The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company's (BTC) owner is targeting a 2018 second half turnaround for its slumping top line, after it lost another 10,400 mobile customers due to "competitive intensity".

Balan Nair, Liberty Latin America's (LiLAC) chief executive, told analysts on a conference call to "check back in two quarters" as the communications provider looks to a new management team to halt the decline in BTC's revenues.

He said the latest executive line-up, headed by Garry Sinclair, a Jamaican, had a "top line growth mission" as part of LiLAC's "second phase" plans for BTC following years of cost-cutting and staff downsizing.

Mr Nair's comments came after BTC lost a further 10,400 mobile subscribers during the three months to end-June 2018, although this was said to represent a near-60 percent decline on the attrition experienced during the same period in 2017.

The incumbent carrier lost some 24,000 mobile customers during the 2017 second quarter, and its latest figures indicate that Aliv continues to steal market share and business following its aggressive market entry in November 2016.

"In The Bahamas, competitive intensity continued to drive subscriber declines totalling 10,000 in the second quarter as compared to a loss of 24,000 in the 2017 second quarter," confirmed BTC's immediate parent, Cable & Wireless Communications (CWC), which is now owned by LiLAC.

A breakdown provided by LiLAC shows BTC lost 10,000 pre-paid, and 4,000 post-paid, subscribers during the 2018 second quarter. This leaves the carrier, which is 49 percent owned by the Government, with 240,700 customers - the bulk of which, some 89 percent, consist of 214,700 pre-paid customers.

Post-paid mobile users, who typically represent the more lucrative and high net-worth market, account for just 11 percent or 26,000 of BTC's subscriber base. Given that LiLAC showed BTC as having 315,000 total mobile customers when Aliv launched, this indicates the incumbent has lost almost 24 percent - nearly one in four of its subscribers - since competition arrived.

Such pressures resulted in a 14.8 percent year-over-year drop in BTC's total 2017 revenues, which fell from $306.6m in 2016 to $261.3m last year. The latter figure is almost $100m down on the revenues BTC enjoyed pre-mobile liberalisation, highlighting just why Mr Nair is so eager to reverse the company's plummeting top-line.

While praising Mr Sinclair's immediate predecessor, Dexter Cartwright, a Bahamian, for boosting BTC's profits and margins via cost cutting, the LiLAC chief admitted that this had not solved the "top-line revenue challenge" at its Bahamian subsidiary.

"On the BTC management front, we made a big change late last year where we changed out the management and brought in a team that really focused on the cost structure there," Mr Nair said.

"I think [they] have done a really good job on it. We've seen the improvement and expansion in our margins with the bottom line. It did not solve our top-line revenue challenge, so we've now got to the second phase of what we want to do with BTC.

"We've made - this is, by the way, a natural progression - the management team we moved there had a mission, and they've accomplished their mission. Now we're moving them to another part of our business."

Mr Nair continued: "We're bringing another team in there with a very different mission, which is the top-line growth mission. Gary [Sinclair] has a proven track record with creating value on the top-line.

"Gary is coming into the Bahamas, and is going to take over from Dexter and focus on the top-line. We feel good about it, but it is still early for us to say much about it. Check back in two quarters."

Mr Nair's comments indicate that LiLAC wants to refocus BTC on growth following years of cost-cutting and realignment since its 2011 privatisation. But achieving top-line expansion will be far from easy, given the continuing erosion of its once-lucrative mobile monopoly by Aliv, while BTC has struggled to make inroads into the TV and Internet markets dominated by its rival's controlling shareholder, Cable Bahamas.

For the 2018 second quarter, while BTC saw a 1,500 expansion in its fixed-line customer base to 48,400 subscribers, its TV and Internet numbers both declined. The former fell by 300 to just 6,700, while Internet subscribers dropped by 700 to 26,400 at end-June 2018 even though BTC's fibre-to-the-home infrastructure passes 128,900 residences.

This highlights the scale of the challenge faced by Mr Sinclair, who is viewed as "a heavy hitter" given his track record as a leading Jamaican investment banker and then as head of CWC's regional business.

Some observers have interpreted his appointment as both a sign of BTC's importance to its current owner, Liberty Latin America (LiLAC), and an indication of the latter's concern at its Bahamian asset's performance in the face of the competition from Aliv and Cable Bahamas.

LiLAC also revealed that CWC's revenues year-to-date were slightly down on 2017 comparatives due to a 5 percent decline in mobile residential revenue that was "primarily driven" by the performance of BTC and its Panama subsidiary.

BTC's parent is also targeting growth in the business-to-business (B2B) market region-wide, with 32 percent - almost one-third - of its 2018 second quarter Bahamas revenues of $58m generated by this segment.

Tribune Business earlier this year revealed how BTC's net profits fell by at least $30 million, or 75 per cent, year-over-year in 2017 as a result of competition's pressure on not just subscriber numbers but pricing and margins.

BTC's 2017 full-year net earnings were down 71.3 per cent at $11.4m, compared to the $39.7m profit it enjoyed for the last nine months of 2016 - the last period in which it enjoyed a mobile monopoly prior to Aliv's launch in November 2016.

This suggests that BTC's full year-over-year profits comparison could have been down by as much as 80 per cent, given that the telecommunications carrier was likely on track for a near-$50m "bottom line" in 2016 based on its nine-month performance.

The figures also revealed that the Government and 'BTC Foundation', as non-controlling BTC shareholders, received no dividend in 2017 compared to the $12.6m payout they collectively enjoyed in 2016.

And BTC lost over 60,000 mobile customers, almost 20 per cent of its market, in just over one year as a result of competition. Data released by LiLAC revealed that at end-2017 its Bahamian subsidiary had 228,100 pre-paid subscribers and 26,800 post-paid customers, giving it a total base of 254,900 persons.

This compared to the 282,000 pre-paid and 33,000 post-paid subscribers that Liberty's 2016 accounts showed it as possessing one year earlier, which was just after BTC's first-ever mobile rival launched in November 2016.