The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas suffered a 12.5 per cent increase in annual net losses to $16.658 million for 2016, driven by Hurricane Matthew-related repair costs and the wait for expansion investments to pay off.

The BISX-listed communications provider, in unveiling its figures for the 12 months to end-December 2016, stayed away from its bottom line ‘red ink’ to focus on the positive, namely its record $180.588 million in revenues.

Cable Bahamas also reiterated its expectation that Aliv, the second mobile operator, for which it has Board and management control to go with its 48.25 per cent equity stake, will seize 30 per cent market share from the Bahamas Telecommunications Company (BTC) by 2017 year-end.

Based on BTC’s subscriber and revenue figures, that would give Aliv estimated subscriber and revenue numbers of around 100,000 and $80-$90 million, respectively. Cable Bahamas said its mobile affiliate accounted for 2.5 per cent of its total revenues in 2017, following Aliv’s November launch.

However, until Aliv’s business ramps-up, it is acting as a temporary drag on Cable Bahamas’ overall results as the latter’s management, Board and shareholders wait for their $62.5 million investment in the spectrum fee and other expenditures - taking the total outlay to $65 million - to pay-off.

‘Non-controlling interests’ accounted for $8.816 or more than 50 per cent of Cable Bahamas’ total net loss for the 2016 financial year, with that likely to be related to Aliv, as most of the ‘red ink’ - some $6.146 million - was incurred in the fourth quarter when the mobile operator launched.

The same ‘non-controlling interest’, not present on the balance sheet the year before, also boosted Cable Bahamas’ total equity by $61.352 million to $152.14 million.

On the revenue front, Cable Bahamas’ top-line rose 9 per cent year-over-year, from $165.678 million to $180.588 million. However, operating expenses grew by 20.2 per cent from $113.93 million to $136.957 million, as the BISX-listed provider continued to invest for future profit growth and rebuild its network after Hurricane Matthew.

As a result, earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 15.7 per cent, from $51.748 million to $43.631 million, while operating income fell by 68 per cent - from $21.594 million to $6.907 million.

Despite the increased net loss compared to 2015’s $14.371 million, there appears to be no cause for shareholders to panic yet.

Cable Bahamas has sharply increased the amount of debt (bank financing and preference shares) on its balance sheet to fund both its $100 million worth of US acquisitions, and their expansion, and its mobile growth opportunity at home.

The company is effectively in the same position as it was in 2015, investing for projected future gains and shareholder returns tomorrow, and these have yet to materialise - although they should be a year closer.

In the meantime, increased payments associated with the new debt financing are weighing on Cable Bahamas’ financial performance, along with the Hurricane Matthew restoration costs. The key now is for the company to execute, and deliver the expected profits increase and returns from these investments.

Cable Bahamas’ release described 2016 as “tumultuous”, as it sought organic growth from its legacy business in the Bahamas, cemented its foothold in Florida with Summit Broadband and launched Aliv. It also had to contend with Hurricane Matthew.

“The progress of these business plans has required careful financial planning, which has been undertaken in the past and continues today,” the company said.

“Already, Cable Bahamas has a very solid financial base with a total funding of $700 million over recent years. This comprises bank loans, preferred shares and, of course, ordinary equity.

“All in all, Cable Bahamas is a picture of financial strength. However, this expansion and growth does come with significant expense, namely the network expansion, coupled with ever increasing programming and regulatory fees in the Bahamas, consolidation of operations in Florida and the Aliv network roll out and launch.”

“All employees should be very proud of all that was achieved in 2016, both financially and operationally,” stated Cable Bahamas’ president, Anthony Butler, in a statement. “That springboard will enable the company to forge ahead in the coming years.”

Cable Bahamas added that the company’s Board and management were “working toward a concerted plan of consolidation and growth that will play out in the future”.