The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Aliv’s latest $90m capital raise “takes us where we need to be” by “cleaning up” multiple inter-company loans and providing funds for capital investment, Cable Bahamas’ top executive disclosed yesterday.

Franklyn Butler, the BISX-listed communications provider’s chief executive and president, told Tribune Business the newly-launched preference share issue will refinance a substantial amount of the mobile provider’s existing debt albeit not at the lower interest coupon he was hoping for.

Speaking after the issue’s Monday launch, he confirmed it will still pay investors 8 percent while voicing optimism that it will be fully subscribed. Cable Bahamas, which holds a 48.25 percent equity stake in Aliv plus Board and management control, “doesn’t anticipate any additional borrowing” once this is placed apart from potential investment in the roll-out of a fifth generation (5G) network.

Mr Butler said the group is “still grappling with the business case for 5G” and, in particular, whether it will be able to gain a satisfactory return on the likely substantial investment required in technology and infrastructure to deliver such services in a market that is only 400,000-strong.

He also revealed that Cable Bahamas’ fibre-to-the-home network infrastructure now covers “just shy of 90 percent” of New Providence, with 13,000 homes already connected to it. The roll-out is expected to be completed before year-end 2024, with only Paradise Island and communities enjoying underground infrastructure remaining.

Cable Bahamas cut its annual losses by more than half during its 2024 financial year, reducing the ‘red ink’ by 53.7 percent from $6.693m in 2023 to $3.104m for the 12 months to end-June 2024. Asserting that he is “pretty confident” the Aliv preference share offering will be subscribed, Mr Butler said: “I think we’ve done a good job getting Aliv to EBITDA (earnings before interest, taxation, depreciation and amortisation) positive.

“I have every confidence that we’ve reduced the risk to the preference shareholders and bondholders. This [the $90m raise] is just to refinance some of the current debt. We started to repay the initial $70m, and I think we had it down to $56m or some number like that. We are actually just replacing some of the current debt, refinancing and replacing it. 

“We are also putting some cash back into the business to give us the opportunity to further grow the customer base and take care of any capital expenditure needs we have. I think $90m will take us where we need to be.”

Mr Butler, though, said the preference share proceeds will not be sufficient to finance any 5G build-out by Cable Bahamas and Aliv. He explained that no communications operator can move on planning investments and network infrastructure for this technology until the ongoing Utilities Regulation and Competition Authority (URCA) consultation is concluded.

“We are unclear what 5G will look like,” the Cable chief told this newspaper. “Really the reliability of the business case for 5G is one we are still grappling with; how we get a return in our small market, and we don’t know what URCA’s requirements are. We do have some capital expenditure in there [the preference share offering], but we don’t know how much is needed to cover 5G.”

Disclosing that the Aliv preference share offering, which has been launched via private placement, is scheduled to close on Tuesday, October 15, Mr Butler said Cable Bahamas had closed its own, separate $160m debt refinancing earlier this. “We refinanced everything,” he added.

As for the Aliv offering, Mr Butler said: “We will be in a strong position. This cleans up all the inter-company loans and puts them in their correct position. We believe this puts us in a great position for the group. We don’t anticipate any additional borrowing at this stage of the game save and apart from some 5G stuff and the unexpected.

“We believe Aliv’s debt-to-EBITDA ratio will improve from hereon and that will give us flexibility even if we have to go back out. It’s a fully mature business. With EBITDA at around $35m-$37m, and a $90m preference share issue, we’re around three times’ debt-to-EBITDA which is great for our industry.

“When we were building Aliv we had to gamble and hope the EBITDA would come. Now we are showing we are producing returns for those investors. That’s why I feel we should be getting less than an 8 percent interest rate on this issue.”

Turning to the build-out of Aliv Fibre’s fibre-to-the-home (FTTH) network, Mr Butler said: “We are probably about, I would say, just shy of 90 percent of New Providence is done. We have got about 13,000 homes already connected. We’ll have all of New Providence complete by the end of December.

“We’re really only working on Paradise Island and certain communities that have underground infrastructure and take longer, and we have to do more extensive work, but all of New Providence will be accessible to our fibre service.”

Abaco will likely be the next island targeted for Cable Bahamas’ fibre roll-out as some of this infrastructure has already been installed in Hurricane Dorian’s aftermath. Grand Bahama and Eleuthera will also be in focus as “those are where we have sub-sea fibre and connectivity where we control the quality end-to-end”.

For 2025, Mr Butler said Cable Bahamas and Aliv are aiming to capitalise on tourism’s continued strong performance to “pick up additional market share on the roaming side” as visitors use their cell phones while in The Bahamas.

“We’ll continue to drive Aliv Fibre and see more innovation and value in our products; how we can give customers greater value and more value with products, and see what other areas of opportunity there are,” he added.

Cable Bahamas, in a statement addressing its fourth quarter and full-year results for the 12 months to end-June2024, said revenues grew by 3 percent and 5 percent, respectively, to hit $61m and $242m. It attributed much of the growth to increased demand for mobile services.

Operating expenses, as a percentage of revenue, fell from 63 percent last year to 60 percent this year. However, Cable Bahamas reported a net loss attributable to shareholders of $9.8m for its 2024 financial year compared to a profit of $4.9m in 2023, which it blamed on depreciation from fibre assets and “strategic shareholder arrangements”.

Cash flow from operating activities stood at $80.8m, while $40m of the $85m allocated to the fibre-to-the-home roll-out was spent during the 2024 financial year. Cable Bahamas has now invested some $75.4m since the project’s launch.

Dividends totaled $2.6m, or six cents per share. Mr Butler said: “We are extremely pleased with our performance in the fourth quarter and throughout financial year 2024, which demonstrates our commitment to innovation, operational excellence and meeting the evolving needs of our customers.”