Cable & Wireless Jamaica returns to losses
Cable & Wireless Jamaica (C&WJ), which trades as Flow Jamaica, posted a loss of $695 million the June first-quarter 2016, or more than double the net loss a year earlier, despite double-digit growth in revenues and mobile subscribers.
The company, now part of the Liberty Global group, said the main reason for the bleed related to heavier depreciation charges.
"This decline is the result of higher depreciation expense due to accelerated depreciation," said managing director Garfield Sinclair in statements prefacing the financials.
Sinclair explained that during 2015/16, in connection with the acquisition of Columbus International by Cable & Wireless Communications, the company re-evaluated the planned timing of network integration.
"Consequently, we made a decision to reverse the prior year impairment charge of $3.4 billion and accelerate the depreciation on these assets over an average four year period," Sinclair said.
Despite the net loss, the company's cash increased by three-quarters to $702 million for the period.
During the June quarter, revenues increased by 11 per cent to $6 billion. However earnings were hurt by finance,costs of $1.3 billion ($1.1 billion a year earlier) and depreciation charges of $639 million ($291 million a year earlier). At the same time, Cable & Wireless' mobile subscriber base increased 14 per cent to 886,200 with mobile revenues up 25 per cent to $3 billion.
Total operating expenses decreased by one per cent year on year largely due to a six per cent reduction in administration, marketing and selling expense, which partially offset a 14 per cent increase in staff costs.
"The net reduction was primarily a result of synergies achieved from the integration with [CII]," said Sinclair.
C&WJ made a net profit of $1.16 billion for the year ending March 2016, its first positive annual results in nearly a decade.
In May, Liberty Global completed the acquisition of Cable & Wireless Communications Plc, a transaction valued at US$7.4 billion.
The CWC business, including C&WJ/Flow Jamaica, now fall under Liberty's regional operation called LiLAC Group.