The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company (BTC) was yesterday branded “our most inefficient business” by its owner despite mobile customer losses dropping to a record quarterly low.

Balan Nair, Liberty Latin America’s (LiLAC) chief executive, nevertheless voiced confidence in the group’s ability to turn around its ailing Bahamian subsidiary by saying it had identified “strong possibilities” for transforming it into a growth business.

He did not identify what these “possibilities” were during a conference call with investment analysts to discuss LiLAC’s 2019 first quarter results, and admitted that BTC was likely to lose “another four to five points” from its top-line revenues as a result of its mobile market share loss “bottoming out” around 35 percent.

Mr Nair also praised BTC’s mobile competitor, the Cable Bahamas-controlled Aliv, and conceded that the upstart which entered the market in 2016 had “taught our team a number of things”. He added, though, that BTC was now “responding correctly” to its rival by seeking to “preserve value” and avoid discounting.

The LiLAC chief executive, though, indicated that BTC still has much work to do in completing its transition from a monopoly to an agile communications provider better able to respond to evolving market need and competitive threats.

“There are two areas where we are challenged on mobile - in The Bahamas and Panama. In The Bahamas we can also see strong possibilities, and we are working with our partners in the Government and the unions to turn that business around,” Mr Nair said yesterday.

“It has been in structural decline due to being a monopoly that has not adjusted to competition. It is our most inefficient business, but we know how to turn it around and make it a growth business.”

Mr Nair’s comments are unlikely to inspire enthusiasm among BTC’s staff, especially since they reveal that its Bahamian business ranks as LilAC’s worst performer among the multiple communications interests it owns throughout the Caribbean, Central and South America.

LiLAC has operating subsidiaries in countries such as Chile, Panama, Costa Rica, Jamaica, Puerto Rico, Barbados and multiple other Caribbean islands, and yesterday’s conference call places BTC at the bottom despite Mr Nair’s optimism about growth opportunities.

His remarks also come at a delicate time given BTC’s recent trumpeting of its industrial agreement with the Bahamas Communications and Public Officers Union (BCPOU), which represents the company’s line staff, and the start of talks on a similar deal with its managers’ union counterpart union.

“In The Bahamas, as I indicated on previous calls, it’s really us being a monopoly and suddenly a competitor shows up on the mobile front in 2017,” Mr Nair said yesterday, tracing the cause of BTC’s present difficulties. “I think we’ll lose subscribers and bottom out at about 35 percent, as we’ve said before, and remain stable on the mobile front there.

“In The Bahamas, you know it’s a duopoly market on mobile and our competitor [Aliv] is good. They’ve taught our team a number of things. It’s really up to us how we want to respond, and I think we’re responding correctly in trying to preserve value in that market.

“But we will see still another four to five more points of top-line challenged on the mobile front. We’ll bottom out at 35 percent or so as I indicated.”

LiLAC can point to positive signs that BTC’s subscriber churn is slowing down to the point where it may “bottom out” in the battle for subscribers with Aliv. “In the Bahamas, we recorded our best quarterly result since the introduction of a new mobile competitor in 2016, with 2,000 subscribers lost in the quarter,” it said of BTC’s performance for the three months to end-March 2019.

Data released by LiLAC yesterday showed it lost a net 1,500 mobile customers during the 2019 first quarter, with the total falling from 224,300 at year-end 2018 to 222,800 at end-March.

The figures show subscriber losses were confined to the 2,000 decline in pre-paid subscribers, which ended the quarter at 198,000. The 500 “gain” occurred on the higher-value, higher-margin post-paid side, where customer numbers grew by 500 to 24,800.

While this suggests that BTC is having some success in slowing the rate of subscriber attrition, given that losses in the previous three quarters ranged from a low of 4,000 to a high of 12,400, Mr Nair’s estimate that the carrier’s market share loss will “bottom out” at 35 percent is likely to be challenged by its rival.

Damian Blackburn, Aliv’s top executive, told Tribune Business in February 2019 that the mobile operator had already grown its market share to 38 percent - some three percentage points higher than Mr Nair’s estimate - after its subscriber base grew by a further further 11.2 percent - from 125,000 to 139,000 - during the final quarter of 2018.

Aliv’s customer numbers are likely to have increased subsequently, while data recently released by sector regulator, the Utilities Regulation and Competition Authority (URCA), suggests BTC’s market share may have dropped to 58.4 percent - almost seven percentage points lower than Mr Nair’s “bottom out” number.

URCA estimated that total mobile voice subscribers in The Bahamas equalled 381,591 at year-end 2018, with BTC’s market share calculated using its latest 222,800 subscriber number.

Meanwhile, Chris Noyes, LiLAC’s chief financial officer, blamed reduced margins and subscriber losses in The Bahamas and Panama for the 2 percent year-over-year declines in Cable & Wireless Communications (CWC) rebased revenues and operating cash flow during the 2019 first quarter.

CWC, which purchased the controlling interest in BTC in 2011, now functions as its immediate parent and a LiLAC subsidiary after being acquired by the latter several years ago.

“Our top-line performance continues to be impacted by declines in mobile revenue driven by reductions in ARPU (average revenue per unit) and mobile subscriber base, principally in Panama and The Bahamas,” Mr Noyes added.

“However, as Balan highlighted, we’ve begun to see signs of stabilisation in those markets.” LiLAC’s results announcement said of CWC: “Mobile revenue attrition of 13 percent on a rebased basis was partly offset by rebased revenue growth of 5 percent in residential fixed-line and 2 percent in B2B (business to business).

“The reduction in mobile revenue was primarily attributable to lower ARPU in Panama and The Bahamas, and reduced subscribers across our markets as compared to the prior-year period.”

Inge Smidts, CWC’s chief executive, yesterday said BTC now had the right management team and “the right proposition”, together with the correct marketing plan, “to be much more ahead of the game”. She added that it had to leverage the quality of its network infrastructure with the right commercial tactics - something the carrier is now poised to do.

BTC was shown as losing 300 TV, and 400 broadband Internet subscribers, during the 2019 first quarter. It increased its fixed-line voice subscribers by 900, though, and added 700 telephony customers.

With 128,900 homes now passed by its fibre-to-the-home network, BTC was shown as having 48,200 fixed-line customers, 6,600 TV subscribers and 26,200 Internet clients.

Mr Nair added that the “refreshed” advertising campaign rolled-out during the 2019 first quarter was “expected to drive financial momentum” for BTC in the coming months.