The Bahamas Telecommunications Company’s (BTC) controlling owner yesterday dismissed the competitive threat Cable Bahamas will pose if it wins the second cellular licence, saying it was “not a big player” when compared to the likes of Digicel.
Phil Bentley, Cable & Wireless Communications (CWC) chief executive, effectively confirmed that it viewed Digicel as posing the greatest challenge to BTC out of the three bidders who applied for the Bahamas’ second cellular licence.
Responding to analyst questions on the Bahamas’ mobile liberalisation process during CWC”s annual results announcement, Mr Bentley nevertheless conceded that BTC’s financial results would take a significant hit from the loss of its monopoly.
He admitted it would “take longer to replace” any mobile revenues lost to competition with growth in BTC’s other business segments, thus explaining why the company is seeking to downsize its 779-strong workforce.
Mr Bentley added that BTC was “up for the fight”, but admitted that CWC needed to “flag up” the fact that its Bahamian asset’s performance was set for “a dip”.
The CWC chief’s comments on Cable Bahamas, and cellular liberalisation, came in response to an investment analyst who asked him to explain - and provide “colour” on - why Digicel had withdrawn from the bidding process.
The regional mobile giant withdrew its bid just before the Government announced who had qualified for the spectrum auction phase, providing no explanation for its exit.
Mr Bentley sidestepped the question on CWC’s main regional competitor, saying “you’d have to ask Digicel why they dropped out’.
He was much more lucid, though, when it came to the remaining bidders, suggesting that Cable Bahamas appeared to be “the front runner” for the second licence based on media reports.
Mr Bentley made no mention of Virgin Mobile (Bahamas), the second remaining bidder, instead downplaying the potential threat that Cable Bahamas posed to BTC’s cellular business if it won the licence.
“They’re the fixed-line network business,” he said of the BISX-listed communications provider. “They may take offence when I say this, but they’re not really a big mobile player - an international mobile player - like Digicel were.”
Cable Bahamas last night dismissed Mr Bentley’s comments, suggesting that CWC had made similar remarks when it entered the fixed-line voice business, only for it to build a 30 per cent market share.
A company spokesman said: “CWC is entitled to its opinion, but we can stand by our extensive network experience and services that are second to none.
“I recall CWC questioned our telephony business in the past, and we now have 30 per cent market share of fixed-line. Also, Cable Bahamas’ innovative history is well known with our Fibre to the Home (FTTH) and IPTV implementation.
“Additionally, our international standing has been significantly enhanced over the years with our expansion into the US market. Unlike other international companies, as a 100 per cent Bahamian company, our revenues stay here in the Bahamas.”
Mr Bentley yesterday conceded that if Cable Bahamas was the winning bidder it would effectively transform the Bahamian communications market into a duopoly, where BTC and its BISX-listed rival would go head-to-head “competing in quad play”.
This would see BTC and Cable Bahamas fighting for customers and market share in mobile and fixed-line voice services, plus broadband and wireless Internet and TV.
Cable Bahamas is already the market leader in the latter two segments, and has captured around 30,000 customers in the fixed-line segment from BTC within three years.
Squaring up to reality, Mr Bentley said the prospect of BTC losing its lucrative mobile monopoly was why the company was rolling out its IPTV (Internet Protocol TV) in the Bahamas.
He added that BTC would seek to leverage the technology and expertise that CWC has acquired through the Columbus Communications purchase to bolster its TV offering, as it seeks to build a product capable of seizing market share from Cable Bahamas.
But the CWC chief conceded that BTC has to travel a long road to replace revenues/market share as a result of its mobile monopoly’s end, especially given that this segment accounted for almost 72 per cent, or three-quarters, of its $348 million revenues for the year to end-March 2015.
“We’ve got the Flow (Columbus) set-top boxes going into the Bahamian islands, and we’re looking to compete,” Mr Bentley told analysts, “but inevitably half of our revenues in the Bahamas come from mobile.
“Inevitably, we’ll lose some share there, and it will take longer to replace that with growth in broadband, B2B and IPTV.
“We’re up for the fight there, but inevitably there’s going to be a dip, and that’s what we’re flagging.”
Mr Bentley gave no estimates on how much of a ‘dip’ BTC’s financials will take as a result of cellular liberalisation, but expectations are that it could lose between one-third to 50 per cent market share within two to three years.
Given that BTC’s total cellular revenues for the 12 months to end-March 31 were $250 million, that translates into a top-line loss of between $83 million to $125 million.
The calculations here explain why BTC, and its CWC controller, want to implement a further round of redundancies and staff cuts, in a bid to right-size the business and align its cost base with the expected income reduction.
Mr Bentley also effectively confirmed yesterday that CWC’s acquisition of Columbus Communications, a deal he lauded as transforming the company into “a true regional powerhouse”, was at least partly designed to make it less reliant on BTC’s financial performance.
BTC, prior to the Columbus purchase, had accounted for 24 per cent of CWC’s overall business, but that percentage is likely to shrink considerably with the end to its mobile monopoly.
Mr Bentley said the Columbus purchase meant CWC’s revenue was “less weighted towards the Government-dominated markets of Panama and the Bahamas”.