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Profit drought breaks at C&W Jamaica

Published:Thursday | February 11, 2016 | 12:00 AM

Cable & Wireless Jamaica, which trades as FLOW, made its first quarterly net profit in years, which came with double-digit, mobile subscriber growth.

The profit at $144 million for the three months ending December 2015 not only reversed the loss a year earlier of $1.8 billion, it also came with a growth in revenues at $6.1 billion, compared to $5.7 billion a year earlier.

Over nine months, however, the company recorded a net loss of $644 million, compared to a $3-billion net loss a year earlier.

"Caribbean growth was driven by continued subscriber additions in Jamaica (up 15 per cent), where investment in our mobile network led to revenue growth of 16 per cent, with data revenue up 72 per cent," according to its parent Cable & Wireless Communications (CWC) in its trading update.

The Caribbean division, of which Jamaica remains its largest country, holds 1.47 million mobile subscribers at December 2015, compared to 1.33 million a year earlier.

C&W Jamaica started to gain subscribers by double-digit amounts following regulatory and marketing changes. In June 2012 and then again in 2013, the Government slashed the wholesale calling rates between mobile networks in Jamaica. It resulted in aggressive marketing campaigns by the mobile providers with C&W Jamaica gaining double-digit growth in mobile subscribers.

CWC shares are quoted on the London Stock Exchange but its Jamaica subsidiary share are listed on the Jamaica Stock Exchange. The group is headquartered in London with its operational hub located in Miami. During the quarter, CWC earned US$238 million in EBITDA (earnings before interest tax depreciation and amortisation) on US$595 million in revenues for the third quarter or 16 per cent higher earnings year-on-year. However, CWC avoided posting its bottom line result.

"In the third quarter, we saw significant EBITDA growth of 16 per cent, underpinned by cost synergies, while Project Marlin investments, which have now passed their peak level, continued to improve our network infrastructure, delivering better resilience and speeds to our customers and carrying 104 per cent and 42 per cent more traffic on our mobile and fixed networks, respectively, compared to last year," said CWC chief executive Phil Bentley in his statement within the financials.

"Overall group year-to-date, like-for-like revenue growth of three per cent is solid. We continue to transform our business to become the region's leading quad-play operator, and I am confident that revenue growth will increase as we build the platform for sustainable, profitable growth in the coming years", he said.

CWC reported capital expenditure of US$135 million in the third quarter or 24 per cent lower than the prior year. Year-to-date capital expenditure of US$399 million dipped 15 per cent and represents 22 per cent of sales.

"Investment in the third quarter has been focused on upgrading Panama's LTE and HFC network, and rolling out fibre in The Bahamas and Jamaica. We also continue to invest in increased broadband network penetration and improving our MPLS footprint to drive our managed services business," Bentley said.

CWC is in the process of being acquired by US-based Liberty Global.

"Regulatory processes in relation to the proposed acquisition are ongoing and we expect the scheme document to be dispatched by 16 March 2016 with completion in the second calendar quarter of 2016, as stated in the offer announcement," Bentley said.