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Aliv Targets January 2018 For ‘Break Even’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ new mobile operator yesterday said it expects to “break even” around January 2018, having gained 50,000 subscribers to-date despite not penetrating 45 per cent of the potential market.

Barry Williams, Aliv’s chief financial officer, told Tribune Business that based on its internal financial projections, the company was aiming to start generating “positive operating cash flow” by June 2018.

He described the new operator’s acquisition of 50,000 subscribers in the four months since its late November 2016 launch as “pretty fantastic”, especially since mobile number portability will be launched two months later than originally projected on April 25.

Aliv is relying upon this to help it penetrate two of the three segments it has divided the Bahamian mobile market into, namely corporate and post-paid customers, many of whom want to retain their present number when switching providers.

Out of an estimated 330,000 total subscriber base, Aliv believes just over half - some 180,000 - are pre-paid mobile users willing to switch to its services without keeping their existing numbers.

This segment, which Aliv calls the ‘early adopters’ or ‘innovators’, is the one that has generated the bulk of its initial customer base - giving it a 28 per cent share of the pre-paid market.

Mr Williams estimated that corporate and post-paid users account for 15 per cent, and 30 per cent, respectively, of the Bahamian mobile market, meaning that Aliv has penetrated just 55 per cent of the market to-date.

“What I can tell you is that we have well over 50,000 subscribers from the pre-paid segment of the market,” the Aliv chief financial officer told Tribune Business. “It’s pretty fantastic to have achieved that in a four-month period.

“The 50,000 has to do with the pre-paid, the early adopters. We believe that some of those 50,000 are post-paid folks as well who, because of the presence of Aliv’s service, want to come on early. We have plans in place to tackle each segment of this market.”

Damian Blackburn, Aliv’s top executive, said the new operator estimates there are around 100,000 Bahamian mobile subscribers, or almost one-third of the market, who will not switch provider unless they can keep their existing number.

The remaining 50,000, he added, were post-paid subscribers including corporate/business users, a market Aliv has just formally launched to on New Providence.

Comparing Aliv’s progress to that previously made by other ‘new market entrants’ when Caribbean mobile sectors liberalised, Mr Blackburn said the company was on track to seize a total 30 per cent market share by year-end 2017.

The private placement memorandum (PPM) for Aliv’s current $30 million bond issue shows the new operator as taking a total 15 per cent market share after just five months.

Taking Barbados as the best comparison with the Bahamas, Mr Blackburn said Aliv’s research showed the first new mobile entrant in that country gained 26 per cent market share after one year - a target Aliv was currently on track to exceed.

“We’re on track for the right place,” Mr Blackburn said of 2017’s 30 per cent market share goal. “This is where our plan says we want to end up.”

Reports in other media previously suggested that Aliv had claimed a 25 per cent total market share during its initial four months, but Mr Blackburn yesterday clarified that he had been referring just to the pre-paid, ‘early adopter’ segment when citing that figure.

The issue was previously seized upon by Aliv’s rival, the Bahamas Telecommunications Company (BTC), in a bid to discredit the company that has ended its mobile monopoly. However, Mr Blackburn noted that BTC’s release, quoting comments by its chief executive, Leon Williams, did not dispute Aliv’s subscriber numbers.

Aliv’s Mr Williams, meanwhile, told Tribune Business that the new mobile operator was forecasting it will hit the ‘break even’ point when it gains around 100,000 subscribers.

“By June 2018, we’re looking at well over 100,000 subscribers; about 122,000,” he said.

“We’re probably going to ‘break even’ around the 100,000 subscriber mark in January 2018. By June, based on our predictions, we should be operating cash flow positive.”

Tribune Business reported in Thursday how Aliv is forecast to start generating a profit in its 2019 financial year, which closes at end-June.

Mr Williams, though, told Tribune Business that the ‘bottom line’, or net income, was not presently the main focus for himself and Aliv’s management given that the company was still in its infancy.

“We’re in start-up mode, have this huge capital expenditure and will have this depreciation [of network assets], but all the while we’re growing our revenue base and acquiring subscribers,” he told Tribune Business.

“The EBITDA, the operating income, is the line where we want to have our focus on. We’re going to be well north, once we get going, of margins that exceed 30-plus per cent.”

Mr Williams described this margin level as the global mobile industry standard, and Aliv is projecting that EBITDA (earnings before interest, taxation, depreciation and amortisation) will turn positive in 2018, reaching $3.013 million.

“We’re really going to turn the corner in year three,” he added, explaining that his optimism on Aliv hitting its financial projections was well-founded.

“I’m very confident, and I’ll tell you why. I believe that the offering we have out there is extremely compelling,” Mr Williams told Tribune Business.

“Our intent is to make sure our customers get a fantastic service and quality experience, so that they’ll want to be - and remain - our customers.”

He argued that successful companies, no matter what the industry, were defined by the “customers’ willingness” to pay for their products and services.

“If I’m giving you good service, if I’m giving you good value for money and not giving you a gimmick, your willingness to pay will be higher than with someone providing an inferior product,” Mr Williams said.

“Our focus is on value and quality, and that’s what we’ll deliver to the customer.”

Confirming that Aliv is targeting a 47 per cent market share by end-June 2019, and 50 per cent thereafter, Mr Williams said it was well-poised to exploit the dynamic nature of mobile technology.

“There are many other opportunities in mobile; we’re not going to be thinking just about what’s in existence today,” Mr Williams told Tribune Business.

“We are a technology company, and there will be continual innovation. We will be looking at demand trends, what the customer is saying that they need and want to achieve.

“Technology doesn’t stand still. What it looks like in five years could be very different from today, and I daresay opportunities five years out could look better than they are today,” he continued.

“It’s a very exciting business to be in. We’ve got to be ahead. We’ve got to be in the know.”

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