The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas believes its newly-acquired US business will generate greater than “20 per cent aggregate” revenue growth for it over the next five years, having won contracts to provide services to 16,600 Florida residential units since the purchases closed.

The BISX-listed communications provider, in documents issued to potential investors for its live $80 million preference share issue, said it is eyeing major expansion opportunities even if it fails to win the Bahamas’ second mobile licence.

It has gained access to these via the four Florida acquisitions it completed by end-2013, with its US customer base currently comprising 68,000 customers, and serving more than 60,000 hotel rooms (a 50 per cent market share).

“Presently, the company anticipates significant growth from its Florida operations,” Cable Bahamas revealed.

“Within Florida, the company has won a number of major commercial and residential contracts to provide its suite of services. The residential contracts won since acquisition exceed 16,600 units.

“The company is currently in its build out stage for most of these contracts, and expects a significant portion to be in operation by late 2015. Such contracts are mostly multi-year, with a high likelihood of renewal, with terms ranging from five to 10 years.”

Cable Bahamas then touted the relationship that its Florida subsidiary, Summit Broadband, has with major resorts, universities and companies, such as Disney and Universal.

It added: “Summit Broadband has access to a market which exceeds one million households.

“These contracts and relationships are expected to provide significant revenue growth to the company [Cable Bahamas] in excess of 20 per cent in the aggregate over the next five years.”

A presentation given by Cable Bahamas to institutional investors, and their financial advisers, as part of its ‘pitch’ for the preference share issue, projects that the company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) will increase by 48.7 per cent in the five years to 2018.

Most of the growth, from $48.3 million in 2014 to $86.7 million, will come from Cable Bahamas’ Florida operations.

The projections appear not to account for the possibility that Cable Bahamas may win the Bahamas’ second mobile licence, the award process for which is ongoing.

Tribune Business understands that the Government and its advisers are still in the process of evaluating the bids submitted by Digicel, Cable Bahamas and Virgin Mobile (Bahamas), and are submitting questions asking the bidders to clarify certain aspects of their offer.

Cable Bahamas’ investor presentation effectively confirms this, as it says the date for the mobile spectrum auction - the second stage of the process - has yet to be revealed by the Government and its Task Force.

However, the BISX-listed communications provider says the Bahamas Telecommunications Company’s (BTC) existing mobile monopoly currently excludes it from competing in 53 per cent of the $470 million communications market.

Of the remaining 47 per cent, Cable Bahamas estimates that it has 24 per cent compared to BTC’s 23 per cent.

It pegs the Bahamian mobile market as generating $243 million per annum in revenues, adding that the second operator could enjoy a top-line of $74 million or $123 million if it gains a 30 per cent or 50 per cent market share, respectively, from BTC.

Cable Bahamas’ Bahamian business featured 109,091 cable TV subscribers, 69,745 Internet customers and 34,212 voice clients as at September 2014. Total subscribers - the Bahamas and Florida - have risen from 144,000 in 2012 to 224,000.

Cable TV and Internet generated a 49 per cent and 40 per cent share of its Bahamian revenues, respectively, with telecommunications generating the remaining 11 per cent.

Back in Florida, Cable Bahamas told potential investors it was on pace to add 140 backhaul network towers in 2015 via a $30 million contract. And it had opened Florida’s east coast via the acquisition of fibre optic systems from Miami to Jacksonville.

If fully subscribed, Cable Bahamas’ latest offering will take its outstanding preference share debt to $207.8 million - up from $127.8 million now.

It anticipates collective annual dividend payments of $5.2 million on the two new preference share classes, taking total payments on its preference debt from $7.4 million to $12.6 million.