LIME continues to bleed - But bosses still optimistic
Published:Sunday | February 13, 2011 | 12:00 AM
Cable & Wireless Jamaica, the telecoms company that trades as LIME Jamaica, continued its financial haemorrhaging in the December quarter, posting a $1.3 billion loss for the three-month period, nearly triple the the $351.4 million of a year earlier.
But LIME's perennially optimistic bosses continue to suggest that they are on the verge of staunching the flow of red ink and affecting a turnaround of the businessthat has been in retreat for thepast decade since it lost its monopoly in Jamaica's telecommunications market.
"Whilst remaining cautious regarding the recovery of trading conditions, we continue to focus our 3G expansion and investment in improved service delivery and customer service," Chairman Chris Dehring and board member Andrew Cocking said in a statement accompanying the financial results.
"We believe this will position us strongly to capitalise on the improved economic climate when the recovery begins," they said.
They also repeated that LIME was in "exploratory talks" for the sale parts of its field services operations, but did not say which parts were likely to go.
"The talks are geared at examining opportunities to achieve cost savings and improved customer services," Dehring and Cocking said.
The latest financials, lodged with the Jamaica Stock Exchange last week, pushed the company's nine-month loss to $2.44 billion, an 11 per cent worsening of the position a year earlier.
The current loss position, which is likely to carry through to the end of the current financial year as of March, follows a loss of $3.4 billion in 2009-2010, and approximately $303 million in 2008-2009.
The third-quarter loss was despite LIME being able to report a 10 per cent increase in revenue for the period, to $6.259 billion, driven in part by the gross report in earnings from director services and 50 per cent growth in its broadband and data business.
However, with its high inter-connection outpayments to mobile competitors, particularly the market leader, Digicel, as well as rocketing costs of sales - $1.56 billion in December 2010 quarter against $408 million in 2009 - LIME faced a 46 per cent drop in its gross margin to $2.74 billion.
At the same time, the company reported sharp increases in both employee and administrative and marketing expenses, the former jumping 28 per cent to $1.1 billion, and the latter by approximately 18 per cent, to $1.9 billion.
The rise in the marketing and selling costs would have been influenced by the big spending on Christmas advertising and promotion, including the launch of a mobile TV service, more of which the company hopes will help drive recovery.
"We are now seen as innovators again with services like mobile TV, which will only enhance our ability to attract mobile customers to our network," said CEO Gary Sinclair, the latest to hold the position that has been a revolving-door job for LIME bosses since Jamaica's telecoms market was deregulated in 2000.
Sinclair also promised "a much-needed facelift" to its landline operations as well as an an intent to work with the Government to expand broadband use in Jamaica, but did not say precisely what would be done.
The company also said that it was already a leader in providing communications services for larger companies here, which Sinclair proposed to extend to small and medium-sized firms.