The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas yesterday unveiled a positive $10.69m bottom line turnaround for the first half of its 2023 financial year despite encountering frustration over the pace of Aliv’s debt refinancing.

Franklyn Butler, the BISX-listed communications provider’s president and chief executive, told Tribune Business that it was aiming to improve profitability “quarter by quarter” after the three months to end-December 2022 delivered further net income to back up the prior period’s performance.

While the $894,000 second quarter may seem relatively modest, it represented a more than $7m positive swing from the $6.261m loss incurred during the same period the prior year. And, for the half-year to end-December, it took Cable Bahamas’ profits above the $4m mark compared to a $6.69m loss in 2021.

Key indicators were trending in the right direction, with revenue and operating income up year-over-year, while operating expenses, depreciation and amortisation and interest expense had all declined. However, Mr Butler said interest and preference share dividend payouts could be further reduced if Aliv’s high-priced debt is refinanced.

Cable Bahamas holds a 48.25 percent interest in the mobile operator, plus Board and management control, with the Government owning the 51.75 percent majority equity interest. Both hold their respective stakes via Aliv’s parent, HoldingCo, and Mr Butler yesterday hinted at some slight frustration that Aliv’s refinancing has not progressed more rapidly.

“We anticipate that could drop even further,” he told this newspaper of Cable Bahamas’ interest and dividend payments, as well as Aliv’s losses. “We’d like to refinance their [Aliv’s] debts as well. We’re kind of at a stalemate with the shareholder as to how to do that. We’re paying 8 percent on that, and in the next four years a lot of that debt matures.

“As we can work to the refinancing of that debt, or reduction of that debt in the next four years, it will put the group in an even stronger position. That’s not a one year or one-off type of thing.” Asked what he meant by “stalemate”, Mr Butler replied: “We are still working with them [the Government] to refinance some of the debt that Aliv has on its balance sheet.

“Government takes forever. We don’t have any differences. We had anticipated by November/December we would have that refinancing addressed as we took on $50m in extra debt. Right now Cable is carrying that and it’s just driving up our financing costs. If we price that in, it gets even better.” The first $4m principal payment on Aliv’s debt was made in December 2022.

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. And the BISX-listed communications provider has made no secret of its desire to put the extra capital to good use by assisting Aliv with its refinancing.

Elsewhere, Mr Butler described Cable Bahamas’ $80m fibre-to-the-home roll-out across New Providence as an infrastructure upgrade that will be “game changing” and “transform the customer experience”. He added: “We are now deep into the South Beach area. We have started in Adelaide. We have about 200 test customers who are testing the service.

“We are just waiting to complete more of the back office integration. That is one area where we are slightly behind from a plan perspective. We wanted to be deeper into the commercial launch.” Mr Butler said Cable Bahamas is providing customers with an online portal where they can sign up for service and see where fibre-to-the-home is being rolled out.

The Cable Bahamas chief added that he also has an app on his phone that shows where the network has been installed, saying: “I can tell you street by street where we have live services.” Describing fibre-to-the-home’s ultimate impact, he argued: “I think it’s going to be huge. We believe it’s really going to allow us to do some pretty creative partnerships. There is a partnership we intend to launch with a big security provider.”

Mr Butler said Cable Bahamas is poised to become one of the few distributors outside the US for Ring security products, and added: “We know what is happening with crime and everything else. We think this is a way to drive digital transformation and the Internet of Things (IOT), connecting modems with SIM cards so you have coverage on IOT to protect your home.”

Cable Bahamas’ second quarter revenues rose 10.8 percent year-over-year, jumping over $5.5m to $57.797m, and driven largely by its Aliv and business solutions segments. Mr Butler said its fixed services, namely traditional voice services and cable TV were “pretty much flat”, growing by 1 percent.

“We’ve been focused on synergies between the group,” he added. “We believe we’re going to continue to see better operating margins. We’re looking to see where we can consolidate fixed and mobile leadership and for marketing purposes. We’ve made good progress on that, and expect that to continue in the next few quarters.”

Mr Butler explained that the leadership consolidation, for example, involved having one consumer head for both fixed and mobile products as opposed to two heading each. “We’re trying to group buy as opposed to individually buy for Aliv and REV,” he added. “If we buy for the group we get our dollar to go a bit further. We’ve been pretty intent about that over the last few quarters, and we expect that to continue for the next four or five quarters.”

Operating expenses for the 2023 half year were down by close to $1.5m compared to the year before, while amortisation and depreciation were relatively flat. As a result, Cable Bahamas’ operating income for the six months to end-December 2022 increased by 87.7 percent year-over-year, surging from $8.857m to $16.625m.

Interest expense, due to the reduction in Cable Bahamas’ bank debt, was cut by 43.8 percent year-over-year to $4.785m as opposed to $8.514m in the prior year. However, dividend payments on the group’s preference shares rose by 42.4 percent to $8.378m from $5.883m

“I think we are pretty much where we hope to be from a budget perspective; probably slightly ahead on revenue, but our operating expenses lie pretty much where we’d expect them to be.... We are pretty attentive to the customer base. We kind of know where our pain points are. We anticipate growth to continue, but know we have a competitor that is not going to lie down and play dead. We have to remain vigilant and ensure customers appreciate there is a difference.”