70 per cent of those subscribers were residential customers.

On the Internet front, average revenue per user (ARPU) was said to have fallen by 7.38 per cent in 2013, with subscriber numbers dropping by 8.59 per cent to 70,900.

Internet penetration rates fell by 2.11 per cent in 2013 to 19.7 per cent, a rate lower than the developed world but higher than its developing world counterpart.

The RFP also noted that while pay-TV penetration rates fell by 1.29 per cent in 2013, average revenue per user grew by 1.04 per cent.