The Tribune

Cable Bahamas yesterday said its US expansion had generated growth that would take three-four years to achieve in this market, having enjoyed an “immediate” 26 per cent top-line boost.

Barry Williams, Cable Bahamas’ senior vice-president of finance, told Tribune Business that the company’s 2015 financial year would “absolutely be better” than 2014 as further synergies from its $100 million worth of Florida acquisitions come through.

The BISX-listed communications provider unveiled a 19.4 per cent year-over-year decline in net income, which dropped from $14.114 million to $11.379 million, as it works to strip out costs and realise efficiencies from its US business.

Mr Williams said that acquisitions of the scale undertaken by Cable Bahamas typically took 18 months to two years to ‘bed down’, and start producing synergies, implying that this process will bear further fruit in 2015.

But he told Tribune Business that the ‘gated community’ nature of Florida’s residential market was already generating strong growth for its US subsidiary, Summit Vista, as one contract win could deliver several thousand new TV and communications subscribers in one go.

“We’ve won quite a number of significant accounts in the Florida area with gated communities,” Mr Williams told Tribune Business.

“One of the great thing about this opportunity is that we signed one that got us 6,500 subscribers and then some.

“When you compare that kind of result to how we acquire subscribers in the Bahamas, we have to essentially go one-by-one, door-to-door. We are not a community of a whole lot of gated communities, which is very different to that in our Florida area.”

Explaining the implications for Cable Bahamas’ business model, Mr Williams added: “If you’d apply that growth [in Florida] to the Bahamas scenario, it would take us three to four years to acquire that increase in subscriber base.

“That is one of the beauties of this opportunity, as we are able to acquire and get a huge pick-up in revenue and EBITDA (earnings before interest, taxation, depreciation and amortisation).

“That is the kind of niche market we’re going to develop in Naples, Bonita Springs. We’re in a very unique market in south-west Florida. It’s a very different one, and one we thought was under-served and not well served. There’s a need and demand in less populated areas.”

Cable Bahamas’ US acquisitions, which involved merging four companies into its Summit Vista affiliate, drove its 26 per cent top-line growth in 2014, with revenues increasing by more than $30 million - from $119.578 million in 2013 to $150.792 million.

“The US accounts for in the neighbourhood of just under 25 per cent and growing,” Mr Williams told Tribune Business. “Last year [2013], it was less than 7 per cent.”

That did not represent a full year of the US operations, and he added: “You’re talking about a transaction that has effectively created an immediate 25 per cent growth in top-line revenue, and growing.

“We’re very focused on executing it, have had a great start, and have a lot to look forward to.”

Mr Williams said Cable Bahamas was in the middle of implementing a five-year strategic plan to grow its Florida operations, based on gated community and large commercial clients, such as the Orlando hotel industry.

Cable Bahamas’ finance chief said he believed the company’s business could ultimately be split equitably between the Bahamas and the US, with a 50/50 divide giving it both geographical diversification and wider growth opportunities.

“One shot got us about 25 per cent,” Mr Williams told Tribune Business. “If, over a period of time, we could get another 25 per cent, increasing to 50 per cent of the total, that would be a good balance.

“It’s a challenge, but the potential is definitely there for us to get there. That’s where I would like to see it go. It might take us a couple of years to get there, but certainly it’s what I would like to achieve.”

Mr Williams emphasised that the main beneficiaries of Cable Bahamas’ Florida expansion were the Bahamian retail and institutional investors who made up its shareholder base.

“This is all about increasing shareholder value, and providing better than average returns,” he added, as all US-generated dividends would ultimately be returned to Cable Bahamas’ local investors.

Mr Williams said the growth momentum built up by Cable Bahamas in the 2014 second half was set to “carry over” into 2015, and would help to produce increased net income compared to last year.

“We are absolutely looking forward to a better 2015,” he told Tribune Business. “We are looking at a number of contracts we are working on now, some of which are going to close in the next couple of weeks and months. Those are contracts we don’t have now, but are going to add growth.”