The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas could “devastate” the Bahamas Telecommunications Company (BTC) if its mobile market share projections come true, even though the latter recorded a 26 per cent profit rise in its last financial year.

Dionisio D’Aguilar, a Cable Bahamas shareholder, told Tribune Business in a recent interview that mobile was “all BTC has”, with this segment accounting for the majority of its revenues and profits.

With Cable Bahamas predicting that NewCo2015, the second mobile operator, is likely to capture between 27-52 per cent of the market within the next two-three years, based on Caribbean and regional experience, Mr D’Aguilar implied that BTC’s very survival may be threatened.

The incumbent, now majority owned by Liberty Global, is unlikely to see it that way, especially as profits for the 12 months to end-March jumped by 25.9 per cent year-over-year.

However, the increase from $53 million to $68 million was not as promising as it seems, for the prior year included $25 million of one-off restructuring costs as BTC downsized and realigned to prepare for competition.

Strip that figure out, and BTC’s performance for its 2016 financial year would have represented a $9 million reduction upon its prior year bottom line.

Referring to Cable Bahamas’ imminent entry into the mobile market, thus ending the Bahamas’ latest communications monopoly, Mr D’Aguilar said: “They’ve fleshed out and maximised revenues on Internet and cable TV throughout the Bahamas, and the only other play really is mobile.

“I can’t wait for them to come out and start knocking down prices. This is what happens when you have competition; it causes prices to go down. It’s good. It’s critical.”

Acknowledging concerns over how leveraged Cable Bahamas was becoming, having added $189 million in preference share debt over the past two years to fund its mobile and Florida expansions, Mr D’Aguilar added: “They’re burning through a lot of cash, but have obviously run the numbers and feel comfortable with what they’re going to earn.”

The Superwash laundromat chain’s president said Cable Bahamas, which will have Board and management control at NewCo, plus a 48.25 per cent equity stake, has some tough targets to achieve in terms of its network roll-out.

He added that the Government had imposed some “very onerous terms”, including the $62.5 million spectrum fee, the $18-plus million performance bond and network sharing with BTC.

“This is all BTC has,” Mr D’Aguilar told Tribune Business in reference to its now-expiring mobile monopoly. “If [Cable’s] projections are right, and it’s going to take half the market, that’s going to devastate BTC. We’ll see what happens.”

For the year to end-March 2016, BTC’s revenues fell by 5.5 per cent year-over-year, dropping from $348 million to $329 million.

This was blamed on the company having to renegotiate international roaming agreements with foreign carriers at lower rates, plus a 7 per cent drop in data revenues.

BTC’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were flat year-over-year, standing at $122 million compared to $121 million the year before, as costs were reduced.

And the absence of 2015’s one-time $25 million restructuring charge ensured its bottom line performance looked healthier than 2015’s. The average number of persons employed by BTC over the 12 months to end-March 2016 was 732, compared to 787 the prior year.

However, BTC has become ever-more reliant on its mobile monopoly, which in recent years has been responsible for generating close to 75 per cent of its revenues.

The carrier will need to quickly compensate by making inroads into the cable TV and Internet markets, the segments where Cable Bahamas is strongest.

Mr D’Aguilar said communications industry liberalisation, and BTC’s privatisation, should act as “the model” for all publicly-owned corporations in terms of getting the Government out of business.

“The only thing extremely frustrating about this has been because of the timeframe,” Mr D’Aguilar told Tribune Business. “The cost of years gone by, where Bahamians had to pay all those charges and higher rates for too long.”