The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas’ top executive is voicing optimism that $2.8m first quarter profits represent the start of a trend with its fibre network set to cover all New Providence “on a home pass basis” by year-end 2023.

Franklyn Butler, the BISX-listed communications provider’s president and chief executive, told Tribune Business he anticipates the near-$5m year-over-year positive bottom line reversal for the three months to end-September 2022 is a sign of things to come “save and except for extraordinary items”.

With no such impediments in sight, he disclosed that Cable Bahamas is mulling whether to employ the extra $50m generated from its $219m capital raise earlier this year to help Aliv refinance or use it to pay off $26m in Series 13 US dollar preference shares that remain on its own balance sheet.

With that raise having locked in long-term capital, Mr Butler told this newspaper that Cable Bahamas is preparing to “accelerate” the roll-out of its $80m-$85m fibre-to-the-home network investment on New Providence with effort presently moving into the heavily-populated Carmichael Road area.

“We have already rolled it out in areas like Adelaide as well as Coral Harbour. We’re coming from the south-west moving deeper into the Carmichael area now,” he said. “We are seeing initial feedback that has been very, very positive. We have just shy of 100 customers on trial, and the feedback has been very positive.

“We anticipate that as we roll-out into 2023 we will be launching fibre-to-the-home in earnest through this Christmas holiday season into early New Year. We’re doing some testing of back office systems now. We have just shy of 100 customers testing that, and giving feedback on the in-home experience and the like.”

Cable Bahamas plans to build-out its fibre-to-the-home infrastructure, in a bid to keep pace with rival Bahamas Telecommunications Company (BTC), over a three-year period. Asked how fast this will proceed, Mr Butler replied: “We anticipate that by the end of 2023 from a home pass basis, all of New Providence. We’re really accelerating this from a New Providence perspective, and it will take a further two years to connect all other users.”

Reaffirming that Cable Bahamas’ mid-2022 refinancing, which raised $219m compared to the target $169m, has provided a solid platform for the company’s growth ambitions by replacing higher-interest preference shares with lower cost ones, he added: “We’ve completed the refinancing of long-term debt for Cable Bahamas, so we don’t expect any shocks in that, as we have a ten to 15-year framework.

“We think we have a pretty decent capital structure in place that will allow us to build on what you see in the first quarter.” Cable Bahamas’ $2.814m net income for the 2023 first quarter was aided by a more than $2m, or near-50 percent, year-over-year decline in interest expenses which fell from $4.31m to $2.173m.

Revenues rose slightly, improving by 4 percent from $53.402m in the prior year to $55.579m, while operating expenses narrowed by 2.6 percent from $35.589m to $34.654m. As a result, operating income before depreciation and amortisation jumped by more than $3m, rising by 17.5 percent from $17.813m to $20.925m. That, together with the reduction in interest expense, drove Cable Bahamas’ return to first quarter profitability.

“We took on another $50m in refinancing over and above what we needed,” Mr Butler told Tribune Business of Cable Bahamas’ summer capital raise. “From a Cable shareholder perspective, we’re ready to assist Aliv with its refinancing. It has some long-term debt that has to mature at the end of the year.

“We’re working with HoldingCo and the Government to see if they want to use that [$50m] as a financing option for Aliv. Depending on where that ends up, we will use that to refinance Aliv or there’s the Series 13 preference shares on our balance sheet that we need to sort out. We have one series that we did not refinance, $26m or so.”

Cable Bahamas owns a 48.25 percent equity interest in its Aliv mobile subsidiary, but has Board and management control, with the Government holding the majority 51.75 percent. Both sides hold their ownership interests via HoldingCo, which effectively acts as Aliv’s immediate parent entity.

“From our perspective we continue to see some growth in the wireless segment with Aliv,” Mr Butler added, “and strong EBITDA (earnings before interest, taxation, depreciation and amortisation) numbers coming from that business. We anticipate continued EBITDA growth, and as EBITDA grows we will hopefully see net income grow with that.”

He said the recent launch of Aliv Fibre, offering customers up to 10 gigabytes of upload and download speed, was designed to support those who live and work via over-the-top (OTT) applications such as What’s App. “We believe we’re putting in the digital infrastructure to support digital nomads wanting to live in The Bahamas and make The Bahamas the best place to live,” Mr Butler said.

Asked when Aliv was likely to become profitable, he added: “That’s a long way away to be fair to you, and only because with that business there’s a lot of money to spend on refinancing as you pay down financing as it matures on the balance sheet.

“We do anticipate over the next three to five years Aliv will be in a place to get closer to net income. Telecommunications is a very capital intensive business. It’s not unusual to have to invest significant amounts of capital upfront. Over time, as long as the returns are consistent, it’s a gift that keeps on giving.”