The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company (BTC) yesterday hailed the $10 million year-over-year increase in the value of its ‘fixed’ assets as “a positive sign”, a senior executive saying it showed “investment is outstripping depreciation”.

Few details on BTC’s financial performance have been disclosed since the carrier was privatised in April 2011, but information buried deep in the 2012-2013 annual report of its majority shareholder reveals that the total value of its fixed or ‘non-current assets’ rose by 2.8 per cent.

The increase to $371 million at end-April 2013, compared to $361 million at the same point in 2012, was said by BTC to show the positive benefits from the $100 million invested into the company over the two years post-privatisation.

“That speaks to our investments outstripping depreciation, which is a positive sign, as we continue to make investments in our plant,” Marlon Johnson, BTC’s senior vice-president of marketing and communications, told Tribune Business.

No BTC annual report has been published since at least 2010, the last year before privatisation, and the last such document on its website is dated 2009.

This has made finding information on BTC’s financial performance difficult, and it is surprising that the Government - given that it is holding a 49 per cent stake on behalf of the Bahamian people - has not tabled its financial statements in Parliament.

However, Cable & Wireless Communications’ (CWC) 2012-2013 annual report does provide some details, as it discloses that BTC’s revenue for the 12 months to end-April 2013 rose by 2.8 per cent year-over-year.

BTC’s total turnover rose from $352 million to $362 million, a $10 million increase that matched the rise in value of its ‘fixed’ assets. The Bahamian carrier now accounts for 18.6 per cent of its majority shareholder’s total global revenue, and 17.1 per cent of its ‘fixed’ assets.

However, Mr Johnson pointed out that with BTC’s cellular monopoly set to end in April 2014, the company’s revenues were likely to come under pressure and, potentially, decline sharply with the arrival of competition.

“We’re pleased with the performance in the current financial year,” he told Tribune Business. “But we understand we have quite a ways to go. We have made inroads as far as adjusting prices and the value proposition, and we know there will be competition in the mobile space.

“We have a lot of work to do to have a manageable cost base, as we realise there will be pressure on those revenues as we start to deal with competition in the mobile space.”

Adding that BTC’s business was “trading pretty positively” during the first few months of its current financial year, Mr Johnson added: “We’re fortunate because we’re still maintaining a monopoly position in cellular, but expect that to be addressed with a second operator, so don’t expect that to be a long-term element.”

However, whether cellular (mobile) phone liberalisation will take place on the currently envisaged schedule remains to be seen, after Prime Minister Perry Christie yesterday disclosed that he was effectively ‘dangling the carrot’ of an extended monopoly in front of CWC in a bid to induce it to give up majority BTC ownership.

Speaking to reporters yesterday, Mr Christie said: “Anything is a possibility. If they are saying: ‘I want you to think about this for the 2 per cent’, I will think about it.

“I told them [CWC] they have to prepare for liberalisation; that has become an issue in our talks. The Government’s agreement with Cable and Wireless is that liberalisation will start at the end of March as a part of the discussions, and their being able to be flexible in the way I would like them to be flexible. The question is whether I extend the time for them to still hold [the monopoly], and extend the dates for liberalisation.”

And he added: “These are all issues that are on the table in my discussions. The clear point that I will not compromise on is that liberalisation must happen in my time, and that means I have a four-year window left until the next general elections.

“In other words, whoever is coming in as a result of liberalisation, whichever company, must be in and active and the Bahamian people having the benefits and part of the benefits will be competition.”

Talks of further extending BTC’s cellular monopoly will create alarm among contenders for the second cellular licence, particularly Cable Bahamas and Digicel, who would see this as entrenching BTC’s incumbent advantage and making it more difficult for them to get market share.

And it would also harm the interests of Bahamian consumers, should it come to pass, who would be denied the benefits of reduced prices, and better services and technology, all driven by competition.

With the bid process and award of a second cellular licence likely to take a year, and the winner’s network build-out taking another 12 months, competition in cellular - on the existing schedule - is likely to arrive in practice by 2016 at the earliest.

Meanwhile, Mr Johnson told Tribune Business that BTC was this year “focused on making investments to enhance the customer experience, and put us on a the glide path to a manageable cost base”.

He added that BTC was aiming to extract savings and efficiencies from service contracts, plus reduce electricity and other costs associated with operating its plant.

Mr Christie, though, vaguely hinted that further redundancies might be coming at BTC.

He said: “I have asked the director to please advise me on the talks about laying off a couple hundred people and closing down various things and so forth, and so we are acting on behalf of the 49 per cent ownership of the people of this country.

“It is very, very important that we do not destabilise the company by any discussions that are run parallel to the operations in the Bahamas.”