The Tribune

• Hits prior year’s $8m in just first half

• Mobile firm touts ‘record’ $42m revenue

• But ‘not quick dash to finish’ on net profit

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Aliv is on track to double last year’s $8m “contribution” to Cable Bahamas’ results, its top executive revealed yesterday, while reiterating it was “never a quick dash to the finish line” on net profitability.

Damian Blackburn told Tribune Business the mobile operator’s positive earnings before interest, taxes, depreciation and amortisation (EBITDA) growth, which reached $4.3m for the six months to end-December 2020, had left it poised to match the full-year production for its controlling BISX-listed shareholder in just half that time.

Explaining that the half-year contribution will amount to $8m once Aliv’s results are consolidated with Cable Bahamas, and the inter-group payments for the mobile provider’s use of the latter’s towers and fibre optic cable network are stripped out, Mr Blackburn said it is now expects to cover all operating costs from its own resources before the June 30, 2021, financial year-end.

Disclosing that Aliv has largely managed to shrug-off COVID-19’s devastating impact on its business and its consumers, he added that revenues for the half-year until end-December had risen by 8.8 percent year-over-year to hit a new $42.2m record.

Subscriber numbers increased by some 16,000, or just under ten percent, over the same period to reach 186,000, Mr Blackburn said, while asserting: “You can see the road we’re on.”

However, arguing that EBITDA was a better measure of Aliv’s performance as a start-up mobile operator, he explained that net or “bottom line” profitability is a longer-term objective that industry players typically reach in their seventh to tenth years due to the heavy investment in network build-out and the subsequent “depreciation” that attracts on balance sheet and income statement values.

Praising staff for having adjusted well to the pandemic’s ‘new normal’, Mr Blackburn said: “The immediate impact of COVID-19 on Aliv in the quarter immediately after the lockdown happened, April to June 2020, was tough. Our revenues were down 15 percent, mainly because a lot of stores were not open to sell our pre-paid plans, and we had very negligible roaming revenues because there was no inbound or outbound travel.

“We have now seen growth return to the business. Our subscriber base has grown from 170,000 at June 30, 2020, to 186,000 on December 31, just under the 10 percent mark. We did a number of things in terms of encouraging our customers to use digital means to pay for and buy plans.

“We’re now receiving over 65 percent of our payments from post-paid customers by digital means, using the MyAliv app via debit or credit card or bank transfer. And 30 percent of our pre-paid customers are purchasing plans on the app or using the IVR when they come to customer care. There’s huge growth in the use of the app.”

Mr Blackburn said all this, together with a surge in demand for Aliv’s wireless broadband product to provide connectivity for students/workers operating from home, “led to us in the first half of our financial year having record revenues of $42.2m”.

While this represented 8.8 percent year-over-year growth for the period, the Aliv chief said some income streams were still down - especially roaming, due to the reduction in visitor numbers to The Bahamas as well as the restrictions on Bahamians travelling abroad amid the pandemic.

“We do feel the effects of the tough economic environment a lot of our customers find themselves in, especially in relation to lower sales on monthly plans; people are buying more weekly plans than monthly,” Mr Blackburn added.

Disclosing that the mobile operator invested more than $6m during the six months to end-December 2020 “to keep pace with data demands on our network that have increased by 35 percent in the last year”, he said Aliv has pressed on beyond the “crucial milestone” it attained towards the end of its previous financial year - that of a positive EBITDA position.

“Despite the impact of COVID-19, in the first half of this year we reached positive EBITDA of $4.3m, and this is growing quarter-on-quarter,” Mr Blackburn told Tribune Business. “This means we already expect to contribute over $8m to Cable Bahamas’ group results for the first half of this financial year.

“That contrasts with the contribution to Cable Bahamas’ group results in the last financial year of $8m. You can see the road we’re on. The next financial target, which is in sight for Aliv in the second half of this financial year, is we expect to reach operating costs break even before capital investment and financing payments.

“This means we will be covering all our operating costs, including subscriber acquisition costs, costs to operate the network, paying Cable Bahamas under the services agreement for towers and transmission, and other operating costs to maintain the network and marketing costs,” the Aliv chief continued.

“That will be another key milestone in the next six months by Aliv. Cash on hand will be used to make capital investments and ensure we continue to meet our financial commitments as we continue to grow the business going forward.”

Mr Blackburn, though, that the capital-intensive nature of Aliv’s launch and network roll-out means net profitability is a longer-term objective that will still take several years to achieve. “For this kind of business that is a lot longer term,” he told this newspaper.

“We obviously invested $60m in the licence and about $140m in the network, and that is being depreciated over a length of time. We don’t really start to see bottom line profits until that gets fully amortised, which is typically between seven to ten years after launch. We’re in our fourth full year after launch, so it’s still a way’s away. That’s why $200m of investment needs to depreciate.

“Nobody should expect to see a bottom line profit for a while. That’s normal in this kind of business... Aliv was always conceived as a long-term plan, which is why the Government issued us a 15-year licence,” Mr Blackburn continued.

“That underpins the long-term plan. This was never a quick dash to the finish line. This was always a 15-year project, and we’re approaching one-third of the way in and have hit the key milestones we needed to hit in that time.”