Wed | Aug 16, 2017

Flow parent Liberty sets cash flow target for regional businesses

Published:Friday | March 31, 2017 | 3:00 AMSteven Jackson
In this November 2016 photo, Flow customers use a kiosk at the airport in Kingston. Liberty Global has set a target of US$1.5 billion in operating cash flows for FLow and other members of the LiLAC Group.

Large cable operator Liberty Global, the owner of FLOW, wants its regional businesses to generate more cash, and has set them a target of US$1.5 billion.

The challenge covers all the businesses under LiLAC Group, including the Caribbean operations of FLOW.

The group delivered operating cash of US$1.09 billion in 2016, which means Liberty wants cash flows to increase by nearly 40 per cent this year. A likely outcome of that goal is that subsidiaries like FLOW Jamaica may have to deliver higher ARPUs, or average revenue per user - a key metric monitored by telecoms.

FLOW's ARPU currently trails sister companies in the LiLAC Group by 40 per cent.

While Liberty has not stated that it wants to increase ARPU, the company said it views the component of the performance of FLOW's immediate parent, Cable & Wireless Communication (CWC), as key to achieving the new cash flow target.

Liberty enacted a series of restructuring of management changes at CWC with that strategy in mind.

"From an organisational perspective, we have changed CWC's operating model and recently placed a number of key personnel in critical roles within the business, including the confirmation of John Reid as CEO. As we head into 2017, we are laser-focused on improving the results at CWC and expect the LILAC Group to deliver approximately US$1.5 billion of operating cash flow for the full year," said the cable company in its newly released earnings report.

Outgoing boss Garfield Sinclair, who is also president of the Caribbean operations of the brand, declined to comment on the implications Queries on the implications of the Liberty target, saying that the competitive environment limited his disclosure of strategy.

"We appreciate your interest, however, your questions are asking for disclosure of our tactical commercial strategy in a fiercely competitive industry," he said.

"What I can say is that the key pillar of our strategy is putting our customers first and providing them with the best value for telecommunications products and services. This is our long standing commitment and remains unchanged," he told the Financial Gleaner.

The US$1.09 billion which LILAC earned in operating cash flow last year was split: CWC, US$541.9 million; Chile, US$339.3 million; and Puerto Rica, US$211.8 million.

The ARPU at LiLAC Group, excluding CWC, totalled US$57.20 in 2016, while the ARPU at CWC alone stood at US$34.27, according to Liberty data.

Sinclair has headed FLOW Jamaica since 2010, but is to be succeeded by his sales strategist Stephen Price. Sinclair was promoted earlier this year to president of the Caribbean operations and will soon relocate to offices in Miami.

steven.jackson@gleanerjm.com