0

Btc Profits Slump 26.4%

The Bahamas Telecommunications Company (BTC) suffered a 26.4 per cent profits slump for the year to end-March 2015, as its revenues and staffing levels came under pressure in the run-up to mobile liberalisation.

Figures released yesterday by its controlling shareholder, Cable & Wireless Communications (CWC), revealed that BTC’s net income dropped from $72 million in the prior year to $53 million - a slump of almost $20 million.

Apart from a 2 per cent top-line decline, driven by reductions in mobile pricing as BTC prepares for its first-ever mobile competition, the carrier also saw ‘exceptional costs’ more than double from $12 million to $25 million.

CWC executives indicated that the increase is associated with plans to downsize BTC’s 779-strong workforce ahead of mobile liberalisation, aligning the company’s cost base with the anticipated reduction in market share and revenues.

Perley McBride, CWC’s group chief financial officer, said some $36 million out of $104 million in exceptional operating costs incurred by the company during its last financial year related to “headcount” reductions in Panama and the Bahamas.

He added that, in BTC’s case, the workforce cuts were “primarily in preparation for competition”.

“Preparations for the introduction of competition impacted the top-line in the Bahamas,” Mr McBride said.

BTC’s 2 per cent top-line fall, from $354 million to $348 million year-over-year, was driven by the 3 per cent fall in mobile revenue.

These fell from $258 million to $250 million, despite BTC enjoying a 60 per cent growth in mobile data subscribers, who now account for 48 per cent of its customer base.

“In the Bahamas, revenue performance declined 2 per cent as we prepared BTC for the advent of mobile competition by reducing prices and updating roaming agreements, whilst also being impacted by the introduction of VAT,” CWC said in its analysis of BTC’s performance.

“Mobile revenue was down $8 million following price reductions ahead of the anticipated entrant of a mobile competitor, reflected in a 7 per cent drop in ARPU (average revenue per subscriber).

“Data traffic grew 140 per cent following additional investment in [technology], with LTE (Long-Term Evolution) sites added in the year.”

CWC said BTC had in 2015 added 24 high-speed sites to boost data downloads and uploads, while “second carriers were added to improve capacity and coverage in the high traffic areas”.

The Bahamian communications provider also deployed some 71 kilometres of fibre optic cable, running past 23,000 homes, last year.

Yet despite this investment, BTC;s broadband Internet and TV revenues failed to budge, remaining stubbornly at $15 million.

“Broadband revenue was flat in the period, with subscribers increasing 9 per cent following increased uptake in fibre-based products, as consumers benefited from investments to double broadband speeds to more than 16 Mega bits per second in the prior year,” CWC said of BTC.

The one revenue growth area for its Bahamian asset was fixed-line voice, its legacy product, where revenues increased by 9 per cent from $45 million to $49 million year-over-year.

CWC said the increase stemmed from a 16 per cent growth in revenue per subscriber, due to product bundling that included higher fixed-line tariff pricing.

“Of the fixed subscriber base, 17 per cent of customers (16,000) have upgraded from their basic packages,” CWC said. “Managed services revenue fell by 6 per cent to $34 million due to a reduction in off-island capacity sales.”

Still, there was little disguising the impact impending mobile liberalisation is having on BTC, as it is forced into pricing cuts that depress margins, plus staff downsizing.

The latter comes despite BTC actually increasing its workforce by seven persons, or 1 per cent, to 779 in 2014-2015 due to investments in marketing.

“Gross margin at $281 million was 3 per cent down compared to the prior year, reflecting the reduction in revenue and higher subscriber acquisition costs,” CWC added of BTC.

“As a percentage of revenue, gross margin declined by one percentage point to 81 per cent. Earnings before interest, taxation, depreciation and amortisation (EBITDA) of $122 million was 5 per cent lower than the previous year, with the EBITDA margin of 35 per cent declining by one percentage point.”

BTC’s average monthly revenue per mobile user dropped by almost $5 year-over-year, from $66.1 to $61.3. Pricing pressure was felt even more keenly in the broadband Internet segment, where average monthly revenue per user dropped from $64.3 in March 2014 to $51.3 a year later.

Fixed-line, due to the product bundling tactic, was the only BTC business segment to see a year-over-year pricing increase, with average monthly revenue per user up from $34.7 in March 2014 to $40.2 at year-end.

BTC performed better on subscriber acquisition, with mobile customers increasing by 10,000 over the 12 months to end-March 2015, coming in at 318,000.

Broadband subscribers also increased year-over-year, from 23,000 to 25,000, while fixed-line customers were down from 103,000 to 99,000.

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment