The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamas Telecommunications Company (BTC) is the sole CWC asset that failed to increase revenues in the 2017 third quarter, as it lost 19,000 mobile subscribers.

John Reid, Cable & Wireless Communications (CWC) chief executive, told analysts during a conference call that Aliv’s “aggressive” efforts to gain market share following the introduction of mobile competition were responsible for the decline in customer numbers.

Conceding that BTC was being hit in its main business segment, Mr Reid indicated that a recent management shake-up had been driven by “disappointment” over the pace of broadband Internet and Flow TV sales despite the carrier’s fibre-to-the-home (FTTH) build-out continuing.

He added that BTC had just poached four management executives from its Cable Bahamas rival to drive operational and sales efforts in those business segments dominated by its BISX-listed communications rival.

BTC’s battle with Aliv also drew the attention of Mark Fries, chief executive of its and CWC’s ultimate parent, Liberty Global, who noted that the Bahamas was the only CWC market that failed to grow top-line revenue year-over-year for the three months to end-September 2017.

“It was good to see another quarter of stability on the top-line despite the hurricane challenges,” Mr Fries said of CWC. “Revenue grew across the entire [Caribbean] region other than the Bahamas, the one market there, which is still managing through the effects of a second mobile entrant.”

Mr Reid confirmed that Aliv’s arrival, as expected, had driven a reduction in BTC’s mobile subscriber numbers as the new entrant sought to quickly build critical mass.

“Our third biggest business is the Bahamas,” the CWC chief confirmed, noting that only Panama and Jamaica were larger. “The story here has been how we continue to adapt to mobile competition following the entry of a new competitor late last year.

“We’re continuing to see aggressive offers from the competitor, particularly in terms of handsets, and this has led to mobile subscribers falling 19,000 during the quarter. Partially offsetting some of these headwinds, there’s good revenue growth across all product lines on the fixed-line services as we spin off our unrivalled fibre-to-the-home offering.”

Cable Bahamas, which has Board and management control of Aliv, revealed in its just-released annual report that the latter is targeting a 30-35 per cent mobile market share by year-end 2017.

Suggesting that it had obtained a 20 per cent share by end-June 2017, with 78,000 subscribers, Cable Bahamas said Aliv had produced almost $13 million in revenues during the seven months following its November 2016 launch.

Aliv’s impact is potentially significant for BTC, given that mobile accounted for almost 75 per cent or three-quarters if its revenues prior to the arrival of mobile competition in November 2016.

Mr Reid conceded as much yesterday, and the 19,000 subscriber reduction - following on from the 24,000 drop in the 2017 second quarter - indicates that mobile number portability as well as Aliv’s aggressive strategy is eroding BTC’s client base.

The CWC chief, though, said BTC was “pretty bang on” in terms of expectations as the Bahamas approached the first anniversary of mobile liberalisation, and predicted it would be several quarters before the market would “land”.

“I think our expectation is that the mobile market is pretty volatile. Certainly in the short-term I think that’s fair to say,” Mr Reid said of the Bahamas. “Our projections are probably pretty bang on with where we kind of thought we’d be after year one [of competition], which is really over or close enough to it.

“The emphasis for us is clearly on the fixed-line business. We will see some more homes passed, upgrade homes passed, and come on in the next couple of quarters.”

Mr Reid then revealed that BTC’s broadband Internet and Flow TV sales had yet to produce the desired returns on its FTTH infrastructure investment, prompting a management shake-up.

“I think it’s probably fair to say as well that we’ve been a little disappointed in the pace of the FTTH sale through,” he disclosed. “That’s why we’ve attracted some pretty capable executives we’ve known personally for about 20 years from Cable Bahamas to drive both the operations side of that as well as, to be frank, the entire sales channel.”

Andre Foster, BTC’s chief operating officer, is a former Cable Bahamas executive, and Mr Reid said the four executives hired would “improve our management strength in the Bahamas” - something he described as critical given the increased competition.

“Our view on the Bahamas [is that] mobile will continue to sort of find its way over the next few quarters,” he added, “but at the same time we will definitely see an uptick on the fixed-line business, recognising that mobile still represents a significant piece of the income statement.

“I think it will be a few more quarters before we get a real good sense for how we’re going to land, but certainly we’re more positive after year one in terms of where we thought we’d be, and I guess more the outlook in terms of the network capability as well as the capacity of driving execution.”

Liberty Global’s Latin American business, LiLAC, of which BTC is part, described the mobile market as “challenging”, while fixed and business-to-business (B2B) were growing.

Mr Reid said BTC’s third quarter revenues for its managed services business were up 9 per cent year-over-year, adding that the segment brought together all the company’s - and CWC’s - strengths.