Mon | Dec 11, 2017

Cable & Wireless core earning grow 38 per cent despite net loss

Published:Friday | November 17, 2017 | 12:00 AMSteven Jackson
FLOW Jamaica Managing Director Stephen Price

Telecommunication provider Cable & Wireless Jamaica (C&WJ), which trades as FLOW, said it remains on track to hit "key metrics" with core earnings before interest, taxation, depreciation, and amortisation (EBITDA) up 38 per cent, despite recording a $378-million net loss.

It comes as the telecoms continues to grow its mobile and broadband customer base.

"The key metrics used to measure the financial health of our business indicate that we are on course to achieving our annual objectives," stated Stephen Price, managing director, in his remarks prefacing the financials.

The company increased its quarterly revenues to $6.8 billion, up five per cent year-on-year, while its operating costs before depreciation and amortisation declined by seven per cent to $4.35 billion. That resulted in EBITDA at some $2.47 billion for the September quarter, compared to $1.79 billion a year earlier.

On the surface, it signals that the company is generating faster earnings as EBITDA grew by 38 per cent in the quarter versus 19 per cent over the nine-month period. C&WJ revenues benefited from the implementation of a series of price increases in recent months and also the growth in its customer base. Operating profit for the quarter, however, remained largely flat at $1.12 billion versus $1.11 billion a year earlier. But Price argued that the outlook for the December quarter remains positive.

"As we approach the last fiscal quarter and peak selling period of the year, our team remains focused and committed to serving our customers with passion and closing the year on a strong note," added Price.

Over nine months, mobile subscribers increased five per cent year-on-year, in addition to its mobile data subscriber base increasing eight per cent year-on-year. This has driven the 20 per cent rise in mobile revenues, supported by the launch of its feature mobile product in 2017, Flow LYF, which offers data-filled options, including social sites and music streaming. Fixed voice continued to decline, but the company said it "arrested" the rate of structural decline by satisfying the demand for broadband, especially in rural Jamaica.

"Our strategic plan is still on track to enable 70,000 more homes to access our services via this expansive network. Furthermore, the demand for broadband access in rural parishes has resulted in increased take-up and 9.0 per cent revenue growth year-on-year," stated Price.

Over nine months, the company posted a net loss of $688 million on revenues of $20 billion, compared to a profit of $916 million on revenues of $18.3 billion a year earlier. That resulted in EBITDA at $6.93 billion versus $5.83 billion a year earlier or 19 per cent higher year-on-year. Operating profit declined to $3.6 billion versus $4.3 billion a year earlier.

The cash generated from operations spiked to $6.3 billion, compared to $2.1 billion a year earlier, indicating that the business is generating more activity. This extra cash was, however, utilised in investments in the year and cash flow and equivalents position closed at $775 million versus $957 million a year earlier.

"As we implemented various aspects of our strategic plan over the last nine months, we remained mindful that all of our stakeholders expect continuous business improvements. Our focus is on executing our strategy with precision to produce improved commercial outcomes, and our efforts are yielding positive results," said Price. "During the year-on-year period under review, our business recorded revenue and gross margin growth of 9.0 per cent and 11 per cent, respectively, when measured against the same period in the prior year. This improvement was driven chiefly by our customers' demand for continuous connectivity, mobility, data security and transmission, in addition to our disciplined approach to managing costs," said Price.

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