The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas is targeting the “three-five year mark” for returns on its $100 million Florida investment, which has increased its contribution to total revenues by seven percentage points year-over-year.

Barry Williams, senior vice-president of finance, told Tribune Business that Cable Bahamas might incur results such as its $587,000 third quarter loss due to the “start-up” nature of its US expansion.

He added, though, that its Summit Broadband subsidiary had increased its share of Cable Bahamas’ revenues from 23 per cent to 30 per cent during its second year in operation.

Emphasising that Cable Bahamas was “on track” in executing on another phase of rapid expansion, which is likely to involve the second Bahamian mobile licence as well as Florida, Mr Williams said the outcome would be “very favourable” for shareholders in two years’ time.

“Our expectation was, and we knew, that Florida was a bit of a start-up for us,” he told Tribune Business. “There would be initial costs going in, with returns on the back end.

“Florida is contributing about 30 per cent of our revenues, which is up about 7 per cent from the prior year, year-to-date. I think we’re on track in terms of our expectations.”

Emphasising that Cable Bahamas was taking the long-term view of its Florida investment, Mr Williams added: “Our focus is really in the three to five year mark. That’s when we’re looking to see it turn the corner.

“I expect that our numbers will be showing more capital expenditure, and some operating expenses. We will see the revenues and EBITDA increasing as well, but it’s going to be later.

“This is not a one to two-year return on investment. It’s not beyond our expectations that we’ll see these kinds of results [the $587,000 loss] right now,” he added.

“You talk to me in two years time and trust me, it’s going to be very favourable in terms of those returns.”

Mr Williams confirmed that part of Cable Bahamas’ strategy in expanding the BISX-listed company across the Florida straits was that it would act as a ‘safeguard’, ensuring continued growth if opportunities in the Bahamas -particularly the second mobile licence - failed to materialise on time or at all.

“As with any start-up, there will be some growing pains, and we are adding customers every day,” he added of Summit Broadband’s Florida operations.

“We’re building out to those customers, providing competitive services, and getting traction in the market we’ve carved out for ourselves.”

Rather than go head-to-head with the US-based communications giants, Mr Williams said Cable Bahamas was targeting Florida’s high-end, wealthy gated communities that offer ‘quadruple play’ subscriber bases ranging from 500 to 6,000.

He estimated that Cable Bahamas’ total capital spending in 2015 would likely be “in the $40 million range”, more than double the normal $15 million average.

Mr Williams said the Florida expansion had also enabled Cable Bahamas to grow beyond its relatively mature home market, which has produced consolidated “sub-5 per cent” subscriber growth across all its local business lines - TV, Internet and fixed-line.

This, he said, compared to annual 15 per cent subscriber growth rates that Cable Bahamas is enjoying in Florida.

“We’re doing well, but we’re not without challenges,” Mr Williams said of the Bahamas’ business. “We’re still challenged by the economic situation in the country, which is affecting our subscriber and growth numbers.

“Until we really get a shot in the arm and turn around, I don’t think we’ll see the growth we’d like to. We’re still growing, moving and very much holding our own.”

Yet he added: “The growth on the Bahamas side is going to be relatively small in comparison to Florida.

“The Florida growth is very material in terms of subscriber growth. On average it’s about 15 per cent. Here, we’re still sub-5 per cent, but from a mature market perspective, that’s pretty good.”