Sat | Sep 23, 2017

FLOW Jamaica makes a real profit

Published:Wednesday | August 16, 2017 | 8:00 AMSteven Jackson
FLOW Jamaica Managing Director Stephen Price.

Telecommunications company Cable & Wireless Jamaica (C&WJ), which trades as FLOW Jamaica, made $222 million in net profit after tax for its June second quarter, reversing a $695 million net loss a year earlier.

The profit reflected a double-digit jump in revenues, without any exceptional charges.

It makes the second quarter in a decade that the company turned a profit, but the first without any exceptional movements in impairments, amortisation or depreciation. Essentially, this quarter's profit is based largely on earnings rather than management estimates on the useful life of their assets, as reflected a year ago.

The stock price jumped more than seven per cent on the first trading day following the results, signalling favourable reception to the financials. It's now trading around $1.15, but still off its year to date high of $1.69.

During the June quarter, C&WJ revenues rose 13 per cent or nearly $800 million to $6.8 billion. The telecoms benefited from price increases earlier in the year and to a lesser extent growth in its mobile customer base up single digits.

Over six months, the company made a net loss of $311 million on revenues of $13.2 billion compared with a net profit of $1.11 billion on revenues of $11.85 billion the year before. Last year's profit, however, came with additional income of $1.67 billion arising from an impairment reversal, so without it the company would have made a $554 million net loss in 2016.

 

Mobile data on the rise

 

The telecoms' new Managing Director Stephen Price welcomed the improved revenue performance over the six months.

"As more subscribers join our wireless network, we continue to satisfy their demand for mobile data," he said. "Mobile data adoption is on the rise and consumption patterns are changing, as such, our aim is to give customers the control they want and to consume data in whatever forms they choose."

Price succeeded Garfield Sinclair as boss of the Jamaican operation on June 1. He was previously the head of retail sales at the telecoms.

C&WJ's mobile subscriber base increased 5 per cent while mobile data subscribers increased 13 per cent. Broadband revenues were up 5 per cent and its business wholesale services segment grew 9 per cent.

Mobile and cable revenues are expected to continue their trajectory going forward. However, fixed line revenue remains under scrutiny by regulators, the Office Of Utilities Regulation, which plans to cut wholesale rates by more than half. The potential impact on consumers' bills has not been fully disclosed, nor the possible rise in usage. The OUR has held off on implementation of the new rates which were initially scheduled for July. Queries to C&WJ for comment were unanswered up to press time.

C&WJ grew its operating profit over three months to $1.6 billion, up from $660 million a year earlier. Over six months operating profit fell by roughly $750 million or 23 per cent year on year due to the reversal in impairment, the change in strategy related to the utilisation of assets that were originally impaired and the increase in revenues, and the increase in operating costs, said C&WJ.

C&WJ is 77 per cent owned by Cable & Wireless Communications through CWC CALA Holding, but its ultimate parent company is Liberty Global. There is an ongoing legal case between Liberty and the Financial Services Commission over whether the foreign cable firm's indirect acquisition of C&WJ last year requires it to make a mandatory offer for all the remaining minority shares in the listed Jamaican operation.

steven.jackson@gleanerjm.com