The Tribune

• Billionaire's Starlink satellite Internet new 'headwind'

• BISX-listed firm's new network passes 30,000 homes

• Chief executive 'not sure business case' for 5G yet

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas is "accelerating" the roll-out of its fibre-to-the-home network infrastructure in response to the competitive "threat" posed by Elon Musk's Starlink, its chief executive revealed yesterday.

Franklyn Butler told Tribune Business the BISX-listed communications provider will respond rapidly to safeguard its market share after Bahamian regulators licensed the Tesla and Twitter magnate's satellite Internet service provider to operate in this nation exactly three months ago.

Disclosing that its Aliv fibre network now passes 30,000 New Providence homes, he added that the product will "officially be launching" across several communities next week where homeowners will be given the chance to switch from Cable Bahamas' existing HFC (hybrid fibre coaxial) infrastructure so they can enjoy a "better experience" with broadband Internet and video TV services.

Acknowledging that the REV and Aliv operator has "had our challenges over the last few years" with customer service issues, Mr Butler also echoed industry regulator, the Utilities Regulation and Competition Authority (URCA), in saying he was "not sure we see a business case for 5G (fifth generation technology) in The Bahamas at the moment".

While Cable Bahamas and its Aliv mobile affiliate will monitor 5G's progress and evolution, he added that the group will only invest in technology where it "makes sense" and the returns to shareholders are clear. The Cable chief spoke as the company's turnaround strategy showed signs of gaining further momentum, with figures for the nine months to end-March 2023 revealing a positive $12.52m bottom line 'swing' to a $7.292m net profit for the period.

"We believe we are following the plan we agreed in the sense that we have got to continue to grow Aliv, and have got to continue to improve customer service across the group and see what we've got to do to win more market share," Mr Butler told this newspaper after Cable Bahamas maintained its 2023 financial year's consistent quarterly profit trend.

"That's what we've been working towards; making the company profitable, and making net income and not just EBITDA (earnings before interest, taxation, depreciation and amortisation). That has been a focus. We completed refinancing of our long-term debt in June last year and we've been focusing on how to be more efficient from a cost perspective even though there are headwinds on utility costs. That's something we didn't necessarily plan for."

The "utility costs" is a reference to the up to 163 percent increase in Bahamas Power & Light (BPL) fuel charge, compared to October 2022 levels, that the likes of Cable Bahamas and other major electricity users will suffer during peak summer consumption this year. Mr Butler said he did not have figures to hand on the likely increase in Cable Bahamas' year-over-year electricity costs, but indicated this is one of several challenges the group faces.

"I would say we're largely on track, but there's still a lot of headwinds," he told Tribune Business. "This is a business that is evolving. We see a threat from Starlink, which was licensed by URCA a couple of months ago. We have to improve our service, be alert to what is happening around the sector from a telecommunications perspective, and listen to our customers and meet their needs.

"We are in a digital transformation that started before the pandemic, and gathered speed through the pandemic, and we have to recognise that customers are serious about having their needs met." Cable Bahamas, in its feedback to URCA's proposed 2023 annual plan, said then that "the new and fast developing satellite to mobile industry, which is being pushed globally by new commercialised satellite companies, cannot be ignored".

Its statement proved accurate far quicker than it likely anticipated. For on February 15, 2023, URCA granted a class operating licence and class spectrum licence to Starlink Services Bahamas, which was represented by the Lennox Paton law firm. Starlink is an affiliate of Elon Musk’s SpaceX, which is not only seeking to offer satellite Internet services but also mobile services.

Starlink and SpaceX are backed by the considerable financial resources of Mr Musk, the Tesla/Twitter magnate and entrepreneur, who has been ranked by both Forbes and Bloomberg's Billionaires Index as the world's second richest man with an estimated net worth between $167bn and $176.2bn. Starlink's Internet and, potentially, mobile satellite services would also appear to have a market in the Family Islands where Cable Bahamas and BTC's networks do not extend.

"Starlink has a service people perceive as potentially being more reliable because satellite Internet, particularly in the Family Islands, where we don't necessarily have fibre, some people believe its more dependable and that's why we have to accelerate Alive fibre's roll-out," Mr Butler conceded to Tribune Business.

"We have 30,000 homes passed with fibre so far on New Providence, and we will officially be launching above the line in a few communities next week. We've been testing so far, using test customers for the most part. We'll now be allowing customers in areas where we have fibre to sign up for the service and convert from HFC to fibre so they have a better experience."

Cable Bahamas' $80m-$85m investment in its fibre-to-the-home network is also designed to compete head-on with BTC's similar infrastructure. Noting that Cable Bahamas will hold an official launch around May 22, Mr Butler added: "It's definitely gathering some steam. We had some challenges on the equipment side with one of our vendors, but we feel we've solved that.

"Aliv fibre is about making sure the customer gets a better service and better experience in keeping with when we launched Aliv a few years ago." Mr Butler said Cable Bahamas' fibre build-out on Abaco had gained a head-start post-Dorian, as the company rebuilt its network there using the technology.

Once the New Providence roll-out is completed, Cable Bahamas will then likely look at Eleuthera "first" before moving on to Grand Bahama, although this schedule could change depending on where major hurricanes strike The Bahamas. The BISX-listed communications provider is aiming to finish its work on New Providence by June 2025.

Turning to URCA's recently launched consultation on 5G, Mr Butler said Cable Bahamas will focus on improving the existing communications services it offers first as a "priority" in accordance with the regulator's wishes. "We continue to look at what could make sense, but I'm not sure if we see a business case for 5G in The Bahamas at the moment," he told Tribune Business.

"While we certainly have a plan, our hope is to leverage the assets we have and make sure we're responsible in our investment process. We want to focus on providing shareholder returns as opposed to choosing technology that doesn't provide a return to the shareholder.

"This industry never stops, and you can never get complacent. Circumstances change all the time, technology changes all the time. We have competitors chomping at the bit to gain our customers. We continue to be vigilant to improve service and give customers a better experience. We know we've had our challenges over the last few years, but are taking them head on and treating them as seriously and intently as we can. We hope our customers see the results."

Cable Bahamas' $7.292m profit for the nine months to end-March 2023, as opposed to the prior year period's $5.23m loss, was driven largely by a near-$10m increase in its top-line revenue. Mr Butler said the 6 percent growth, from $161.759m to $171.383m, was driven largely by its government and B2B (business to business) segments plus the Aliv mobile operator.

The same trend was seen for the third quarter, covering the three months to end-March, with revenues increasing by 6.7 percent year-over-year from $54.376m to $58.007m. Net profits more than doubled, rising 117 percent from $1.462m to $3.095m.

"As long as we have no external shocks such as hurricanes, which change things, we anticipate that we have set the foundation to continue to improve net income and results," Mr Butler said.