The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company (BTC) was the “principal” driver of the 4 per cent operating income increase enjoyed by its regional parent during the 2012-2013 first half, with mobile data usage in this nation having increased 600 per cent in 18 months.

Cable & Wireless Communications (CWC) top executives yesterday conceded that BTC’s 
“good performance” had “masked” the weak showing in many of LIME’s other Caribbean territories, nations where it held equity interests greater than the 51 per cent stake in the Bahamas.

Unveiling its results for the six months to end-September 30, 2012, CWC disclosed that a “strong underlying performance in the Bahamas and Macau” had helped to drive group-wide EBITDA (earnings before interest, taxation, depreciation and amortisation) up 2 per cent year-over-year to $445 million.

BTC’s impact on the Caribbean region, and LIME’s figures, was even stronger. Its performance was the main factor that drove LIME’s first-half EBITDA 4 per cent higher to $137 million.

“EBITDA increased by 4 per cent to $137 million, driven principally by operational progress in the Bahamas and the early benefits from the wider Caribbean programme,” CWC said of LIME.

“The Caribbean performance was driven by mobile customer growth in Jamaica, further operating performance gains in the Bahamas and a region-wide cost reduction programme.

“Operating costs reduced by 7 per cent compared to the prior period as we realised efficiencies, particularly in our Bahamas business.”

Without BTC, LIME would be all the poorer. Although CWC is no longer breaking out the Bahamas’ results, it is clear that it had to win last year’s privatisation deal if it was to grow, and support, its LIME business.

Even so, Caribbean regional revenues declined by 4 per cent year-over-year for the 2012-2013 first half, with a corresponding reduction in gross margins.

“The Caribbean has been a mixed bag, as it always is,” Tony Rice, CWC’s chief executive, told London-based financial analysts.

“In the Bahamas, we’re driving operational improvements steadily. We’re 18 months in now, and have put in something like $70 million in capital expenditure.

“Forty-three per cent of sales are now smart devices, and data usage has gone up something like 600 per cent [in 18 months],” he added.

“We’ve moved from 2G to 4G, and are on the cusp of moving to LTE (Long Term Evolution) in the not too distant future.

“Our commitment there [in the Bahamas] was to deliver world class telecommunications by the time of liberalisation in late 2014, and while we’re not there yet we are making tangible steps in the direction of that... We’re making progress, tangible progress, in Jamaica and the Bahamas, but there’s more to do there.”

The year 2014 is when the Government is supposed to unveil a competitive bidding process for a second cellular licence, with BTC’s first competitor in the field likely to start delivering service in 2015-2016.

“We need to be sure we’re ready for competition in the Bahamas when it comes in, which is still two-two-and-a-half years away,” Mr Rice said.

He added that CWC understood the business models involved in transitioning to liberalised communications markets, having learned its lessons from Jamaica.

The CWC chief executive said the Bahamian communications market was “well suited” to the LTE technology/network that BTC is set to begin rolling-out in January 2013, via an initial $8-$10 million.

This will deliver data and voice speeds up to three times’ faster, and Mr Rice said the Government had imposed no special conditions on BTC relating to the LTE roll-out.

“Specifically, the Bahamas government shares our vision of bringing the Bahamas into world class telecommunications capacity, and they want LTE,” Mr Rice said.

“It makes absolute good sense for them to give us the spectrum. I don’t think they’ve attached any particular conditions to it, other than the fact we will invest in LTE. We intend to do that anyway, because we think that market’s well-suited to it.”

Tim Pennington, CWC’s chief financial officer, added: “In the Bahamas there are some roll-out obligations, but we’re pretty comfortable with those as they coincide with our business plan.”

Acknowledging that the Bahamas was propping up the LIME business, Mr Pennington said: “The Bahamas is performing well, and we own 51 per cent of it, and the rest of the Caribbean didn’t perform well and we own 90 per cent of those businesses.

“Yes, EPS did take a hit in the period. It [the Bahamas] does mask the fact that some of our wholly-owned businesses in the Caribbean are not performing as well as the part-owned businesses, and that’s a challenge we’re focused on.”

CWC saw a 55 per cent reduction in exceptional charges during its 2012-2013 first half, from $58 million to $26 million, due to the 2011 comparative period including the costs associated with BTC’s restructuring and voluntary separation packages.