The Tribune

The Bahamas Telecommunications Company’s (BTC) 2017 profits plunged by around 75 per cent amid its owner’s continuing two-year wait for the Government to approve its takeover.

Corporate filings by Cable & Wireless Communications (CWC), BTC’s immediate parent, show that Aliv’s entry into the Bahamian mobile market sent BTC’s profits tumbling by at least $30m during its rival’s first year of operation.

The precise impact is difficult to glean from CWC’s filings, because the year-before comparative figures only include nine months of 2016, but if anything they hide the true impact of BTC’s mobile monopoly loss.

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 revealed by CWC also show 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.

BTC’s profits slump is unlikely to be surprising to close observers of The Bahamian telecommunications industry, given that it had become increasingly reliant on its mobile monopoly to sustain the business - the segment accounting for up to 75 per cent of total revenues at one point.

Yet the data, and extent of the plunge, is likely to be at least partly behind BTC’s latest voluntary separation package (VSep) offering. This attracted close to 100 employees, including some 20 managers and 75 line staff, as the former incumbent seeks to further right-size its workforce and cut costs to better align itself with increased competition.

Bernard Evans, the Bahamas Communications and Public Officers Union’s (BCPOU) president, could not be reached for comment yesterday, but previously said Aliv’s entrance was anticipated to impact BTC’s financials through its seizure of 20-30 per cent market share.

He also declined to attribute all BTC’s issues to Aliv, saying: “What was not anticipated was what we saw over the last four or five years with the advancement of data and bandwidth, the new apps coming out like WhatsApp and the ability to communicate via other mediums instead of incurring roaming charges.

“There was a fall-off on toll charges and roaming charges. Text messaging and all those things that used to be revenue streams have all fallen off due to the advancement of technology. BTC was experiencing losses for a while. Even inter-island calls fell off because people aren’t using landlines. All these variables played a role in BTC losing revenue.”

CWC yesterday sought to suggest BTC was arresting its decline, with its affiliate having enjoyed the smallest quarterly fall-off in subscribers - a drop of just 3,800 - since Aliv launched.

“Our loss this quarter was driven by Jamaica and the Bahamas,” CWC said of its 20,000 total mobile subscriber fall, “although the quarterly loss at BTC was the lowest since a new competitor entered the market in 2016’s fourth quarter.

“Residential mobile revenue declined 3 per cent compared to the prior-year period. The decrease in mobile subscription revenue was primarily attributable to the net effect of lower revenue in the Bahamas, associated with a decrease in the average number of subscribers and lower ARPU (average revenue per unit), primarily driven by the commercial launch of mobile services by a competitor during the fourth quarter of 2016.”

CWC’s statement indicates that besides the loss of subscribers and market share, BTC’s pricing and margins are also being squeezed by Aliv’s arrival, hence the drop in ARPU.

BTC’s total mobile subscriber base stood at 251,100 at the end of the 2018 first quarter, with pre-paid customers having fallen by 3,400 to 224,700 since the start of the year. Post-paid subscribers were down by 400 to 26,400.

Excluding its mobile business, BTC’s customer numbers (revenue generating numbers) were said to have grown by 1,200 during the first quarter, with video (TVB) subscribers up by 800 and Internet increasing by 500.

Fixed-line phone customers fell by 100, but the data shows BTC is finding it tough going to make inroads into a TV and Internet market dominated by Cable Bahamas, Aliv’s controlling and managing shareholder.

BTC’s travails come as its utimate parent, Liberty Latin America, is still awaiting final government approval of an acquisition that occurred almost two years ago on May 16, 2016.

Liberty is now CWC’s owner, and the latter’s filings said: “The Liberty Global transaction triggered regulatory approval requirements in certain jurisdictions in which we operate.

“The regulatory authorities in certain of these jurisdictions, including the Bahamas, Trinidad & Tobago and the Seychelles, have not completed their review of the acquisition or granted their approval.

“While we expect to receive all outstanding approvals, such approvals may include binding conditions or requirements that could have an adverse impact on our operations and financial condition.”

The Government’s failure to approve the acquisition by Liberty, its new partner, is unlikely to have held BTC back, with several sources suggesting the approval had fallen ‘through the cracks’.

K P Turnquest, Deputy Prime Minister, expressed surprise over CWC’s filings and said of the approval: “I don’t know what the status of that is. I thought it had been done.”

He added that the Prime Minister was responsible for relations with BTC, and suggested that Tribune Business contact the Attorney General. Carl Bethel QC did not return this newspaper’s calls before press time.

Khaalis Rolle, minister of state for investments under the former Christie administration, told Tribune Business last February that he was waiting for the Attorney General’s Office to complete its review of Liberty Global’s BTC purchase before “re-submitting” it for approval.

He described as “standard procedure in a transaction of this magnitude”, and said: “I think it’s just a standard review. That is still being reviewed by, I think, the Attorney General’s Office prior to it coming back to me to re-present to the National Economic Council (NEC).”